Forms 3520 and 3520-A: Foreign Trusts and Large Foreign Gifts

Forms 3520 and 3520-A are the information returns for two situations that surprise newcomers: receiving a large gift or inheritance from someone abroad, and having a connection to a foreign trust. A parent in Hyderabad who wires you money for a down payment in Naperville, or a Canadian trust set up by a grandparent, can create a filing duty even when no tax is owed. Form 3520 is filed by the US person. Form 3520-A is the annual statement of the foreign trust itself, filed by the trust or, if it fails to, as a substitute attached to the US owner's Form 3520.

Who must file Forms 3520 and 3520-A?

A US person (citizen, resident, domestic entity or an executor of a US decedent's estate) files Form 3520 if one or more of these apply:

1. Part I: you are the responsible party for a reportable event with a foreign trust, or you transferred property to a related foreign trust in exchange for an obligation.
2. Part II: you are treated as the owner of any part of a foreign trust under the grantor trust rules. You complete this part even if there were no transactions.
3. Part III: you received a distribution from a foreign trust, or a loan of cash or marketable securities from it, or the uncompensated use of trust property.
4. Part IV: you received large gifts or bequests from foreign persons.

The foreign trust files Form 3520-A for each year in which it has a US owner. If it does not, you must attach a substitute Form 3520-A to your Form 3520.

What counts as a foreign gift?

A foreign gift is an amount received from a foreign person (a nonresident alien individual, foreign corporation, foreign partnership or foreign estate) that you treat as a gift or bequest and exclude from income. Qualified tuition or medical payments made directly on your behalf are not foreign gifts. You report if the total from a nonresident alien or foreign estate, aggregated with related persons, exceeds $100,000 in the year, and you then separately identify each gift above $5,000. If you receive "gifts" from a foreign company or partnership, the IRS may recharacterize them, and the lower threshold applies.

Exceptions that matter for India and Canada

• Canadian RRSPs and RRIFs: the Form 3520 instructions exclude transfers to, ownership of and distributions from these plans, per Rev. Proc. 2014-55.
• Tax-favored foreign retirement and non-retirement savings trusts: eligible individuals are exempt from Form 3520 and 3520-A under Rev. Proc. 2020-17 and, for years ending after May 8, 2024, may rely on proposed regulations if they apply them in full. The relief covers trust information reporting only, not income tax.
• Canadian RESP: often fits the non-retirement savings category, subject to the revenue procedure's tests.
• Canadian TFSA: the revenue procedure's tests, such as earned-income contributions and retirement-age or purpose-limited withdrawals, do not obviously describe a TFSA, so we analyse each TFSA on its facts before concluding.
• Indian EPF, PPF and NPS: no IRS guidance; we review the structure.
• Fair market value transfers and certain compensatory trusts are also outside Form 3520 in most cases.

See our foreign retirement and savings guide and the RRSP, TFSA and RESP guide.

Filing Forms 3520 and 3520-A step by step

1. Identify the event: a gift, a transfer to a trust, ownership of a trust, or a distribution or loan from a trust.
2. Aggregate by donor family. Add all gifts for the calendar year from the donor and anyone you know or have reason to know is related to them, then compare to $100,000.
3. Gather details: each donor's name, address, country, relationship, date, a description of the property and its fair market value.
4. Check the exceptions above, including direct tuition and medical payments.
5. Complete the right parts of Form 3520. For a trust you own, also obtain Form 3520-A and the Foreign Grantor Trust Owner and Beneficiary Statements from the trustee, or prepare a substitute.
6. Sign and mail to the IRS Service Center in Ogden, Utah, address in the instructions. E-signatures are accepted. A preparer signs and includes a PTIN.
7. Report related items: an FBAR and Form 8938 if the trust holds foreign accounts or you hold a trust interest, and income on your return.
8. Keep records of the gift transfer: bank wire, foreign bank statements, gift deed.

Documents you need

• Wire confirmations, bank statements and a gift letter from the donor
• Donor's passport details and relationship proof
• Trust deed, trustee contact details and annual statements for any foreign trust
• Valuation reports for non-cash property
• Prior-year Forms 3520 or 3520-A

Deadlines and penalties

The discretionary two-month extension for taxpayers abroad does not extend Form 3520 beyond October 15.

Additional penalties begin if the failure continues for more than 90 days after an IRS notice. Penalties are waived for reasonable cause, but a foreign law or trust instrument that blocks disclosure is not reasonable cause. A late Form 3520 also keeps the assessment period open until 3 years after the information is reported. See IRS foreign reporting penalties.

Country and Illinois notes

Illinois has no state version of Form 3520. IDOR says inheritance and estate tax questions go to the Illinois Attorney General.

Worked examples

Rajiv, Aurora, green card holder. His parents in Hyderabad transfer $140,000 in 2025 toward a home. The total is above $100,000, so he files Form 3520 Part IV and identifies each gift of more than $5,000 separately. If he files three months late, the penalty exposure is 15% of $140,000, or $21,000, subject to reasonable cause. He pays no income tax on the gift.

Priya, Mississauga to Aurora. Her father sends $60,000 for a car. It is below $100,000, so no Form 3520 is needed. If he also pays her university tuition directly to the school, that amount is not a foreign gift.

Mistakes to avoid

• Missing the aggregation of related donors.
• Attaching Form 3520 to Form 1040 instead of mailing it separately.
• Assuming a gift is "tax free, so no filing."
• Ignoring a foreign trust that benefits you because you never received money.
• Forgetting that a trust you own also needs Form 3520-A.

How we can help

Our Aurora, Illinois firm determines whether a gift or trust creates a Form 3520 or 3520-A duty, prepares the forms and coordinates the FBAR and Form 8938. We work with your Indian CA or Canadian CPA and trustee. See our foreign account and asset reporting service. We do not give legal advice on trust structures.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.