Efile with form 3520

[TAD-SAT]

@michaelcote01  For inherited foreign assets such as real estate, things get complicated for the Form 3520 + FBAR FinCEN Form 114.  If I were you I'd request an extension from the IRS to file your income taxes.  This request automatically extends the deadline required to file Forms 3520 & 114.  Gives you time to review the mountains of "How To" IRS instructions, assuming you or your spouse have a finance background.  Or you can hire a Tax CPA who understands how to properly complete these forms.  After all, tax day is tomorrow.  Good Luck!  TAD-SAT.

[SusanY1]

It is common with these reports, due to the nature of the reporting, that your net worth is inflated. 

The reports aren't designed (or interpreted) as a report of your net worth.

Form 3520 just tells us where the assets came from and doesn't report on the actual accounts themselves.    The others very frequently inflate the assets due to transfers.  For example, if I have $50,000 in my foreign savings account, and move it to checking, I have to report that $50,000 in both accounts.  If I subsequently change banks and move the assets again, I could be reporting the same $50,000 three times.  This is known, and expected.  

Whether you efile or print and mail should be based on what is comfortable to you, knowing the limitations of each.  It won't confuse the IRS or FinCEN, though, and on the off-chance they ask you anything about either form it will be simple to explain.  
 

@Cincilla 


For real property assets, unfortunately, this work around won't work as there is nowhere to report those on 8938.

@michaelcote01 

[TAD-SAT]

@Cincilla  I'm in a similar situation to yourself and this is how I handled it for 2023 tax year.  I completed Form 3520 and MAILED it to the IRS Service Center in Ogden, UT, + attached a print-out of the Form 8938 + Foreign documentation explaining the funds were an inheritance.  Gifts & Inheritance are documented in Part-IV of Form 3520.  From what I can tell, Form 3520 and Form 8938 have different purposes.  3520 explains HOW you received the foreign funds, and 8938 explain WHERE the foreign funds are located.  Hence there should be no overlap from the IRS's perspective.  I electronically filed by Tax Forms to the IRS, including Form 8938, which was a duplicate of the 8938 I printed out and mailed to the IRS in Ogden, UT. Don't forget you also have to complete FBAR FinCEN Form 114 for the U.S. Treasury Department (separate from the IRS).  Both my Federal & State income tax returns have been accepted, so I must have done something right.  Good luck!  TAD-SAT.

[michaelcote01]

thanks for your reply...it aligns with what I thought, unfortunately. The fact that I also can't efile my state return as a result of this stupid problem really adds insult to injury. This inheritance really complicates our tax situation, so going forward we'll be using a professional. So long, Turbotax!

[RobSI]

Paper filed on Friday and checked status at IRS online account. Apparently paper filing of 1040 may take as long as 6 weeks to process. I'm sure IRS will want to send a word of thanks to Intuit for creating more delays 😉