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oboero2
Returning Member

Foreign life insurance and form 3520

Do you need to report proceeds from foreign life insurance on form 3520 upon the passing of a foreign relative if it's over $100,000? I'm a US citizen.

The foreign relative who passed is the owner of the foreign life insurance, I am just a beneficiary. 

If I am reporting it on form 3520, which year should I report, the year the death occurred(2023) or the year the proceeds were actually paid out to me in my US bank account(2024)? It took a while for the foreign insurance company to do the payout since it was an international wire.

My questions, in short are:

1. Do I need to file form 3520?

2. If yes, for which year(2023 or 2024) should I file?

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Accepted Solutions
pk
Level 15
Level 15

Foreign life insurance and form 3520

@oboero2  my condolences for your loss.

 

Generally you have to report this  for the year in which you received the bequeathal -- in your case in 2024.  It does not go with your return, though.  

Here is more on this from the IRS -->  Gifts from foreign person | Internal Revenue Service

 

I am assuming here that the  insurance distribution occurred first into the Estate of the decedent and then on to you as the beneficiary.  So for purposes of form 3520, it is foreign Estate distribution.

 

Is there more I can do for you ?

View solution in original post

pk
Level 15
Level 15

Foreign life insurance and form 3520

@oboero2  don't believe it makes a difference.  But  I would still use the "Estate" as  the issuer of the benefit -- 

(a) the Estate  came into being as soon as the  decedent passed and  (b) the insurance claim & distribution became available only at that point.  So I will stay with  "Foreign Estate " just to keep everything copacetic.

 

Is there more I can do for you ?

View solution in original post

7 Replies

Foreign life insurance and form 3520

Please check later. I will page Champ @pk.

pk
Level 15
Level 15

Foreign life insurance and form 3520

@oboero2  my condolences for your loss.

 

Generally you have to report this  for the year in which you received the bequeathal -- in your case in 2024.  It does not go with your return, though.  

Here is more on this from the IRS -->  Gifts from foreign person | Internal Revenue Service

 

I am assuming here that the  insurance distribution occurred first into the Estate of the decedent and then on to you as the beneficiary.  So for purposes of form 3520, it is foreign Estate distribution.

 

Is there more I can do for you ?

oboero2
Returning Member

Foreign life insurance and form 3520

Thank you for your reply.

I don't think the insurance distribution went into the estate first. Since I was the beneficiary, the payout went directly to my US bank account without ever needing to even contact the decedent. Would this change anything?

pk
Level 15
Level 15

Foreign life insurance and form 3520

@oboero2  don't believe it makes a difference.  But  I would still use the "Estate" as  the issuer of the benefit -- 

(a) the Estate  came into being as soon as the  decedent passed and  (b) the insurance claim & distribution became available only at that point.  So I will stay with  "Foreign Estate " just to keep everything copacetic.

 

Is there more I can do for you ?

oboero2
Returning Member

Foreign life insurance and form 3520

But in terms of form 3520, whether it came from an estate or individual, the way I fill out the form would be the exact same, right? Like I would just fill out the first page with basic info, check the last box that says "You are a U.S. person who, during the current tax year, received certain gifts or bequests from a foreign person. Complete all applicable identifying information requested below and Part IV of the form." and then fill out Part IV 54?

pk
Level 15
Level 15

Foreign life insurance and form 3520

@oboero2 Yes.

oboero2
Returning Member

Foreign life insurance and form 3520

Thank you!

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