Form 3520-A 2020 Tax Year Checklist
Overview and Filing Obligations
The annual information return Form 3520-A captures foreign trust income, distributions, and asset values for tax year 2020. Trustees file this return when a foreign trust has at least one U.S. owner under the grantor trust rules in sections 671 through 679. The form delivers essential information to the IRS about the foreign trust structure, its U.S. beneficiaries, and any U.S. person treated as an owner of any portion of the trust's assets.
U.S. Agent Appointment Requirements
You must determine whether the foreign trust appointed a U.S. agent according to the 2020 instructions. If the trust did not appoint a U.S. agent, you must attach trust documents, including the trust instrument, written agreements, variances, and organizational charts.
When you previously attached these documents to Form 3520-A filed within the past three years, attach only updates and check the "Previously Attached" boxes with the year noted for each document category in Part I, lines 2a through 2e.
Part I: General Information and Entity Identifiers
Complete Part I with the foreign trust name, employer identification number if issued, creation date, complete address, and trustee name and taxpayer identification number. For 2020, confirm you enter the trustee TIN when available.
If the trustee is a non-U.S. person without a TIN, note "N/A" per 2020 instructions and attach an explanation.
Enter the total count of owner statements on Part I, line 5, and the total count of beneficiary statements on Part I, line 6.
Foreign Grantor Trust Owner Statements
Prepare a separate 2020 Foreign Grantor Trust Owner Statement on pages 3 and 4 for each U.S. person treated as owning any portion of the trust under IRC sections 671 through 679.
Line 7 requires a written explanation of the facts and law, including the specific IRC section, that establishes grantor trust treatment.
Line 9 must show the gross fair market value of the owned portion.
Each U.S. owner must receive a copy of the owner statement before you file Form 3520-A, and each owner must attach a copy to Form 3520.
Distribution Reporting and Fair Market Valuation
Report distribution information in Part II with careful attention to valuation dates:
- Enter the total fair market value of all distributions made during 2020 on line 17a, including both direct and indirect distributions.
- Complete lines 17b(i–iv) separately to detail distributions to U.S. owners, showing the distribution date and fair market value determined on the date of distribution.
- Complete lines 17c(i–iv) separately to detail distributions to U.S. beneficiaries, showing the distribution date and fair market value determined on the date of distribution.
- Attach a statement listing all distributions when space on the form is insufficient.
Part II: Foreign Trust Income and Deductions
Enter all trust income categories in Part II, including interest on line 1, dividends on line 2, rents and royalties on line 3, partnership and fiduciary income on line 4, net short-term gains on line 5a, net long-term gains on line 5b, ordinary gains or losses on line 6, and other income on line 7.
Total income on line 8 must equal the sum of lines 1 through 7. Attach statements for "Other income" and "Other expenses" categories.
Account for all deductible expenses on lines 9 through 14:
- Line 9 reports interest expense.
- Line 10a reports foreign taxes with an attached statement.
- Line 10b reports state and local taxes.
- Line 11 reports amortization, depreciation, and depletion.
- Line 12 reports trustee and advisor fees.
- Line 13 reports charitable contributions.
- Line 14 reports other expenses with an attached statement.
Total deductions on line 15 must equal the sum of lines 9 through 14. Net income or loss on line 16 equals line 8 minus line 15.
Part III: Balance Sheet Requirements
Complete Part III with asset values and liabilities at both the beginning and end of 2020 in columns (a) and (b). Enter cash, receivables, securities, real property, and other assets according to their fair market value.
Show accumulated depreciation as a negative entry in line 8b.
Lines 12 through 15 capture accounts payable, mortgages, and other obligations in the liabilities section.
Net worth reconciliation appears on lines 17 through 19 and accounts for contributions, accumulated income, and other items.
Line 21 total liabilities plus net worth must equal line 11 total assets for both columns.
Foreign Grantor Trust Beneficiary Statements
Prepare a separate 2020 Foreign Grantor Trust Beneficiary Statement on page 5 for each U.S. beneficiary receiving distributions, loans, or property use during the tax year:
- Line 7 requires a table showing the distribution date, property description, fair market value on the date of distribution, any property transferred back to the trust in columns (d) and (e), and the excess of distribution fair market value over any return in column (f).
- Line 8 must include a written explanation of the facts and law establishing trust ownership.
- Line 9 identifies the owner type as Individual, Partnership, or Corporation.
Signature, Assembly, and Furnishing Requirements
The trustee or U.S. owner filing a substitute Form 3520-A must sign the form under penalties of perjury and provide the title and date.
When a paid preparer completes the form, the preparer must complete the signature block with the preparer's tax identification number, firm name, employer identification number, and phone number.
Attach all required owner and beneficiary statements, trust documents if no U.S. agent exists, and expense and asset schedules.
Send each U.S. owner a copy of the Foreign Grantor Trust Owner Statement and send each U.S. beneficiary a copy of the Foreign Grantor Trust Beneficiary Statement before filing Form 3520-A with the IRS.
Reporting Standards and Currency Requirements
All information must appear in English on Form 3520-A, and you must show all amounts in U.S. dollars rather than foreign currency.
Convert foreign currency amounts to U.S. dollars using applicable 2020 exchange rates when distributions, assets, or income are denominated in foreign currencies.
Excepted Specified Foreign Financial Assets
Check the "Excepted Specified Foreign Financial Assets Reported" checkbox on the front of Form 3520-A only when a U.S. person treated as the owner of any portion of the trust also files Form 8938 for the tax year and includes this form in the total number of Forms 3520-A reported on line 2 of Part IV of Form 8938.
This checkbox signals coordination between Form 3520-A reporting and separate FATCA reporting obligations under Form 8938 related to specified foreign financial assets.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
