As an individual with relatives or friends overseas, you should be aware of an information reporting requirement that applies to certain large gifts or bequests from foreign persons.
If you, while a U.S. citizen or resident, received during the tax year either (1) more than $100,000 from a nonresident alien or a foreign estate, or (2) more than $10,000 (indexed for inflation to $16,388 for 2019) from foreign corporations or foreign partnerships, and you treated those amounts as gifts or bequests, you must report information relating to those gifts on Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. Form 3520 is due on the date your federal income tax return is due, including extensions.
Failing to report such foreign gifts will subject you to a penalty equal to 5 percent of the amount of the foreign gift for each month for which the failure to report continues (not to exceed a total of 25 percent). No penalty will be imposed if you can demonstrate that the failure to comply was due to reasonable cause and not willful neglect.
Please call me at your convenience so that we can discuss the rules for reporting large gifts from foreign persons as they apply to your particular situation.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.