Received a Gift from Overseas? Here's What to Know About U.S. Reporting
Updated: 5 days ago
A gift or inheritance from family abroad may be a welcome surprise. It can also raise a question that is easy to miss during tax season: Does the gift need to be reported to the IRS?
For U.S. recipients, the answer depends on who gave the gift, how much you received during the year, and whether the transfer was truly a gift.
When Does a Foreign Gift Need to Be Reported?
If you are a U.S. person, you may need to file Form 3520 when gifts or bequests from foreign sources exceed these thresholds:
More than $100,000 in a year from a nonresident individual or foreign estate. Gifts from related people may need to be added together.
More than $20,573 in 2026 from foreign corporations or partnerships, including certain related parties. This threshold changes annually.
What Counts as a Foreign Gift?
Foreign gifts can include money, real estate, investments, artwork, or other property. An inheritance from a foreign estate may also fall under the Form 3520 reporting rules.
The details of a transfer matter. For example, a payment described as a “gift” could have a different tax treatment if it came from a foreign business or was connected to services you provided. Money received from a foreign trust has its own Form 3520 rules. We can review how the transfer was made before determining what needs to be reported.
What Should You Keep for Your Records?
If you receive a gift from abroad, save any gift letter, transfer confirmation, estate document, or other explanation of where it came from. Record the date, amount, and donor, and keep valuation records for property such as real estate or investments. If you received several gifts during the year, track them together; related donors’ gifts may count toward the same threshold.
When is Form 3520 Due?
Form 3520 is filed separately from your income tax return. For most individuals with a calendar tax year, it is generally due April 15 following the year the gift was received. An applicable income tax filing extension can extend the Form 3520 deadline, generally no later than October 15. Different timing may apply to U.S. citizens or residents living abroad.
Missing a required filing can be costly: the potential penalty for failing to report a foreign gift is 5% of its value per month, up to 25%, unless reasonable cause applies.
Have you Received a Gift from Overseas?
Foreign gift reporting often connects with a larger cross-border tax picture. We can review the source and value of what you received, determine whether Form 3520 applies, help you gather the supporting information, and prepare the required filing as part of an agreed engagement. We can also assess whether holding the gifted assets creates separate reporting questions, such as foreign accounts or asset reporting.
Contact Boyd Shoker to discuss your situation.
This article is for general information. Reporting thresholds and requirements depends on the tax year and your circumstances.
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