As part of your U.S. tax compliance, understanding Form 3520 filing requirements is crucial, especially for U.S. persons with ties to foreign trusts, foreign gifts, or foreign estates.
This guide explains everything you need to know about Form 3520, from who must file it to how to stay compliant with IRS foreign trust reporting obligations and avoid international reporting penalties.
What Is Form 3520?
Form 3520, officially titled “Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts,” is used by U.S. persons to report transactions with foreign trusts and the receipt of certain foreign gifts.
The Internal Revenue Service (IRS) requires this form to ensure transparency in foreign assets, foreign trusts, and international transactions for income tax purposes. It also helps the IRS track money, property, or assets received from foreign persons, foreign corporations, foreign partnerships, or foreign estates.
Filing Form 3520 correctly ensures you remain compliant with U.S. tax purposes, particularly if you receive large foreign gifts or are connected to foreign trust distributions.
Learn more about foreign gift tax rules for U.S. citizens abroad.
What Is Form 3520 Used For?
Form 3520 serves two main reporting purposes:
1. Reporting an Interest in a Foreign Grantor Trust
If you are treated as the owner of any portion of a foreign grantor trust, you must file Form 3520 to report transactions and the trust’s assets. This includes direct or indirect distributions or use of trust assets for personal benefit.
Failing to report such interests can trigger late filing penalties and serious tax implications.
For a deeper explanation of foreign trusts, reporting rules, and penalties, see our guide on foreign trust reporting and tax rules for U.S. expats.
2. Reporting Foreign Gifts or Bequests
If you receive substantial foreign gifts or inheritance from a foreign estate, you must timely report foreign gifts using Form 3520. The IRS monitors certain foreign gifts exceeding the reporting thresholds to prevent false offshore disclosure submissions.
Who Must File Form 3520?
You must file Form 3520 if you meet any of these Form 3520 filing requirements:
- You are the responsible party for a reportable event involving a foreign trust, including:
- Creating a foreign trust.
- Transferring property or cash to a foreign trust, even through inheritance.
- The death of a U.S. person who owned or transferred assets to a foreign trust.
- You are a U.S. person treated as the owner of a foreign grantor trust for income tax purposes.
- You received:
- Over $100,000 from a nonresident alien individual or foreign estate as a foreign gift.
- More than the IRS threshold (currently $20,116 for 2025 ) from a foreign corporation or foreign partnership.
- You received a distribution from a foreign trust, or a foreign trust held an outstanding qualified obligation issued by you.
💡 Tip: If both spouses are beneficiaries or grantors of the same trust and file jointly, they may file a joint Form 3520.
Exemptions From Filing Form 3520
Some foreign transactions are exempt from Form 3520 filing requirements. Exemptions include:
- Transfers to certain foreign trusts described under sections 402(b), 404(a)(4), or 404A.
- Transfers of property at fair market value, except for specific qualified obligations or non-recognized gains.
- Canadian tax-deferred savings accounts, such as RRSPs and RRIFs (see Rev. Proc. 2014-55).
- RESPs and tax-favored foreign retirement trusts exempted under Rev. Proc. 2020-17.
- Foreign charitable trusts recognized under section 501(c)(3).
- Distributions already taxed as compensation for services rendered.
These exemptions reduce the need to file Form 3520 and help eliminate international reporting penalties.
When to File Form 3520
The Form 3520 filing deadline depends on your tax year:
- For most U.S. expats, it’s due June 15 (the 15th day of the sixth month after the end of your tax year).
- If you file for an income tax return extension, the Form 3520 deadline extends accordingly, up to October 15.
Where to file Form 3520:
Internal Revenue Service Center
P.O. Box 409101
Ogden, UT 84409
You must submit Form 3520 separately from your income tax return.
If you’re not sure where to start, our Form 3520 filing service can handle the entire process for you.
💡 We even file Form 3520-A for free when you choose to file Form 3520 with us.
How to File Form 3520
When you file Form 3520, include the following sections carefully:
- Part I – Identify the U.S. person and foreign trust.
- Part II – Report foreign gifts or bequests.
- Part III – Provide details about your foreign trust, including trust assets and trust distributions.
- Part IV – Executed statements by trustees or executors acknowledging their responsibilities.
It’s important to use your taxpayer identification number and list all principal and interest payments from qualified obligations.
Difference Between Form 3520 and Form 3520-A
Form 3520 is filed by U.S. persons to report transactions with foreign trusts and the receipt of foreign gifts.
In contrast, Form 3520-A is the Annual Information Return of Foreign Trust With a U.S. Owner, which provides the IRS with details about a foreign trust’s assets, income, and distributions that are treated as owned by a U.S. person.
If Form 3520-A is filed late or not filed at all, the IRS automatically assesses a $10,000 penalty per foreign trust under Internal Revenue Code §6677.
👉 For a full breakdown of filing deadlines, penalties, and what counts as a substitute Form 3520-A, read our complete guide: Form 3520-A Explained: The Ultimate Resource for U.S. Expats
Penalties for Late Filing Form 3520
Failure to file Form 3520 or incomplete filings can lead to heavy late filing penalties:
- 35% of the gross value of property transferred to a foreign trust.
- 35% of the gross value of any foreign trust distributions not reported.
- $10,000 automatic penalty if the foreign trust fails to file Form 3520-A.
Additional penalties may apply after 90 days if you don’t respond to an IRS notice. Demonstrating reasonable cause can help reduce these fines.
Why Seek Professional Help for Form 3520?
Because Form 3520 involves complex foreign trust reporting, foreign assets, and international tax rules, working with an experienced international tax preparer is highly recommended.
At 1040 Abroad, our board-certified tax specialists help U.S. expats understand Form 3520 filing requirements, handle foreign gifts, and eliminate international reporting penalties.
We charge a flat fee of $300 for preparing Form 3520 and provide free expat tax advice by email. Contact us to ensure you stay compliant, report transactions properly, and avoid late filing penalties.
Don’t risk untimely foreign reporting forms—hire offshore tax counsel today to simplify your compliance and protect your international finances.
