US persons receiving large gifts from foreign persons must report on IRS Form 3520. Threshold: $100,000+ from foreign individuals/estates, or $18,567+ (2025) from foreign corporations/partnerships.
10 steps across 2 sections
1. Steps Process
- Determine if reporting required — Gifts from foreign persons exceeding thresholds.
- Track all foreign gifts — Include cash, property, in-kind. Aggregate related persons' gifts.
- Determine fair market value of property gifts.
- File Form 3520 — Separate return, due with your tax return (including extensions).
- Keep records of donor info, dates, amounts.
2. Key Details
- Foreign gifts are NOT subject to US income/gift tax
- Form 3520 is information reporting only
- Penalty for failure: 25% of gift value (automatic and severe)
- Foreign inheritance also reportable if exceeds threshold
- Streamlined Filing may help if non-willful failure
Pro Tips
- File even if late — penalty is worse for non-filing
- Keep all documentation indefinitely
- Consult tax professional about penalty abatement if late