Form 3520: Guide on reporting foreign trusts, inheritances, and gifts for US expats
Living abroad does not exempt US citizens from IRS reporting obligations involving foreign trusts and large foreign gifts. Form 3520 outlines what expats need to disclose and by what deadline to avoid harsh penalties. This guide covers the Form 3520 filing requirements for the 2026 filing season – tax year 2025 – so you can stay compliant.
TFX specializes in IRS Form 3520 for expats – learn more about our services or get in touch if you need filing help.
Key takeaways
- IRS tax form 3520 is an informational return – no tax is calculated on it, but missing it triggers penalties starting at $10,000
- The Form 3520 reporting threshold is $100,000 for gifts from foreign individuals or estates and $20,116 for gifts from foreign corporations or partnerships for tax year 2025
- Form 3520 must be paper-mailed to the IRS in Ogden, UT – electronic filing is not available
- Penalties can reach 35% of unreported trust transfers or distributions, and 25% of unreported foreign gifts
- The form is filed separately from your Form 1040 – it is not an attachment to your income tax return
What is IRS Form 3520
IRS Form 3520 is an information return that tells the IRS about certain money, property, and trust-related activity that crosses US borders. The IRS uses it to track non-US transfers, confirm ownership interests, and close reporting gaps that appear when assets move internationally.
A foreign trust Form 3520 classification is triggered whenever a trust fails one of two IRS tests:
- Court Test – A US court must be able to exercise primary supervision over the trust’s administration
- Control Test – One or more US persons must have the authority to control all substantial decisions of the trust
If a trust fails either test, the IRS classifies it as foreign. Form 3520 filing requirements generally arise when a US person has a reportable transaction with, ownership of, or distribution from a foreign trust, or receives a reportable foreign gift, unless an exception applies under the Form 3520 instructions or other IRS guidance.
As a result, some overseas family trusts and certain foreign pension or superannuation arrangements may have US reporting obligations, depending on how they are classified under US tax law and whether an exemption – such as relief available under Rev. Proc. 2020-17 or other IRS guidance – applies, even when they are not structured as formal trusts under local law.
Form 3520 vs. Form 3520-A – at a glance:
| Topic | Form 3520 | IRS Form 3520-A |
|---|---|---|
| Primary filer | US individual or estate executor | The foreign trust, signed by the trustee |
| Main purpose | Reports trust transactions, ownership, and large cross-border transfers | Provides annual trust information and required statements |
| Typical trigger | Transfers, distributions, or reportable gifts above thresholds | Ongoing US ownership of a foreign trust under IRC 671–679 |
| Deadline | Follows the taxpayer’s filing calendar – April 15 or June 15 for expats, October 15 final extension | 15th day of 3rd month after trust year-end |
| Penalties | $10,000 minimum – up to 35% of unreported transfers or 25% of unreported gifts | $10,000 or 5% of trust assets attributable to a US owner |
Missing either form can carry steep penalties, even when the underlying transaction is not taxable.
For more on trust reporting, see our guide to foreign trusts and IRS reporting obligations.
Who must file Form 3520?
The IRS requires Form 3520 whenever money or assets cross borders above certain thresholds. For tax year 2025, the triggers are:
- Foreign gifts from individuals or estates – Total gifts exceeding $100,000 during the year. Form 3520 foreign gift reporting applies even when the gift is not taxable.
- Gifts from foreign corporations or partnerships – Aggregate amounts exceeding $20,116 for tax year 2025
- Foreign trust ownership – If you are treated as the owner of a foreign trust under the grantor trust rules in IRC sections 671–679, you may have a Form 3520 filing obligation
- Transfers to a foreign trust – Moving cash, real estate, or other property into a trust outside the US
- Distributions from a foreign trust – Including cash, trust-paid expenses, rent-free use of trust property, and certain loans
- Responsible party for a reportable event – Setting up, restructuring, or changing ownership of a non-US trust
Form 3520 foreign inheritance reporting generally follows the same $100,000 threshold for gifts or bequests received from foreign individuals or foreign estates, subject to the aggregation rules in IRC §6039F and the Form 3520 instructions. Even when no US income tax is owed on an inheritance from a foreign estate, the transfer must still be disclosed if it exceeds this amount.
Tuition and medical exception – Under Section 2503(e), if a foreign relative pays tuition directly to a US educational institution or medical expenses directly to a healthcare provider on behalf of the expat, those payments are exempt and do not count toward the $100,000 reporting threshold.
The Form 3520 instructions also highlight special treatment for Canadian RRSPs and RRIFs under Rev. Proc. 2014-55. Some UK pension arrangements may qualify for relief depending on the specific plan and applicable IRS guidance, but the analysis is fact-specific and not all UK pensions are exempt from Form 3520 reporting.
For UK-specific guidance, see UK pension taxation for US expats.
Key components of Form 3520 – part by part
Each part of Form 3520 lines up with a specific type of cross-border event. Courts continue to scrutinize how these rules are enforced.
In Huang v. United States, a taxpayer who filed late Forms 3520 for foreign gifts argued reasonable cause based on reliance on tax software – the court allowed that argument to move forward, showing that reasonable-cause defenses for late Form 3520 filings are not automatically dismissed.
Part I – Transfers to foreign trusts
This part applies when a US person moves assets into a foreign trust, including transactions structured as loans or obligations.
What to report:
- Cash or property transferred to a foreign trust during the year
- Loans, notes, or obligations involving a foreign trust
- Trustee and beneficiary details tied to the transfer
Penalty for missing it: The greater of $10,000 or 35% of the value transferred.
Part II – US ownership of foreign trusts
What to report: Ownership status under the grantor trust rules, even when no money was paid out during the year. Ownership alone creates a filing duty.
If the trust fails to file IRS Form 3520-A: The US owner may need to submit a substitute filing to limit the 5% penalty tied to missing owner-level reporting.
Part III – Foreign trust distributions
This section captures any value a foreign trust provides during the year, whether paid directly or received indirectly. The IRS looks beyond cash and focuses on real economic benefit.
What to report:
- Cash or property distributions from a foreign trust
- Trust-paid personal expenses or credit card charges
- Rent-free use of trust-owned property or certain loans
Penalty for missing it: The greater of $10,000 or 35% of the gross distribution.
Beneficiary statement requirement – When receiving a distribution, ask the foreign trustee for a Foreign Grantor Trust Beneficiary Statement or a Foreign Nongrantor Trust Beneficiary Statement. Without this statement attached, the IRS applies the punitive default calculation method – often resulting in significantly higher income taxes and interest charges.
Part IV – Large foreign gifts received
What to report: Once gifts from foreign individuals or estates exceed the reporting threshold, the Form 3520 instructions require separate reporting of certain gifts over $5,000, subject to the IRS reporting rules and aggregation requirements. The IRS form to report foreign gifts above the threshold is Form 3520, Part IV.
Penalty for late filing: 5% of the gift’s value per month, capped at 25%.
Aggregation rule – Gifts from related parties must be combined. A typical Form 3520 inheritance example: you receive $60,000 from a foreign uncle and $50,000 from a foreign aunt who are related – combined $110,000, above the threshold, reportable.
Valuation – A common Form 3520 example involves inheriting property abroad. The Form 3520 description of property received field requires reporting the fair market value of the property received, as required by the Form 3520 instructions, using records that support the reported value.
No Form 3520 attachments are required beyond what the instructions specify – do not send appraisals or bank statements unless the instructions call for them. Keep them for at least three years in case of an audit, and attach any required statements or schedules described in the instructions for the applicable part of the form.
When and where to file Form 3520
For US expats, knowing the deadline and mailing process upfront helps avoid the most common compliance mistakes.
Deadlines
The IRS Form 3520 due date is usually April 15, 2026, for the 2025 tax year. Living abroad gives extra time until June 15, 2026, as long as a short statement is included with the filing.
For most taxpayers, a valid extension moves the deadline to October 15, 2026, though IRS disaster relief or other special filing relief may extend it further when applicable.
Mailing address
The IRS Form 3520 mailing address is: Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409. You can download the IRS Form 3520 PDF from IRS.gov, print it, sign it, and mail it.
How to file Form 3520
The IRS does not publish a fully completed sample Form 3520, but the official Form 3520 instructions provide detailed line-by-line filing guidance. The Form 3520 initial return and final return checkboxes on page 1 indicate whether this is your first or last filing for this trust or gift relationship. The Form 3520 signature and title fields must match the filer’s legal name and capacity – individual, executor, or trustee.
How to amend
If you made a mistake after mailing, print a new correct Form 3520, write “AMENDED” clearly across the top of page 1, and mail it to the same Ogden, UT address.
Late filing penalties
Penalties begin at $10,000 and may reach 35% of unreported trust transfers or distributions, or 5% per month up to 25% for unreported foreign gifts.
If the failure continues for more than 90 days after the IRS mails a notice, an additional $10,000 penalty applies for each 30-day period (or part of one) that the form remains unfiled, up to a total penalty equal to the gross reportable amount.
If you are behind on Form 3520 reporting, our Streamlined Filing Compliance service may provide penalty relief for eligible taxpayers who meet the program requirements, including the applicable non-willfulness standard
Consequences of non-compliance
Missing Form 3520, filing it late, or reporting it incorrectly can draw IRS attention and raise the chance of an audit. Penalties compound:
- Trust transfers and distributions – The greater of $10,000 or 35% of the gross value
- Foreign gifts – 5% of the gift’s value per month, up to 25%
- Continued non-filing after notice – If more than 90 days pass after an IRS notice, an additional $10,000 for each further 30-day period, capped at the gross reportable amount
Even when no tax is owed, non-compliance can slow down your return, trigger reviews of foreign assets, and make future filings under programs like the Streamlined Filing Compliance Procedures more difficult.
For background on IRS enforcement in this area, see Non-US trusts remain an IRS target.
Get expert assistance with your Form 3520 filing
For 2026 filings tied to 2025 activity, the IRS focuses heavily on how foreign gifts, inheritances, and trust relationships are described and documented – not just whether tax is owed. Our specialists at TFX handle the reporting carefully and help you stay compliant.
FAQ
Yes. Reporting is required if the aggregate value of gifts – including cash, property, or living support transferred directly to your account – from nonresident alien individuals like parents exceeds $100,000 during the tax year. Direct tuition payments made to a US educational institution on your behalf are exempt under Section 2503(e) and do not count toward the threshold.
There is generally no US federal income tax on inheritances received from nonresident aliens or foreign estates. However, if the inherited asset value exceeds $100,000, it must be reported on Form 3520. The IRS form to report a foreign inheritance is Form 3520, Part IV. Failing to report a tax-free inheritance can still trigger penalties of up to 25% of the asset’s value.
No to both. Form 3520 is a standalone informational return – entirely separate from your Form 1040. You cannot file Form 3520 online. It must be printed, signed, and paper-mailed to the IRS service center in Ogden, UT.
No. Form 3520 is not included in the standard e-filed Form 1040 package. Taxpayers generally must prepare it separately, print it, sign it, and mail it to the IRS. Taxpayers with foreign gift tax Form 3520 obligations or trust distributions should work with a professional expat tax firm to ensure accurate and compliant paper filing.
Late filing can result in significant penalties. However, penalties may be waived if you establish reasonable cause and show that the failure was not due to willful neglect. A reasonable cause statement should explain the specific facts: when you became aware of the obligation, what steps you took, and why the delay occurred. Working with a tax professional to draft this statement significantly improves the outcome.
Yes. Fill out a new Form 3520 with the corrected details, write “AMENDED” clearly across the top of page 1, and mail the physical copy to the IRS center in Ogden, UT at P.O. Box 409101.
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