Gifts from a Foreign Person/Non-Resident Alien

Gifts from a Foreign Person/Non-Resident Alien

QUESTION: I received a gift of $50,000 from a relative in another country (Foreign Relative). It is the only foreign transfer I received in 2022. Do I need to file form 3520?

ANSWER: You did not explain the reason for the gift, however such transfers based on your facts are technically considered foreign gifts. There’s no requirement to file informational 3520 form, unless the transfer exceeds $100,000.

In summary, there’s no reporting requirement here. However, if you received more than $100,000 from a non-US person or foreign person, then you will have to report it, unless it is taxable income.

Taxable income is reported on the form 1040; whereas foreign gifts are generally reported on the form 3520.

This instructions on form 3520 makes this requirement clear enough, see the quote below.

You must file form 3520 if:

You are a U.S. person who, during the current tax year, received either:

  1. More than $100,000 from a nonresident alien individual or a foreign estate (including foreign persons related to that nonresident alien individual or foreign estate) that you treated as gifts or bequests; or
  2. More than $15,358 from foreign corporations or foreign partnerships (including foreign persons related to such foreign corporations or foreign partnerships) that you treated as gifts.

Because you received $50,000  from an individual who is a foreign person, and where such gift did not exceed $100,000,  you are not required to file form 3520.

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***Disclaimer: I am a tax accountant and a CPA licensed in Massachusetts , but I am not your accountant or advocate (Unless you have signed up to my services). This communication is not intended as tax advice, and no tax accountant -client relationship results**

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