US Taxpayers Must Report Foreign Gifts Received

If you receive over $100,000 a year in foreign gifts (given to you from an individual abroad who is not a US Citizen) or over $14,375 per year in gifts from foreign corporations, partnerships, etc. you must file Form 3520 in order to avoid a possible 25% penalty being imposed by the IRS.  If you fail to file this form when receiving such gifts you also risk the IRS later claiming the gift was taxable income and attempting to collect income taxes, penalties and interest for failing to report it on your US tax return.

This form is informational and does not cause you to pay any tax on the foreign gift.  You just list certain information about the gift and file.  Many fail to file this form thinking it will cause them problems, but the problem will only arise when you fail to file it. The 3520 is filed separately from your tax return but is due on the due date of your 1040. If you can show reasonable cause the penalty for not timely filing this return may be waived by the IRS.