Form 3520, and the two thresholds that are not the same number

Two thresholds, five times apart, and only one of them moves

A gift from your grandmother abroad and a gift from a company abroad are reported under the same form and tested against completely different numbers. From a nonresident alien individual or a foreign estate the threshold is $100,000. From a foreign corporation or partnership it is $20,573 for tax year 2026.

The second one is indexed for inflation and the first is not, which means the gap between them widens every year and any page stating a single figure for "gifts from foreign persons" is wrong about at least one of the two cases.

Both thresholds aggregate. Gifts from the donor and from persons you know or have reason to know are related to that donor are added together for the year. Two parents sending separate transfers are one aggregate, and a family splitting a gift across several relatives has not split the reporting.

What the Service says about the individual threshold

"you are required to report the receipt of such gifts or bequests only if the aggregate amount received from that nonresident alien or foreign estate, or foreign person that you know or have reason to know are related to the nonresident alien or foreign estate, exceeds $100,000 during the taxable year."

That is Gifts from foreign person, reporting threshold for a nonresident alien individual or foreign estate, IRC 6039F, from Gifts from foreign person, read on 2026-09-06. The sentence above is archived with a hash of its text as it stood that day, so a change at source shows up here rather than being absorbed silently.

The entity threshold, tax year by tax year

Because this one is indexed, the figure a reader needs is the one for the tax year the gift was received in, not the year they are filing in. The store holds three.

• The individual threshold across all three of those years was $100,000, unchanged, because it is not indexed. Set beside the table above, that is what a fixed threshold looks like next to a moving one.
• The tax year is the year the gift was received. Conflating it with the filing year is the single most common error in this subject and it puts a reader one row out of date by construction.

Reporting a gift is not paying tax on it

A gift from a foreign person is not income to the person receiving it, and Form 3520 does not compute a liability. It is an information return. The reason people find that hard to believe is that the penalty for not filing it is severe enough to look like a tax.

What the filing does is make the transfer visible. A large sum arriving from abroad that is never explained is the shape of a great many things, most of them not gifts, and the reporting regime exists so that a genuine gift can be distinguished from the rest without an examination.

The corollary matters for anyone who inherited from a relative abroad. A bequest is caught by the same threshold and the same form. Somebody who receives $150,000 from a parent's estate overseas owes no United States tax on it and has a filing obligation they usually do not know about.

The trust half of the form, which is the expensive half

Form 3520 also reports transactions with foreign trusts, and the penalties there are structured differently: the greater of $10,000 or a percentage of the gross value involved.

• Gross value, in every row. Not gain, not income, not the taxable portion. A transfer that produced nothing still carries 35% of what was transferred.
• The third row is charged to the United States owner for a failure by the trust. A foreign trustee who has never heard of Form 3520-A is not the person who pays.
• The word "initial" in the statute is doing work: further penalties accrue where the failure continues more than ninety days after the Service gives notice.

What the instructions say about the trust penalty

"35% of the gross value of any property transferred to a foreign trust for failure by a U.S. transferor to report the creation of or transfer to a foreign trust in Part I."

That is Instructions for Form 3520, Penalties, IRC 6677(a), Part I failure, from Instructions for Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, read on 2026-09-06. The sentence above is archived with a hash of its text as it stood that day, so a change at source shows up here rather than being absorbed silently.

What counts as a foreign trust is wider than it sounds

The word trust does most of the damage here, because a great many arrangements that nobody involved would call a trust are treated as one. Certain foreign pension and savings arrangements, certain investment structures and certain family holding vehicles have all been treated as foreign trusts for this purpose.

This site holds the thresholds and the penalty rates as rules and does not hold the definition, so this page does not enumerate what is in and what is out. That boundary is exactly the sort of thing that gets paraphrased into something confidently wrong, and a reader near it needs the instructions rather than a summary of them.

The practical advice that follows from the numbers rather than from the definition: where the arrangement might be a foreign trust and the value is substantial, the cost of asking is small against 35% of gross value.

Four cases where the obligation is missed

• An inheritance from a parent abroad of $250,000. No tax, a filing obligation, and almost nobody knows.
• Gifts of $60,000 each from two siblings abroad in the same year. Aggregated to $120,000, over the $100,000 threshold, where each on its own would be under it.
• A transfer of $25,573 from a family company abroad. Tested against the entity threshold of $20,573, not against $100,000, and over it by a margin most people would not think to check.
• A foreign retirement arrangement that turns out to be a foreign trust. The reporting obligation runs annually rather than once, and the penalty is measured on assets rather than on contributions.

How to check a figure you found somewhere else

The reason this subject is unreliable online is not that writers are careless. It is that the figures change annually, they are published in documents nobody reads for pleasure, and a page that was right when it was written stays online long after it stops being right. A page with no date on the figure is not making a claim you can check.

Three questions settle almost every case. First, which tax year does this apply to, and is that the year the income was earned or the year the return is filed? Second, what document set it, and does the page name the section rather than the website? Third, when was it read, and does the page say?

Applied to the Form 3520 thresholds, those three questions are answerable from this page: every figure names its tax year, its source document and section, and the date it was read, and the sentence it came from is archived with a hash so a change at source shows up rather than being absorbed silently.

That standard is not a courtesy. A calculator or a guide that quietly serves last year's figure produces an answer no reader can distinguish from the right one, which is worse than an obvious error and far harder to notice.

Where this sits alongside the calculators

Reporting obligations and tax liability are different questions and they are answered by different parts of this site. This page is about the Form 3520 thresholds: a threshold or an amount set by a document, which either applies to you or does not.

The calculators answer the other question. They take a gross salary in one of the jurisdictions this site models and compute what is actually deducted from it, band by band, with each rate carrying the rule behind it. Every one of those jurisdictions has been checked against the average tax rates the OECD publishes for a single person at three different incomes, and any jurisdiction that missed by more than half a percentage point is not published at all.

Somebody working abroad usually needs both. The domestic calculation tells you what the country you live in takes. Pages like this one tell you what your home country still wants to know about. Neither substitutes for the other, and a page that blurs them is the reason so many people abroad discover a reporting obligation years late.

What this site does not do

It does not give advice, and it does not model your situation. Everything here assumes a single person on employment income with no dependants and no reliefs beyond those stated, because that is the only shape that can be computed identically across jurisdictions and compared honestly.

It does not model treaty relief, foreign tax credits, remittance rules, self-employment, or the interaction between two countries taxing the same income. Those are real and they change answers, and each of them requires facts about you that a page cannot know.

What it does do is state the underlying figures accurately, with their sources, and compute the domestic position in each jurisdiction it covers. That is the input every adviser asks for first, and it is the part most often wrong on the pages that rank above this one.