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Do I need to file 3520 form?

Forum|Forum|7 years ago
June 1, 2019
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I am a permanent resident in US. In 2016, I received 50,000 dollars from 5 people, totally 250,000, as gift. These 5 people are in China and none if them are US citizen. They are not related with each other. All of them are my friends. They don't know each other.

Since the form 3520 requires US person received more than 100,000 from a nonresident alien individual report, do I have to file it if I received 50,000 from each 5 different nonresident alien individuals?

Thanks

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Best answer by GeoffreyG

That's a good question you ask. I did some tax research on it it for you. The answer I reached is that the IRS rules for the Form 3520 filing threshold only require that such a disclosure is required where the annual "gift" total received is greater than $100,000 from a single nonresident alien individual, or $100,000 in total from persons related to each other. In other words, if the foreign persons who each gave you $50,000 are not related to one another (by blood or marriage), then there is no legal requirement to file IRS Form 3520.

That said, there is another potential element to consider. As long as these gifts were transferred to you in the United States, and the funds are held with a United States-based bank or other financial institution, then you have no additional foreign account disclosure requirements either.

However, if you keep these funds in an overseas account, or if you own a bank account or maintain other financial assets in a foreign country (that includes China as well as elsewhere), then there are certain foreign financial account reporting requirements that you must meet annually, in addition to filing a primary tax return (Form 1040, etc.), and aside from Form 3520 considerations.

In fact, there are two separate disclosure forms that may be required; each also has different reporting rules. One is known as IRS Form 8938, and can be attached to the relevant yearly Form 1040 tax return. The other is FinCen Form 114, which can only be filed via the internet. The following Internal Revenue Service webpage describes them in some detail, and provides their dollar value reporting levels:

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

If you are not already familiar with the foreign financial account disclosure rules (which apply to US citizens, as well as resident aliens), then you are respectfully encouraged to learn more about them, as the US Internal Revenue Service has become increasingly vigilant in enforcing these offshore financial account rules in recent years.

Thank you for asking this question.

G

GeoffreyGAnswer

Employee

That's a good question you ask. I did some tax research on it it for you. The answer I reached is that the IRS rules for the Form 3520 filing threshold only require that such a disclosure is required where the annual "gift" total received is greater than $100,000 from a single nonresident alien individual, or $100,000 in total from persons related to each other. In other words, if the foreign persons who each gave you $50,000 are not related to one another (by blood or marriage), then there is no legal requirement to file IRS Form 3520.

That said, there is another potential element to consider. As long as these gifts were transferred to you in the United States, and the funds are held with a United States-based bank or other financial institution, then you have no additional foreign account disclosure requirements either.

However, if you keep these funds in an overseas account, or if you own a bank account or maintain other financial assets in a foreign country (that includes China as well as elsewhere), then there are certain foreign financial account reporting requirements that you must meet annually, in addition to filing a primary tax return (Form 1040, etc.), and aside from Form 3520 considerations.

In fact, there are two separate disclosure forms that may be required; each also has different reporting rules. One is known as IRS Form 8938, and can be attached to the relevant yearly Form 1040 tax return. The other is FinCen Form 114, which can only be filed via the internet. The following Internal Revenue Service webpage describes them in some detail, and provides their dollar value reporting levels:

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

If you are not already familiar with the foreign financial account disclosure rules (which apply to US citizens, as well as resident aliens), then you are respectfully encouraged to learn more about them, as the US Internal Revenue Service has become increasingly vigilant in enforcing these offshore financial account rules in recent years.

Thank you for asking this question.