IRS Form 3520 (2022): Late & Amended Filing Guide

What IRS Form 3520 (2022) Is For

IRS Form 3520 (2022) is an annual information return that the Internal Revenue Service requires from U.S. persons who engage in certain transactions involving foreign trusts or receive substantial foreign gifts. It is used to report the transfer of property to a foreign trust, ownership under the grantor trust rules, and the receipt of gifts or bequests from foreign persons or estates that exceed the annual reporting thresholds for the tax year.

This form also enables the Internal Revenue Service to ensure compliance with foreign trust reporting obligations and verify that all reportable transactions have been appropriately documented for income tax purposes. It applies to U.S. citizens, residents, and entities with financial connections with foreign individuals, estates, or partnerships. For additional IRS forms connected to foreign transactions or trust reporting, you can visit our IRS Form Help Center to review related filing requirements.

When You’d Use IRS Form 3520 (2022)

U.S. taxpayers must file IRS Form 3520 (2022) when specific foreign trust or gift transactions occur during the tax year.

1. Transferred property to a foreign trust: You must file Form 3520 if you transferred assets or property to a foreign trust, as these transactions must be reported under the foreign trust rules.
   
   
2. Ownership under grantor trust rules: You must file if you are treated as the owner of a foreign grantor trust immediately before the close of the tax year, even if no distributions occurred.
   
   
3. Received distributions from a foreign trust: You must report all capital gains, trust property, and any principal and interest payments received from such foreign trust during the tax year.
   
   
4. Received large gifts from foreign persons: You must file if you received foreign gifts or bequests exceeding $100,000 from individuals or $17,339 from foreign corporations or partnerships for 2022.
   
   
5. Amended or late filing situations: To ensure compliance and reduce penalty risk, you must file an amended or late Form 3520 if errors are discovered after submission or the original filing was missed.

If your situation also involves domestic estate or trust reporting, our guide to Form 1041 for estates and trusts outlines the separate filing rules that may apply.

Key Rules or Details for Tax Year 2022

Several rules and thresholds are explicitly applied to IRS Form 3520 (2022), and following them accurately ensures compliance with the Internal Revenue Service’s foreign reporting standards.

1. Gift reporting thresholds: For tax year 2022, you must report large gifts or bequests from foreign persons or estates if they exceed the gross reportable amount of $100,000 from individuals or $17,339 from foreign corporations or partnerships.
   
   
2. Filing deadlines: The filing deadline was April 15, 2023, with an automatic extension to October 15, 2023, for taxpayers who also filed an income tax return extension; U.S. citizens living abroad had until June 15, 2023, to submit the form.
   
   
3. Filing location: You must mail the separate form to the following address: Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409, as Form 3520 cannot be submitted electronically.
   
   
4. Extension checkbox: When you have an approved income tax return extension, you must check the extension box on Form 3520 to avoid automatic penalties that could otherwise apply.
   
   
5. Foreign trust filing obligations: If a foreign trust fails to file Form 3520-A, the U.S. person associated with that trust must attach a substitute Form 3520-A to their filing to prevent additional penalties from being assessed.

When foreign trusts involve U.S. source income, you may also need to understand the withholding rules explained in our Form 1042 annual withholding tax return guide.

Step-by-Step (High Level)

Filing IRS Form 3520 (2022) correctly requires proper documentation, the use of the right-year form, and careful attention to reporting obligations.

1. Gather documentation: You should collect all relevant documents, including foreign trust agreements, bank statements, and gift records that reflect the fair market value of property at the time of transfer or receipt.
   
   
2. Use the correct-year form: To ensure accurate compliance, you must use the 2022 version of Form 3520 for any reporting related to this tax year beginning January 1, 2022.
   
   
3. Attach required schedules: Include any substitute Form 3520-A and all supporting materials for foreign grantor trusts, outstanding qualified obligations, and related foreign trust transactions.
   
   
4. Mail the complete form: If filing from a foreign address, you should mail the annual return to the Internal Revenue Service Ogden Campus following your country’s laws to ensure proper delivery.
   
   
5. Keep copies for records: You should retain copies of your filed Form 3520 and all attachments, as doing so provides evidence of compliance and protects against additional penalties in case of IRS review.

To compare foreign gift reporting with domestic gift tax obligations, see our Form 709 gift tax return guide for details on how U.S. gift reporting works.

Common Mistakes and How to Avoid Them

Taxpayers frequently make filing errors that can trigger penalties or delay the processing of IRS Form 3520 (2022). The following common mistakes should be carefully avoided.

• Filing when not required: Non–U.S. persons should never file Form 3520 for protective purposes; only U.S. persons with reportable transactions involving foreign trusts or foreign gifts are required to file.
  
  
• Missing extension checkbox: Forgetting to check the income tax extension box on Form 3520 often leads to automatic penalties; always confirm that box 1k is selected if an income tax return extension has been filed.
  
  
• Incorrect taxpayer identification: Foreign trusts must use an Employer Identification Number (EIN) rather than a Social Security Number or Preparer Tax Identification Number to identify the entity correctly.
  
  
• Improper gift aggregation: You should only aggregate related foreign gifts from connected foreign individuals or corporations; unrelated gifts do not need to be combined for threshold testing.
  
  
• Omitting substitute forms: If required, you must attach a substitute Form 3520-A directly to your main Form 3520; sending it separately can result in the IRS treating the filing as incomplete. 

If your late Form 3520 filing overlaps with unfiled or incorrect income tax returns, our resource on unfiled federal income tax returns explains how to restore compliance across all tax years.

What Happens After You File

After you submit IRS Form 3520 (2022), the Internal Revenue Service reviews it for accuracy, completeness, and compliance with foreign reporting regulations. You may receive written confirmation, requests for additional documentation, or notices assessing penalties if deficiencies are found. If fines are imposed, you may submit reasonable cause statements to explain the circumstances that led to the issue. 

The IRS supervises these determinations and will make substantial decisions regarding penalty relief or appeal requests. If you disagree with the outcome, you may pursue a formal appeal through the IRS Appeals Office.

FAQs

What foreign gifts must be reported on IRS Form 3520 (2022)?

You must report transactions involving some foreign gifts received from individuals, estates, or corporations if they exceed the annual thresholds. The Internal Revenue Service requires you to report foreign gifts promptly to ensure compliance and proper tracking of cross-border transfers.

What should I report if I have interests in foreign trusts?

You must report transactions involving foreign trusts if you have received distributions, transferred property, or are treated as the owner of the trust’s assets. Each U.S. person must file Form 3520 to accurately disclose the nature and value of those interests.

Do I need to report foreign financial assets separately?

Yes, even if you report transactions with foreign trusts or gifts, you may still need to disclose foreign financial assets on Form 8938, depending on your filing status and account values. This ensures the IRS has complete visibility into foreign holdings and income.

What does ownership of a foreign trust immediately before year-end mean?

Being the owner of a foreign trust immediately before the end of the tax year means you are responsible for reporting the assets treated as your own under the grantor trust rules. This reporting ensures proper compliance and prevents penalties.