Foreign accounts & expats

Form 3520: reporting foreign gifts, inheritances & trusts

By the Tax Explorers team · Published July 5, 2026 · Last updated July 5, 2026

Form 3520 catches people off guard more than almost any other international filing, because the underlying transaction is often completely non-taxable — receiving a gift from a parent abroad, an inheritance from a relative overseas — and taxpayers reasonably assume there's nothing to report since there's no tax due. The form exists purely for informational purposes, but the IRS treats it seriously, and the penalty applies whether or not any tax was actually owed.

Who must file Form 3520

• A US person who received gifts or bequests from a foreign individual or estate exceeding $100,000 in a year
• A US person who received gifts from foreign corporations or partnerships exceeding a much lower threshold (adjusted periodically — confirm the current figure)
• A US person who created a foreign trust, or transferred property to one
• A US person who received a distribution from a foreign trust
• A US owner of a foreign trust under the "grantor trust" rules (who may also need the related Form 3520-A)

The gift itself usually isn't taxed — but the form is still required

This is the detail that trips people up most. Receiving a gift or inheritance from a foreign person is generally not taxable income to the US recipient. But Form 3520 is a reporting requirement, separate from the question of tax. Many taxpayers reasonably (and incorrectly) conclude that because nothing is owed, nothing needs to be filed. The penalty for not filing applies regardless of whether any tax was due on the underlying gift.

Foreign trusts are a different, more complex category

If you're a beneficiary or grantor connected to a foreign trust — including some foreign retirement or investment structures that the IRS treats as trusts even if they don't look like one in everyday terms — the reporting is more involved, and can include an additional annual form (3520-A) filed by the trust itself. This area has real complexity and is worth a direct conversation about your specific structure.

Frequently asked questions

My parents overseas sent me money as a gift. Do I owe tax on it?

Generally no — a genuine gift from a foreign individual isn't taxable income to the US recipient. But if it exceeds the threshold, Form 3520 is still required to report it, even though no tax is due.

What if I inherited foreign property, not cash?

The same reporting generally applies to non-cash gifts and inheritances (property, securities, etc.), valued at fair market value, once the threshold is crossed.

I missed filing Form 3520 in a prior year. What now?

There are procedures for addressing late or missed filings, and reasonable-cause relief is sometimes available given the form's history of catching taxpayers by surprise. The sooner it's addressed, the better the options tend to be.

Does a foreign retirement account count as a "foreign trust"?

Sometimes — this depends on the specific country and account structure, and it's one of the more commonly misunderstood areas of Form 3520. Worth a direct review of your specific account.

Is this the same as FBAR or FATCA?

No — different filing, different trigger. FBAR and FATCA report foreign accounts and assets you hold; Form 3520 reports gifts, inheritances, and foreign trust transactions. Many people with international ties owe more than one of these. See our FBAR vs FATCA guide for that comparison.

This page is general educational information, not legal or tax advice for your specific situation, and does not create a client relationship. Form 3520 thresholds, penalty amounts, and filing procedures change — verify against current official instructions or consult a qualified tax professional before acting.