Efile with form 3520

[spsefton]

Has anyone tried reporting the same amounts disclosed on Form 3520 on form 8938 in TurboTax (it says you don't need to, but it doesn't say you can't) and then not entering this in the Number of Copies to be Filed field so that you can then e-file? It would work, but would it cause other issues with the IRS?

[ronnierrl]

I think as long you remove the number of Form 3520 from Part IV of Form 8938, TurboTax will allow you to e-file. However, there is a check mark on Form 3520 to indicate whether you filed Form 8938. In other words, these two forms talk to each other, so I personally will not risk an inconsistent filing which could increase my audit risk. I will paper file my federal return to make sure it is correct and consistent. However, I will remove the number to trig the system to allow me to e-file my state return as Form 8938 is not reqired to be attached to my state.

[sean99]

Hi Dave - what if I leave the Number of Copied to be Filed to empty (or 0) for Form 3520 on Turbotax when I answer Foreign Financial Asset Already Reported question. Then I mail in my 1040 along with 3520 to IRS. Is there any inconsistency concerns? This is my first time file 3520. Print out over 100 pages of return form just because of 3520 is so inconvenient. Thanks 

[spsefton]

This is true. The wording on Form 3520 c) is "Check if any excepted specified foreign financial assets are reported on this form." with meaning that you haven't reported them on 8938. If you don't check c) but report them on both 3520 and 8938 too then I wonder if this is good enough? The duplicative reporting change was brought in to make life easier, but because TT can't get its act together is actually makes it harder!

[yihaow1229]

Hi,

I also need to file 3520 and I saw this topic. Seems like if you need to file both 8839 and 3520 then it will not be allowed to be efiled by TT? I am wondering if 3520 is the only form that I need to attach(actually mail), would it be applicable then(say no need to file 8839 as the value is always less than 10k in my oversea account), or will this still be risky as some said above these 2 forms are talking to each other.

[SusanY1]

If you aren't required to file the Form 8938 then you will be able to e-file without issue.   

The e-filing error only occurs when you are filling out form 8938 and you wish to indicate that you have reported an asset on 3520 rather than on 8938.  (Form 3520 is sent in separately from your tax return, to the Odgen, UT office.)

If your assets (in aggregate not per account) don't exceed the filing threshold for Form 8938, then you won't have this problem.  For Form 8938 whether or not you're required to file depends on where you live and your filing status:

Living within the United States

• Unmarried taxpayers (or married taxpayers filing separately) $50,000 on the last day of the year or $75,000 any day of the year
• Married taxpayers filing jointly $100,000 on the last day of the year or $150,000 any day of the year

Living outside of the United States (either with bona fide residence abroad or present in another country 330 days in a consecutive 12 month period)

• Unmarried taxpayers (or married taxpayers filing separately) $200,000 on the last day of the year or $30,000 on any day of the year
• Married taxpayers filing jointly $400,000 on the last day of the year or $600,000 on any day of the year

There shouldn't be any issues if, instead of indicating the number of assets which are ‌on the 3520, you duplicate the efforts by reporting the same account on both forms.  The ticker is meant to say "hey, this asset isn't on this form, it's on that one".  Reporting it on both should cause no problem aside from the obvious inconvenience of having to do so. 

TurboTax doesn't assist in preparing Form 3520 since it's not filed with your income tax return.  

@spsefton @sean99 @yihaow1229 @ronnierrl 

[ronnierrl]

I guess I can do a duplicative reporting by putting the same information on both the Form 8938 and Form 3520. However, I will need to uncheck the box on Form 3520 C - "Check if any excepted specified foreign financial assests are reported on this form" because there is no "excepted specified financial assets" in my case. That way, there is no inconsistency, but only duplicative efforts.

[Darenl]

Follow up - Form 3520 has mixed purposes:

1) to report transactions with foreign trust

2) to report receiving foreign gift in excess of $100K

I have to report 8938 as I worked abroad before and opened a salary account. This year I also have to report 3520 because I received a gift from foreign relative exceeding $100K. 

My understanding is that in TT's interview question "Foreign Financial Assets Already Reported" when generating for 8938, I should put 0 for form 3520, and thus I can still e-file. I also should uncheck the 3520 Item C, since I'm only reporting a received gift on 3520, and not a "excepted specified foreign financial assets". 

Is my understanding correct?

@SusanY1 

[SamLin]

I am in the same boat with you. That is my plan as well.  

> " I also should uncheck the 3520 Item C, since I'm only reporting a received gift on 3520, and not a "excepted specified foreign financial assets". 

in instruction https://www.irs.gov/instructions/i3520

Check the box in item C only if the Form 3520 filer also files Form 8938 for the same tax year and includes this form in the total number of Forms 3520 reported on line 15 of Part IV, Excepted Specified Foreign Financial Assets, of Form 8938.

so I think it means I don't have to includes this form in the total number of Forms 3520 reported on line 15, since I don't  Excepted Specified Foreign Financial Assets, of Form 8938.

Got this answer from Custom GPT, Tax AI CPA mode.

The purpose of Line 15 in Part IV, "Excepted Specified Foreign Financial Assets," of Form 8938, is to report the number of certain informational forms filed by the taxpayer that relate to specific foreign financial assets. These assets are excepted from detailed reporting on Form 8938 because they are reported elsewhere, but the IRS still requires acknowledgment of their reporting on other forms to ensure comprehensive compliance with foreign asset reporting requirements.

The forms that might be relevant here include:

• Form 3520, for transactions with foreign trusts and receipt of certain foreign gifts.
• Form 3520-A, relating to foreign trusts with a U.S. owner.
• Form 5471, for certain foreign corporations.
• Form 8621, for information about passive foreign investment companies (PFICs).
• Form 8865, for certain foreign partnerships.
• Form 8891, for U.S. individuals with certain foreign retirement plans, which is no longer required but was relevant in prior years.

By reporting the number of these forms on Line 15 of Part IV of Form 8938, the taxpayer is indicating to the IRS that although these specified foreign financial assets are not being detailed on Form 8938, they have been reported as required on other relevant forms. This helps the IRS track compliance with foreign asset reporting obligations across different forms and ensures that the taxpayer has adequately disclosed their foreign assets in accordance with U.S. tax laws.

The key takeaway is that Line 15 helps maintain transparency with the IRS about the reporting of foreign assets and avoids unnecessary duplication of information while still ensuring that all necessary disclosures are made.

[TAD-SAT]

Instead of paper snail mail, for tax year 2023 I plan on sending my completed Form 3520 to the IRS electronically, using the IRS Online Account I setup a couple of years ago.  Saved lots of time circa ~2021 since the IRS was backlogged with over 6 months of unopened mail, due to COVID.

[Darenl]

That's a life saver. @TAD-SAT  do you have some pointers to share? 

It's my first time trying to file 3520. But everywhere I googled, including TT's instruction, it says this form can't be filed electronically. 

[SusanY1]

While the IRS has an upload tool available inside of IRS accounts, it is only intended to be used to respond to specific correspondence from the IRS. 

There isn't an approved way to electronically file Form 3520 at this time. 

Uploading documents that aren't in response to IRS notices will result in them not being processed.  

@Darenl 

[hauker]

I'm in the same boat:   1st time 3520 / FBAR / 8938 due to 12/2023 inheritance from Europe (liquid assets & residence), but long time TT (H & B) filer ... and this situation has brought up the dreaded "... you'll need to print and file by mail ..." message to bear.   I understand that FBAR & 3520 are separate issues, but needing to file the ENTIRE 1040 via mail is more than a little annoying ...

In my pursuit for a solution, I found:

"If you are required to file a Form 8938 and you have a specified foreign financial asset reported on Form 3520, Form 3520-A, Form 5471, Form 8621, Form 8865, or Form 8891, you do not need to report the asset on Form 8938.  However, you must identify on Part IV of your Form 8938 which and how many of these form(s) report the specified foreign financial assets. "   (https://www.irs.gov/businesses/corporations/do-i-need-to-file-form-8938-statement-of-specified-forei...)

Based on that, I don't think "putting 0 for form 3520 when generating for 8938 in TT" as @Darenl put it is an option.   (@SusanY1 ?)

Has anyone figured out a way to do this "correctly" and still be able to efile the 1040 in TT? - (Again, the 3520 & FBAR are happening offline, and that's okay.)

[SusanY1]

There is no way to e-file at this time if there is an indicator on the line for Form 3520.  We don't anticipate that this will change for tax year 2023.

Leaving the reference to 3520 off only works if you duplicate the reporting of the asset on your 8938.  Normally, you avoid the extra steps by simply telling the IRS that asset X is not listed here (8398) because it's listed there (3520.) 

If you go that route you will efile your 1040, separately efile your FBAR/FinCEN 114 and mail in your 3520 (this form can't be e-filed).  

Otherwise, you will need to print and mail your 1040 with all attachments to the filing address listed in the TurboTax instructions, mail the 3520 to the Odgen, UT address listed in the instructions for Form 3520, and separately file your FBAR at the BSA website, here: BSA e-filing system.
 

@hauker 

[TAD-SAT]

Thank you Susan for your replies.  Form 3520 has to be mailed to the IRS - got it.  It's now 2024 and the IRS still hasn't entered the 21st century.  Long sigh ...