Form 3520

[sarah72]

I am a US citizen. In year 2023, I received two cash gifts from two foreign family members. Each of them sent me $50k, but each time, the amount showed up in my bank as $49985, and then I got charged another $15 fee for incoming wire. I don't know what happened between the banks because they paid fee before wired the money too. I prepared that I need to file Form 3520, but suddenly I found that I didn't receive more than $100k, but 2 *$49985 in 2023. In Jan 2024, I received another$49985, but I don't expect to receive more in 2024. Based on Form 3520 instruction, I don't think I have to file, but will it better to file? Will there be a problem if I file when I don't need to file?

[DaveF1006 · Accepted solution]

Assuming if the total of the gifts paid by your related foreign persons was $100,000, the IRS says you need to report this on a 3520 only if the amounts of the gifts exceed $100,000. 

If the gross amounts from the two gifts exceeded $100,000, then the full amount of the gifts is the amount that will be reported  without regard to the wire transfer fee paid.

Form 3520 is an information form.  There would be no penalty for filing this if you didn't need to. Since the amounts are right at the threshold for filing a 3520, I recommend filing it for piece of mind.

Foreign Gifts

Instructions for 3520

[sarah72]

@DaveF1006 Thank you very much for your explanation and suggestion, they are clear and helpful!

[jakala]

Hi Dave, 

I am in a similar situation. The only difference is that my parents also wired me some money to my bank account in my home country. The money they wired to my US bank account didn't exceed 100k, but if we need to count the money wired to my bank account in my home country, the total amount would exceed 100k. I'm a resident alien. Do I need to file a 3520 in this file? I'm not sure if the money wired to my home-country bank account would be considered as gift money. Would love to hear your thoughts on this! Thanks in advance!  @DaveF1006 

[SusanY1]

You should file Form 3520 if the total received in all accounts (US and foreign) in one calendar year exceeded $100,000.  For gifts or inheritances  that don't involve foreign trusts, you are just filling out the top of page 1 (through line 1k), and then on the last page, Part IV question 54.  

It's always better to disclose if there is any doubt, as the penalty for not filing this form or filing it late are pretty steep.  

Be sure to sign and date the form before mailing.  


@jakala 

[jakala]

thank you Susan! 

[jakala]

Hi Susan, 

Continuing with a related inquiry 🙂  The gift money transferred into my foreign account(s) pushed the balance over $10,000 last year. Given that I'm prepping to submit Form 3520, do you reckon it's necessary to also tackle the FBAR (FinCEN Form 114) filing? I'm thinking since I'll be disclosing the funds through Form 3520 anyway, maybe that could suffice. Looking forward to hearing back from you! Much appreciated in advance!

@SusanY1 

[SusanY1]

Form 3520 and FBAR/FinCEN114 are sent to separate agencies, so you definitely want to also file the FBAR. 

Form 3520 goes to the IRS and FBAR/FinCEN114 to the Financial Crimes Enforcement Network.   Thankfully, that's a simple process as these things go.  You can file that form HERE.

The only tricky part to filing the FBAR is that you must report the highest balance in your account during the year.  You do these for each account, not each sum of money.  This means if you have $10,000 in bank account 123 and you move it to bank account 345 (such as checking to savings or switching banks) you would report the highest balance in each account, even though it comes from the same funds.  

[jakala]

Thank you, Susan! What if I kept the money in account 123, and whether with or without account 345, account 123 itself would surpass $10k. In this case, would it then be okay to only report account 123? Also, about Form 3520, I've got 6 items to detail in Part IV, question 54, but there’s only space for 3 entries. Could I possibly merge some of these items into one entry, so I can fit all 6 items into those 3 slots? Looking forward to your advice on this. Thanks in advance!

@SusanY1 

[DaveF1006]

There is an instruction within the form that says if more space is needed, attach a statement listing additional information. As far as the FBAR report, remember if at any time the account balances exceed the $10K threshold, both accounts need to be reported. It could be a brief moment in time, but still need to be reported regardless. Be careful, here. 

[jakala]

Thank you Dave!