Reporting a Gift From Abroad | Kathryn Meyer Law PC

Often, yes, even though the gift itself is usually not taxable income. A U.S. person must file Form 3520 if gifts or bequests in a tax year total more than $100,000 from a nonresident alien or foreign estate, or more than $20,573 for 2026 ($20,116 for 2025) from foreign corporations or partnerships. The form is filed separately from your return, generally by April 15, and late filing can cost up to 25 percent of the gift.

Families receiving help from relatives overseas often learn about the form only after the deadline. Cross-border reporting is part of Kathryn Meyer's strategic tax counsel work, which includes fixing missed filings.

How foreign gift reporting works, step by step

Identify who gave the money or property. A "foreign person" includes a nonresident alien individual, a foreign corporation, partnership or estate, and a domestic trust treated as owned by a foreign person. Distributions from a foreign trust are reported differently, in Part III of Form 3520.
Add up the year's gifts by source. Gifts from people you know or have reason to know are related, or from someone acting as a go-between, are added together. Amounts paid directly for your qualified tuition or medical care are not counted.
Compare the total with the threshold for that kind of giver, shown in the table below.
Complete Part IV of Form 3520. For individual and estate givers, list each gift over $5,000. For corporate and partnership givers, list every gift and the identity of the donor.
Mail the form separately to the IRS address in Ogden, Utah, given in the instructions. It is not attached to your income tax return, and only a complete form, with all required attachments, counts as timely.
Check the other foreign reports. Money that stays in an account abroad can trigger an FBAR and Form 8938.

Reporting thresholds by type of giver

Who gave it	Report on Form 3520 when the year's total is	What to list
Nonresident alien individual or foreign estate (including related foreign persons)	More than $100,000	Each gift or bequest over $5,000
Foreign corporation or foreign partnership (including related foreign persons)	More than $20,116 for 2025; more than $20,573 for 2026 (adjusted each year)	Each gift and the donor's identity; the IRS may recharacterize the payment
Distribution from a foreign trust	Reported in Part III as a trust distribution, not as a gift	The distribution and trust details
Distribution from a domestic trust treated as owned by a foreign person	Counted as a gift from a foreign person in Part IV	As for individual givers
Tuition or medical bills paid directly for you	Not a foreign gift for this purpose	Nothing

The $100,000 figure comes from the IRS instructions and its guidance page; the corporate and partnership figure is the inflation-adjusted amount under IRC 6039F, published for 2026 in Rev. Proc. 2025-32. Gifts from a former U.S. citizen or green card holder who is a "covered expatriate" are subject to a separate tax on the recipient under section 2801 and may require Form 708.

Who counts as related matters for the totals. The instructions point to the relationships in sections 267 and 707(b), which include brothers and sisters, a spouse, parents and grandparents, children and grandchildren, and the spouses of any of them, as well as corporations more than 50 percent owned. Gifts routed through a nominee or intermediary are also added to the real giver's total.

When Form 3520 is due

For a calendar-year individual, Form 3520 is due on the 15th day of the fourth month after year end, generally April 15. U.S. citizens and residents who live and work outside the United States and Puerto Rico, or are on military duty there, have until June 15 and must attach a statement showing they qualify. An extension of your income tax return also extends Form 3520, but never past October 15, even if the IRS grants an additional two-month extension for the return. If you extended, check box 1k and enter the return's form number, so the form is not treated as late. When a due date falls on a Saturday, Sunday or legal holiday, the form is due the next business day.

For 2025 gifts, that means April 15, 2026, or October 15, 2026, if you extended your return. Gifts received in 2026 are reported in 2027.

What happens if you file late

Under IRC 6039F(c), if a required gift report is not filed on time, including extensions, two things can happen. The IRS may determine the income tax consequences of the receipt, and you owe a penalty of 5 percent of the gift for each month the failure continues, up to 25 percent. The penalty does not apply if the failure was due to reasonable cause and not willful neglect. The IRS also treats an incomplete or incorrect form as a failure.

The IRS's procedures for delinquent international information returns say to file late Forms 3520 under the form's own instructions, and that for Form 3520 a reasonable cause statement is considered before a penalty is assessed. Write "Reasonable Cause Statement attached" at the top of the first page. How the IRS weighs these explanations is covered in whether IRS penalties can be removed.

What changes the answer

Who the giver is. An individual or estate triggers the form above $100,000; a foreign corporation or partnership triggers it at a much lower amount (Form 3520 instructions; Rev. Proc. 2025-32).
Whether givers are related. Gifts from related foreign persons are added together, so two parents giving $60,000 each cross the line together (Form 3520 instructions, line 54).
Gift or something else. Only amounts you treat as gifts or bequests are foreign gifts, so pay for services is not reported this way. A foreign trust distribution goes in Part III, where the penalty is the greater of $10,000 or 35 percent of the distribution (Form 3520 instructions; IRC 6677).
Where you live. Living and working abroad moves the due date to June 15 (Form 3520 instructions).
Covered expatriate givers. Section 2801 can impose tax on the recipient (IRS gifts from foreign person page).
Income after the gift. The gift is excluded from income, but income the property later earns is not (IRC 102).

For example: two parents abroad help with a house

For example, imagine a U.S. citizen living in Virginia whose parents, both nonresident aliens living in Brazil, help her buy a home in 2026. Her mother sends $60,000 in March and her father sends $50,000 in September. Neither gift alone is over $100,000, but because the givers are related, the total of $110,000 is, so she must file Form 3520 Part IV for 2026 and list both gifts, since each is over $5,000. The form is due April 15, 2027, or October 15, 2027, if she extends her return. She does not report the $110,000 as income. If she instead had the money deposited first into an account in her own name in Brazil, that account could also require an FBAR for 2026. If she forgot the form and the failure continued for four months without reasonable cause, the penalty would be 20 percent of $110,000, or $22,000. This is a hypothetical, not a real case.

Common mistakes with gifts from abroad

Assuming no tax means no form. The gift may be tax-free, and the report can still be required.
Counting each parent separately. Related givers are added together for the $100,000 test.
Attaching Form 3520 to the tax return. It is mailed separately to Ogden, and e-filing the return does not file it.
Forgetting box 1k. Without it, an extended Form 3520 can be treated as filed late.
Treating a trust payment as a gift. A distribution from a foreign trust belongs in Part III, with different rules and larger penalties.
Overlooking the account the money passed through. An inherited account abroad, or one used to collect the gift, can create separate FBAR and Form 8938 duties.

What to do this week

List every amount received from abroad in 2025 and 2026, with dates, givers and how each giver is related to the others.
If 2025 gifts crossed a threshold and you extended your return, file Form 3520 by October 15, 2026.
Gather proof that each transfer was a gift or bequest: letters, estate papers, bank records.
Check any foreign account used for the money against the FBAR and Form 8938 rules.
If earlier years were missed, write down when and how you learned of the requirement, for a reasonable cause statement.
If the facts include unreported foreign income as well, review the IRS streamlined procedures for missed foreign reporting before filing anything.

Frequently asked questions

Do I owe tax on an inheritance from a relative abroad?

Generally not on the inheritance itself: IRC 102 excludes property received by gift, bequest or inheritance from gross income. Interest, dividends, rent or gains the property produces afterward are taxable, and a covered expatriate's gift or bequest can be subject to the section 2801 tax.

Is an inheritance reported the same way as a gift?

Yes. A bequest from a nonresident alien or a foreign estate is counted toward the same $100,000 threshold and reported in Part IV.

My spouse and I both received money from my parents. Do we each file?

The test applies to each U.S. person's receipts. The instructions allow a joint Form 3520 only in specific trust situations, so check how the gifts were made and to whom before deciding who files.

What if the IRS has already sent a penalty notice?

You can ask for abatement based on reasonable cause, and if that is denied, an appeal may be available. What happens at that stage is explained in what happens at an IRS Appeals conference.

I already paid a Form 3520 penalty. Is it too late to get it back?

A paid penalty can be the subject of a refund claim, but strict deadlines apply. They are set out in how long you have to claim a tax refund.

Can someone deal with the IRS about this for me?

Yes, with a signed power of attorney naming the form and years involved. How a tax attorney represents you before the IRS explains Form 2848.

Does a missing Form 3520 keep my tax return open for audit?

For the foreign trust parts of the form, yes: the instructions say the assessment period for related tax stays open until three years after the information is reported. That rule, in IRC 6501(c)(8), does not list section 6039F, the gift reporting rule, and the general periods are in how far back the IRS can audit.

Reporting a gift from abroad the right way

A late Form 3520 is usually a paperwork problem that should be handled before it becomes a penalty problem. Kathryn Meyer spent more than two decades in the IRS Office of Chief Counsel and can help you decide what must be reported, prepare a reasonable cause statement for missed years and respond to penalty notices. To discuss your situation, contact the firm or call (571) 560-8674.

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