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International tax · IRC §§ 6039F, 6048
Money or property received from parents or relatives outside the US is generally not taxable income, but large gifts and inheritances must be reported on Form 3520. Penalties for missing it can reach 25% of the gift.
Serving United States, Virginia, Washington, DC, Maryland.
What we handle
A US person who receives more than $100,000 in a year from a nonresident alien individual or foreign estate, counting gifts from related people together, must report it on Part IV of Form 3520. Lower, inflation-adjusted thresholds apply to gifts from foreign corporations and partnerships. The form is due with your income tax return, including extensions.
Transactions with foreign trusts, including distributions, loans and transfers, are reported on Form 3520, and foreign trusts with US owners must also file Form 3520-A. Gifts are generally not income under section 102, but income earned on gifted assets abroad, and some trust distributions, are taxable.
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Failure to report a foreign gift can cost 5% of the gift per month, up to 25%.
Foreign trust reporting failures can cost the greater of $10,000 or 35% of the gross reportable amount.
Gifts and inheritances are generally excluded from the recipient's income.
Penalties can be abated with a well-supported reasonable cause statement.
Our approach
A senior advisor reviews your facts and documents.
Scope, fees and timeline in an engagement letter.
Returns, elections and forms prepared and reviewed.
IRS contact and planning all year.
Questions
If your question isn't here, call (703) 880-8412 and you'll reach a person.
Generally no US income tax on the gift itself, but if gifts from your parents and other foreign relatives total more than $100,000 in the year, you must file Form 3520.
Nonresident aliens are generally not subject to US gift tax on gifts of foreign cash or property, though gifts of US real estate or tangible property located in the US can be.
The inheritance is reported on Form 3520 if above the threshold. If you later sell the property, the gain is taxable in the US, with credit for Indian tax paid.
File it as soon as possible with a reasonable cause statement. We help request abatement if the IRS assesses a penalty.
Latest updates
FinCEN issued a final rule revising BOI reporting. Business owners should confirm whether their entities still have a filing obligation.
Source: Federal Register
The IRS took down the page that described penalty relief for late FBARs when all income had been reported. Get advice on reasonable cause or the Streamlined procedures before filing late FBARs.
Source: EY Tax News
Related
Streamlined Domestic Offshore Procedures (SDOP), Streamlined Foreign Offshore Procedures, late FBAR and international information return filings, and voluntary disclosure support for foreign accounts and assets.
Learn moreHeadquartersAddress, local tax issues and the full range of services in Northern Virginia.
Learn moreUS tax returns for Americans and green card holders living abroad: the foreign earned income exclusion, foreign tax credit, FBAR and Form 8938, state residency and the Streamlined Foreign Offshore Procedures.
Learn moreNRIsStreamlined Domestic and Foreign Offshore Procedures for NRIs and expats with unreported Indian or other foreign accounts: NRE/NRO accounts, fixed deposits, mutual funds (PFIC), FBAR and Form 8938.
Learn moreInternational taxFBAR filing for US persons with foreign bank and financial accounts: who must file FinCEN Form 114, the $10,000 threshold, deadlines, penalties after Bittner v.
Learn moreInternational taxForm 8938 under FATCA (IRC 6038D): who must file, filing thresholds for residents and expats, how it differs from the FBAR, penalties and the extended statute of limitations.
Learn moreInternational taxForm 5471 for US owners, officers and directors of foreign corporations, including Indian private limited companies: filing categories, Subpart F and section 951A income, section 962 elections, penalties and Farhy.
Learn moreInternational taxForm 8865 for US persons with interests in foreign partnerships and LLPs: filing categories, contributions and transfers, penalties and how to fix missed years.
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