Forms 8938 and 3520

Forum|Forum|5 years ago
April 5, 2021
1 reply
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During 2020 I received a foreign cash gift of over $100k which was deposited into a new foreign bank account (and subsequently remitted to the USA). I have completed Form 3520 (downloaded from IRS) to report the gift and also made a FinCen 114 filing to report the bank account.

I was doing Form 8938 in TurboTax and had gathered the various required details like bank name, address, account number etc. However, after first completing f3520, I came back to TurboTax and noticed that it says for f8938 "Only include accounts that have not already been separately reported on f3520..." . The forms screen in TurboTax also states that I do not need to include these assets in f8938 for the tax year, but just enter the number of Forms 3520 filed.

So my question is: Do I therefore NOT need to enter the bank info details for f8938 in TurboTax? Since Form 3520 only asks for the amount and date of the gift , but not the bank account details as in f8938, it seems that those details would be "missing" from the tax return (though they would be filed with FinCen).

Thanks for your help.

JeffreyR77

Level 10

You do not need to enter on Form 8938 any information for accounts you have reported on Form 3520

Instructions for Form 8938 (2020) Statement of Specified Foreign Financial Assets (see Exceptions for Reporting - Duplicative Reporting)

AlKur_20Author

Level 2

Thanks, Jeffrey. That's what I concluded from my reading of the forms, and it's certainly preferable from a privacy/information-limiting perspective. But it does seem odd that one can avoid giving the IRS those details (which would otherwise be provided on an 8938) simply by submitting a 3520 - are they likely to query or reject the return because of it? A CPA I spoke to recommended providing the full info on f8938 or risk a $10k penalty.

Appreciate your opinion on that.

Thanks a lot!

JeffreyR77

Level 10

It would be my understanding the asset transferred to you this year has previously been reported on Form 8938 by your benefactor.

In 2020, the account is reported as being transferred.

In 2021, you will pick up any reporting requirement.

There will be no break in reporting.

The IRS is not likely to query or reject your return as you are fully compliant with the instructions on how to report this transaction in 2020.

When you provide information other than what the IRS requests or in a manner other than they request is when you risk having to try to explain something that never needed explaining in the first place.