Foreign Gift
Foreign Gifts & IRS Form 3520: $100k Rule, Deadline, and Penalties
It’s common to receive family help from overseas for a down payment or big life events. If you’re a U.S. tax resident and receive a large foreign gift, specific reporting rules may apply.
Quick Answer
- Report foreign gifts if total exceeds the $100,000 threshold in a tax year.
- File Form 3520 by your individual return due date (extensions generally apply).
- Penalties can be substantial if required reporting is missed.
When a U.S. person receives a large gift from a foreign source, it can trigger significant tax reporting obligations, even if the gift itself isn’t taxable. If you don't know whether the person who gives you the gift is a nonresident alien for tax purposes, you probably will need to check with them. How to determine someone's U.S. tax residency?
The $100,000 Reporting Threshold (Who Must File)
If you receive gifts from a nonresident alien individual or a foreign estate that exceed $100,000 during the tax year, you are generally required to file Form 3520 to report those gifts.
Form 3520 Deadline (and Extensions)
Form 3520 is typically due with your individual income tax return due date—even though it’s filed separately. If you extend your Form 1040, your Form 3520 due date is generally extended as well.
Penalties for Not Filing
Failing to file Form 3520 when required can result in substantial penalties. Filing on time and accurately can help avoid unnecessary costs and IRS correspondence.
Not Everything Counts as a Gift
Qualified tuition paid directly to a school and most medical payments paid directly to a provider are typically excluded from gift calculations.
Aggregation Rule (Related Donors & Nominees)
To determine if you cross the $100,000 threshold, you may need to aggregate amounts from related foreign persons and nominees/intermediaries.
Unsure about your filing requirements?
Let Copper River Tax help. We work with many clients who receive overseas family support and regularly prepare Form 3520.
Frequently Asked Questions
Do transfers from my foreign parents to help with a home down payment count as gifts?
Yes—family support is typically treated as a gift unless it’s a bona fide loan. If total gifts from foreign individuals/estates exceed $100,000 in the tax year, Form 3520 reporting may be required.
Need more help? Contact usIf multiple relatives send smaller amounts, do I aggregate them?
Often yes. If you know or have reason to know they’re related or acting as nominees, the amounts may need to be aggregated to test the $100,000 threshold.
Need more help? Contact usDo direct tuition or medical payments count toward the threshold?
Generally no, when paid directly to the school or medical provider. These are commonly excluded from gift calculations.
Need more help? Contact usDoes an extension of my Form 1040 extend Form 3520?
Generally yes—the Form 3520 due date is typically tied to your individual return due date, and an extension usually extends the Form 3520 deadline as well.
Need more help? Contact usDisclaimer: The information provided in this article is for general informational purposes only and should not be considered tax, legal, or financial advice. Tax laws and regulations are subject to change, and individual circumstances may vary. Always consult a qualified tax professional for specific guidance regarding your tax situation. Copper River Tax is not responsible for any errors, omissions, or reliance on the information presented.