Do I owe tax on a gift or inheritance from a foreign relative?

No — a foreign gift or inheritance is generally not taxable income to a U.S. recipient, but above the reporting thresholds it can still need to be reported on Form 3520. The thresholds differ for gifts from individuals versus foreign entities and can change, so confirm the current figures.

Is my foreign pension a 'foreign trust' I have to report?

It depends. Some foreign pensions and savings wrappers may be treated as foreign trusts, while certain tax-favored accounts can qualify for relief from Form 3520/3520-A reporting under IRS guidance. Because this is fact-specific and debated, confirm it for your situation.

I missed a Form 3520 in a prior year — what now?

Catch-up options exist, and reasonable-cause relief from penalties may be available depending on your facts. Atamatax provides preparation support; this is not legal advice.

Before treating an obligation as late, check ordinary extensions and any applicable postponement. IRS and FinCEN coverage must be verified separately. Read the current relief explainer or check your dates.

Topic · US expat tax

Form 3520 & 3520-A: Foreign Gifts, Inheritances & Trusts

When a U.S. person reports large foreign gifts or inheritances, how foreign trusts (including some foreign pensions) come into play, and why the penalties are unusually harsh.

By Danilson Ramos · Founder, Atamatax

Published June 2026 · Updated October 2026

Reviewed and approved by our EA/CPA team on November 10, 2026.

Direct answer

When is a foreign gift or inheritance reportable on Form 3520?

A US person files Form 3520 when, in one tax year, they receive more than $100,000 in gifts or bequests from a nonresident alien individual or a foreign estate, or more than the inflation-indexed §6039F amount in gifts from a foreign corporation or partnership — and whenever they transfer property to, or receive a distribution from, a foreign trust.

The gift itself is generally not income to the person who receives it; the form reports it. The $100,000 figure is fixed and adds together gifts from related foreign persons; the much lower figure for gifts from a foreign company or partnership is published each year with the IRS inflation adjustments.

Applies when: US citizens and residents receiving money or property from abroad, and US owners or beneficiaries of foreign trusts.
Underlying rule: IRC §6039F for foreign gifts and §6048 for foreign trusts. Form 3520-A is the foreign trust's own annual return when it has a US owner.
Gifts from a foreign individual or estate: More than $100,000 in the year
What remains uncertain: Whether a foreign pension, a savings wrapper or a foundation is a foreign trust for US purposes depends on its terms and is often unsettled.

Primary source: About Form 3520 — Annual Return To Report Transactions With Foreign Trusts

What changes the answer

The money came from a foreign company or partnership: the much lower indexed threshold applies.
The gift came from, or through, a foreign trust: Form 3520 applies whatever the amount.
Several gifts came from related foreign persons: they are added together toward the $100,000.

Next step: Check whether my gift or inheritance is reportable

Form 3520 is an information return for U.S. persons who receive certain large foreign gifts or inheritances, or who have dealings with a foreign trust. A related form, Form 3520-A, is the annual information return of a foreign trust with a U.S. owner. Neither is a tax bill by itself — they're reporting — but missing them can be costly.

Which form, and roughly when

It helps to separate the situations the 3520 family covers, since the trigger and threshold differ for each:

Situation	Form	Rough threshold / trigger
Gift/bequest from a foreign individual or estate	Form 3520	More than $100,000 in the year, in aggregate (a fixed figure, not inflation-adjusted)
Gift from a foreign corporation or partnership	Form 3520	A much lower threshold — about $20,000 in recent years, indexed every year
Transfers to / distributions from a foreign trust	Form 3520	Generally reportable regardless of amount
Foreign trust with a U.S. owner	Form 3520-A	Annual trust information return (often the U.S. owner ensures it's filed)

Confirm the current-year figure before relying on it — the threshold for gifts from a foreign company or partnership is adjusted every year, and it is far lower than the fixed $100,000 for gifts from individuals. Receiving a foreign gift or inheritance is generally not taxable income to a U.S. recipient, but it can still be reportable, and the penalty risk usually comes from the missed reporting, not from tax owed.

Foreign trusts — and the surprises

Transfers to, ownership of, and distributions from a foreign trust can trigger Form 3520 (and Form 3520-A for the trust). The trap for expats is that some non-U.S. retirement and savings arrangements — certain foreign pensions, and wrappers like a Canadian TFSA or an RESP — may be treated as foreign trusts for U.S. purposes. Whether a particular arrangement is a trust is fact-specific and sometimes debated.

Distributions from a foreign trust to a U.S. beneficiary.
Being treated as the U.S. owner of a foreign trust (grantor-trust rules).
Some foreign pension or savings wrappers that may be characterized as trusts.

Note: certain tax-favored foreign retirement and savings accounts can qualify for relief from Form 3520/3520-A reporting under IRS guidance. Eligibility is specific, so it's worth confirming rather than assuming either way.

If you think a 3520 may apply

Identify the source — was it a foreign individual/estate, a foreign entity, or a trust? That sets the threshold and form.
Total the amounts received in the year (aggregating related gifts) and compare to the relevant threshold.
Characterise any pension or savings wrapper — check whether it's a trust for U.S. purposes and whether tax-favored-account relief applies.
File Form 3520 (and ensure 3520-A where a foreign trust has a U.S. owner) by the applicable deadline.

Why the penalties matter

Form 3520 penalties are unusually steep — for unreported foreign gifts they can run as a percentage of the gift per month, and trust-related penalties can be a significant percentage of the amounts involved. Reasonable-cause relief may apply in some cases, but the exposure is large enough that careful, timely reporting is generally the safer path.

Received a large foreign gift or hold a foreign pension/trust?

The free Tax Risk Check helps you think through whether Form 3520 or 3520-A reporting is likely in play. Atamatax provides preparation support; this is not individualized tax or legal advice.

Start free tax risk check

Run the free scan

Authorities cited

IRS Form 3520 — About Form 3520 — Annual Return To Report Transactions With Foreign Trusts
IRC §6048 — IRC §6048 — Information reporting for foreign trusts (Forms 3520 / 3520-A)
IRS annual inflation adjustments — IRS annual inflation adjustments (Rev. Proc.) — indexed limits/thresholds; verify per tax year

Primary sources (Cornell Legal Information Institute for the US Code and CFR; IRS.gov for forms, procedures, and treaty documents). This page is general information, not individualized tax or legal advice.

Atamatax provides tax preparation support and educational resources. This website does not constitute legal or tax advice.

Frequently asked questions

Do I owe tax on a gift or inheritance from a foreign relative?#: No — a foreign gift or inheritance is generally not taxable income to a U.S. recipient, but above the reporting thresholds it can still need to be reported on Form 3520. The thresholds differ for gifts from individuals versus foreign entities and can change, so confirm the current figures.
Is my foreign pension a 'foreign trust' I have to report?#: It depends. Some foreign pensions and savings wrappers may be treated as foreign trusts, while certain tax-favored accounts can qualify for relief from Form 3520/3520-A reporting under IRS guidance. Because this is fact-specific and debated, confirm it for your situation.
I missed a Form 3520 in a prior year — what now?#: Catch-up options exist, and reasonable-cause relief from penalties may be available depending on your facts. Atamatax provides preparation support; this is not legal advice.

Related guides

Preparation · price before you start

If you want the trust or gift reporting prepared

Which route fits depends on a few facts, not on the balances. These are the common situations and the route the same rules give each one. Nothing is charged until you generate a package or accept a written quote.

Your returns are up to date and a foreign trust is involved
Confirm the scope before choosing a package · Free to ask
A foreign trust brings Form 3520, and often Form 3520-A, and whether a structure is a trust for US purposes, who is treated as its owner and how distributions are taxed need a specialist's judgment. Atamatax scopes the case and routes it to a qualified professional; the personal return and its package are their starting point.
What arrives, who prepares and checks it, and who files
Free to ask. A person reads the facts and says whether Atamatax can take the case, and which route it would be.
A person at Atamatax reads the facts before any route is offered.
See whether Atamatax can take the case
You received a gift or inheritance from abroad and are not sure it is reportable
Confirm the scope before choosing a package · Free to ask
A foreign gift or inheritance may be reportable, but donor type, aggregation, trust involvement, and the tax-year threshold need review first.
See whether Atamatax can take the case
Returns, FBARs or Forms 3520 are missing for earlier years
Streamlined Complex · From $2,990 · Done-with-you case preparation, scoped first
Several unfiled years plus a foreign company, a trust or a large fund portfolio is the hand-scoped tier: the scope is set before any price is quoted, and a company or trust return is prepared by a specialist alongside the personal returns.
What arrives, who prepares and checks it, and who files
A Streamlined Foreign Offshore preparation package: up to three delinquent returns and six FBAR years as worksheets mapped to each year's official forms (official pre-filled PDFs only for tax year 2025), a document completeness check, the Form 14653 organiser, and filing instructions — one scoped quote, one payment.
A CPA or Enrolled Agent from the Atamatax team, assigned according to your case (its forms, countries and complexity), prepares the three returns, the six FBAR years and the Form 14653 organiser from your documents, against the written scope, with the engine computing the figures, and signs as paid preparer. They are named on your case once they accept. If no professional has been assigned 7 days after payment, you choose between waiting and a full refund. You write your own statement of facts.
The CPA or Enrolled Agent assigned to your case reviews and answers for the work they sign; a person at Atamatax checks the file is complete before it reaches you.
You mail the returns to the IRS as the Streamlined instructions direct, and file the FBARs on FinCEN's BSA E-Filing System. Atamatax transmits nothing to the IRS or FinCEN.
Get a scoped quote

When a professional's judgment is needed. Whether a structure is a trust for US purposes, who is treated as its owner, how a distribution is taxed, and whether gifts from related foreign persons add up past a threshold depend on documents and relationships. That is a qualified professional's work, under their own engagement letter; Atamatax scopes the case and prepares the personal side.

In every route the signatures and the filing stay with you or the accountant you choose; nothing is filed on your behalf. Written questions to hello@atamatax.com reach a person — we aim to reply within one business day. Who does what in each route.

Your next step · free

Does your foreign company need a US information return?

Ownership share, entity type and what it earns in; whether Form 5471, Form 8858 or a GILTI computation is in play, and what would settle it. Free, no account.

Check my company's US filings Run the free scan