Tax
Form 3520: Reporting Gifts and Inheritances from Family Abroad
A gift or inheritance from a parent abroad is usually not taxable in the U.S., but above $100,000 it must be reported on Form 3520. The threshold, the aggregation rule, the 5%-per-month penalty, and how to fix a late filing.
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Is the Gift Taxable?
- No. A gift or bequest from a nonresident individual or a foreign estate is not income to the U.S. recipient, and the U.S. gift tax falls on donors, not recipients.
- What exists is a reporting rule under section 6039F: a U.S. person who receives more than $100,000 in a year from nonresident alien individuals or foreign estates files Form 3520, Part IV.
- Typical triggers: parents in India wiring money for a house down payment, an inheritance after a death in the family, or a share of the proceeds when parents sell property abroad.
- Gifts from foreign corporations or partnerships have a much lower, inflation-adjusted threshold and are reported separately on the same form.
- Money you transfer from your own foreign account to your own U.S. account is not a gift and is not reported on Form 3520; it belongs on your FBAR and Form 8938 if the thresholds are met.
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Educational content, not tax, legal, or accounting advice. Confirm with a CPA before acting.
Frequently asked questions
Is money my parents send me from India taxable in the U.S.?
No. A gift from a nonresident parent is not taxable income to you, and the U.S. gift tax applies to donors, not recipients. If the total you receive from nonresident relatives in a calendar year exceeds $100,000, you report it on Form 3520, which is an information return. No tax is due with it, but the penalty for filing late is 5% of the gift per month, up to 25%.
Does the $100,000 threshold apply per person or in total?
In total, across related donors and across the year. Gifts from your mother and father are aggregated because they are related to each other, and a $60,000 transfer in spring plus a $50,000 transfer in autumn is a single $110,000 total. Convert each gift to U.S. dollars at the exchange rate on the date it was received and keep the remittance confirmations.
What if I received a large gift a few years ago and never filed Form 3520?
File it now with a reasonable-cause statement attached. Since late 2024 the IRS reviews the statement before assessing a Part IV penalty instead of assessing automatically, and a well-documented explanation often avoids the penalty entirely. The statute of limitations on the gift reporting stays open until the form is filed, so waiting does not make the exposure go away.
Does a gift of property, such as a share of a flat in India, need to be reported?
Yes, if its fair market value pushes you over the threshold. Report it at fair market value in U.S. dollars on the date of the gift. Your basis in the property for a later sale is generally the donor's basis for gifts and the date-of-death value for inheritances, so keep the valuation and the original purchase records.
Does the new remittance tax apply to money my family sends me?
The 1% U.S. remittance excise tax that took effect January 1, 2026 applies to certain outbound transfers from the U.S. funded with cash, money orders, or similar instruments. Transfers funded from a U.S. bank account or a U.S.-issued debit or credit card are exempt, and money coming into the U.S. from abroad is not a remittance transfer under the rule.
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