International Tax Attorney Houston
If you are a U.S. person who received foreign gifts of money or other property, you may need to report these gifts on Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. Form 3520 is an information return, not a tax return, because foreign gifts are not subject to income tax and it is due along with your Form 1040. Note: A gift to a U.S. person does not include amounts paid for qualified tuition or medical payments made on behalf of the U.S. person.
Here are some definitions before moving ahead:
Foreign gift: Money or other property received by a U.S. person from a foreign person that the recipient treats as a gift or bequest and excludes from gross income.
Foreign person: Nonresident alien individual or foreign corporation, partnership or estate.
There are two instances where you must file Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts:
- Gifts or bequests valued at more than $100,000 from a nonresident alien individual or foreign estate (including foreign persons related to that nonresident alien individual or foreign estate);
- Gifts valued at more than $13,258 (adjusted annually for inflation) from foreign corporations or foreign partnerships (including foreign persons related to the foreign corporations or foreign partnerships).
You must aggregate gifts received from related parties. For example, if you receive $60,000 from nonresident alien A and $50,000 from nonresident alien B, and you know or have reason to know they are related, you must report the gifts because the total is more than $100,000. Report them in Part IV of Form 3520. Treat gifts from foreign trusts as trust distributions you report in Part III of Form 3520.
International Tax Attorney Houston
