A large gift or inheritance from family abroad usually arrives tax-free, but it can bring a filing duty with it. If you're a US citizen or resident and a parent, grandparent or other foreign person sends you more than the thresholds below, the IRS wants the transfer reported on Part IV of Form 3520. The form exists so the IRS can see large transfers from abroad; skipping it is what costs money, at up to a quarter of the gift. For the banking side of a transfer from abroad, see receiving money from abroad, and for transfers in general, the money transfer hub.
Who has to file Form 3520 for a gift from abroad?
The US recipient files, not the giver: any US person who receives foreign gifts or bequests above the reporting thresholds reports them in Part IV.
A US person, for this form, is a US citizen; a resident, such as a green-card holder or someone who meets the substantial presence test, including a dual resident who claims treaty benefits; a domestic partnership or corporation; a domestic trust; or an estate that isn't foreign. Charities exempt under section 501(c) don't report gifts this way.
The giver must be a foreign person: a nonresident alien individual, a foreign estate, or a foreign corporation or partnership. That rules out a US citizen who lives abroad, even one who sends money from a bank in London or Dubai; that giver may owe a Form 709 instead, as explained in gift tax on money sent abroad.
Some payments don't count as gifts for this purpose. Tuition or medical bills a foreign person pays directly to a school or care provider on your behalf are left out, and distributions from a foreign trust are reported in Part III under different rules.
What are the Form 3520 thresholds for foreign gifts?
There are two: one for gifts from foreign individuals and estates, and a much lower one for gifts from foreign corporations and partnerships.
- Individuals and estates: More than $100,000 in a tax year from a nonresident alien individual or foreign estate (IRS, as of Nov 1, 2026), counting gifts from anyone related to the donor
- Companies: $20,573 from foreign corporations or partnerships in 2026, also counting related donors; the figure rises with inflation and was $20,116 for 2025
| Donor group | Report once the year's gifts exceed | What to list |
|---|---|---|
| Nonresident alien individuals and foreign estates, with related donors added together | $100,000 | Each gift over $5,000, separately; if none is over $5,000, a statement saying so |
| Foreign corporations and partnerships, with related donors added together | $20,573 for 2026 | Every gift, with the identity of each donor |
The individual threshold isn't adjusted for inflation, while the company figure is. The company rule carries a warning: the IRS can recharacterize a purported gift from a foreign corporation or partnership as income, such as a dividend or pay. For any gift that goes unreported, the IRS can also decide its income tax treatment.
How do gifts from relatives add up?
You add together gifts from foreign donors who you know, or have reason to know, are related to each other, then compare the total with the threshold.
Related here means family under the tax code's attribution rules: brothers and sisters, including half-siblings, spouses, ancestors such as parents and grandparents, lineal descendants, and the spouses of all of these, plus entities those people control. What matters is the relationship between the donors, not between a donor and you. Money passed through a nominee or intermediary counts as a gift from the person behind it.
Worked example: Four ways family money from abroad can add up
- Mother sends $60,000 and father sends $50,000, both nonresident aliens: they're related, so $60,000 + $50,000 = $110,000, which is over $100,000; you file and list both gifts, since each is over $5,000
- Father sends $70,000 and his brother, your uncle, sends $40,000: brothers are related, so the total is $110,000 and you file
- Two family friends who aren't related to each other send $60,000 each: each is tested alone at $60,000, so there's no Form 3520
- Grandparents send 25 gifts of $4,500 over the year: 25 × $4,500 = $112,500, so you file, but because no single gift exceeds $5,000 you state that instead of itemizing them
The test runs by tax year, so gifts from the same donor group in one year are added together however many transfers they took, while a gift in December and another in January fall in different years.
When is Form 3520 due, and where do you send it?
It's due when your income tax return is, generally April 15, or June 15 if you live abroad, and October 15 at the latest if you extend your return.
For gifts received in 2026, that means April 15, 2027; June 15, 2027 if you live and work outside the US and Puerto Rico or are on military duty abroad, with a statement attached explaining why you qualify; or October 15, 2027 with an extension of your income tax return. Form 3520 can't be extended past October 15, even if you get extra time for your income tax return. It isn't attached to Form 1040; it goes in the mail on its own.
Total the year's gifts by donor group
Add up gifts and bequests from each nonresident alien or foreign estate together with anyone related to them, and separately total gifts from foreign corporations and partnerships with their related donors.
Compare each total with its threshold
If no group crosses its threshold, there is nothing to file for the gifts. Keep your records anyway, including the dates and amounts of gifts received in another currency.
Complete the identifying sections and Part IV
Fill in the identifying information at the top of the form, then line 54 for gifts from individuals and estates and line 55 for gifts from foreign corporations and partnerships. Answer line 56 if you think a donor was acting as a nominee or intermediary for someone else.
Show any extension
If you extended your income tax return, check the extension box and enter the form number of the extended return. If you're using the June 15 date for people abroad, attach the statement.
Mail it separately and keep proof
Send the form to Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409, and keep a copy along with proof of the date you mailed it.
What happens if you file Form 3520 late?
The penalty is 5% of the unreported gift for each month or part of a month it's late, capped at 25%, unless the IRS accepts reasonable cause.
Because the penalty is a percentage of the gift rather than of any tax, it can be enormous on a transfer that is otherwise tax-free. The Taxpayer Advocate reported that from 2018 to 2021, even people with income of $400,000 or less who were penalized for foreign-gift reporting faced an average penalty of over $235,000, and that the IRS went on to abate 67% of these penalties.
Two things help late filers now. In October 2024 the IRS ended its practice of assessing Part IV penalties automatically at the moment a late form arrives, a practice the Taxpayer Advocate had criticized for years. And its procedures for delinquent international information returns now say that a reasonable-cause statement attached to a late Form 3520 will be considered before any penalty is assessed. If the IRS hasn't contacted you and you aren't under examination or investigation, those procedures tell you to file the late form under its normal instructions.
Write "Reasonable Cause Statement attached" at the top of the first page and set out the facts: what happened, when you learned of the requirement and what you did next. The IRS looks for evidence that you acted responsibly before and after the failure, and that it came from circumstances beyond your control or other significant reasons. Whether a particular explanation is enough depends on the facts, which is where a tax professional earns their fee.
Worked example: A $300,000 inheritance from a parent in Canada, reported late
The form for 2026 was due April 15, 2027, and no extension was filed.
- Each month or part month costs $300,000 × 5% = $15,000
- Filed July 1, 2027: two full months plus part of a third, so 3 × 5% = 15%, or up to $45,000
- Filed August 16, 2027 or later: five months or more, so the 25% cap applies, up to $75,000
- Reasonable cause accepted: $0
- Income tax on the inheritance: none in any case, since an inheritance isn't income
Is a gift from abroad taxable income?
No: a gift, bequest or inheritance generally isn't income to you, though what it earns afterward, such as interest, dividends or rent, is taxable.
IRS Publication 525 lists gifts and inheritances among the amounts you don't include in income, and that holds whether the money comes from Toronto or Texas. The exceptions are about labels, not amounts. Money that is really pay for work, rent or business income is taxable whatever the sender calls it, and a gift from a foreign company may be recharacterized as income. Gifts of property, such as shares or real estate, also raise questions about your cost basis when you later sell, so keep whatever records the giver has of the original purchase price and date.
One genuine exception to the tax-free rule involves covered expatriates: former citizens and long-term green-card holders who met certain tests when they left the US. Gifts and bequests from them can carry a special tax for the US recipient under section 2801, reported on Form 708. On the giver's side, a parent abroad sending cash from a foreign account generally owes no US gift tax, and nonresidents who hold US investments can find their own rules through the invest-from-abroad hub.
Which other forms can a gift from abroad trigger?
Usually none, but keeping the money in an account abroad, receiving it from a foreign trust or getting it from a former US citizen brings in other forms.
| Situation | Form | What to know |
|---|---|---|
| The gift sits in your own account abroad, and your foreign accounts together exceed $10,000 at some point in the year | FinCEN Form 114 (FBAR) | Filed online with FinCEN, not the IRS; see FBAR explained |
| Your foreign financial assets are large | Form 8938 | Filed with your tax return; for a single filer living in the US, it starts at $50,000 on the last day of the year or $75,000 at any time |
| Money comes from a foreign trust | Form 3520, Part III | Separate rules, with a penalty of the greater of $10,000 or 35% of an unreported distribution |
| The giver is a covered expatriate | Form 708 | A section 2801 tax may apply to the recipient |
| A US-citizen relative abroad gives more than the annual exclusion | Form 709, filed by the giver | Nothing for you to file |
| The gift arrives by wire in your US bank account | None from you | Your bank may ask about the source of the funds |
If a gift arrives in another currency, convert it to dollars to see where you stand against the thresholds, and note the rate and date your bank actually applied. Money flowing the other way follows different rules: cash-funded transfers you send abroad carry the 1% remittance transfer tax, and the Remittance Rule gives you cancellation and error rights on them.
The thresholds and penalty rules here can change, and the company threshold moves every year. For a large inheritance, gifts of property or a form that's already late, a tax professional can check how the rules apply to you before you file.