Form 3520-A (Rev. December 2023) Checklist
Purpose
Form 3520-A reports annual income, distributions, and balance sheet information for foreign trusts with U.S. owners under IRC §6048(b). A foreign trust that has appointed a U.S. agent indicates the year the Authorization of Agent form was last attached, consistent with Form 3520-A and its instructions.
Filing Steps
1. Confirm Foreign Trust Classification and U.S. Ownership Threshold
Verify the trust meets the definition of a foreign trust under IRC §7701(a)(31) and that at least one U.S. person is treated as an owner of any portion of the foreign trust under the grantor trust rules (IRC §§671–679) during 2023. When you evaluate ownership, you should apply the Internal Revenue Code rules to the trust terms and funding history, and you should document your conclusion in a clear workpaper for foreign trust reporting.
2. Identify U.S. Agent Status and Authorization Documentation
If a U.S. agent was appointed, confirm the year the Authorization of Agent form was last attached and that the agent’s name, taxpayer identification number, and address are current as of December 2023. If no agent exists, prepare to attach required trust documents consistent with Form 3520-A guidance (and if these documents were attached to a Form 3520-A filed within the previous three years, attach only relevant updates).
3. Gather and Organize Trust Financial Records
Obtain the foreign trust’s complete books and records for calendar year 2023 (or applicable tax year ending in 2023), including all income, expense, asset, and liability transactions in U.S. dollars. You should reconcile activity tied to foreign assets, foreign accounts, and any foreign bank holdings so you can support line items and related international tax positions on your Form 1040 filing package.
● Maintain source documents that support interest, dividends, rents, royalties, and capital gains in a consistent folder structure.
● Document exchange rates used to convert foreign financial account activity into U.S. dollars.
● Monitor foreign activities flowing through foreign partnerships or controlled foreign corporations when they affect trust income reporting.
4. Complete Part I: General Information and Document Attachment Election
Enter the foreign trust name, EIN, address, creation date, and check boxes for initial, final, amended, or extension-filed status. You should answer whether a U.S. agent was appointed, and if you answer “No,” you should indicate which required trust documents are being attached for the first time or updated, consistent with the Form 3520-A instructions.
5. Prepare Part II: Foreign Trust Income Statement for 2023
Report all income items (lines 1–7) in the order they appear: interest, dividends, gross rents/royalties, partnership/fiduciary income, short-term and long-term capital gains, ordinary gains/losses, and other income. You should include all foreign-source and U.S.-source income, and you should calculate total income, then deduct allowable expenses to arrive at net income or loss on line 16.
● Report foreign taxes on the line provided for taxes paid or accrued during the year.
● Support fees and depreciation with schedules that reconcile to the trust’s books and records.
● Maintain a summary showing how each “other income” or “other expense” amount was computed.
6. Complete Part II Distribution Section and Document FMV
On line 17a, enter the fair market value of all distributions (direct and indirect) from the trust during 2023 to any persons, U.S. or foreign. You should list each U.S. owner and U.S. beneficiary receiving distributions on lines 17b and 17c with their TIN, distribution date, and FMV determined on the distribution date, and you should attach a detailed statement if space runs out.
● Treat indirect benefits, such as payments for a person’s expenses, as distributions when the trust provides the benefit.
● Describe property distributions in sufficient detail to support valuation and U.S. tax classification.
● Coordinate distribution details with the recipient’s Form 3520 reporting when the recipient is a U.S. person.
7. Prepare Part III: Foreign Trust Balance Sheet
Report assets (cash, receivables, securities, real property, and other assets) and liabilities (accounts payable, mortgages, and other payables) at both the beginning and end of the 2023 tax year in the beginning-of-year and end-of-year columns. You should calculate totals and net worth and confirm that total liabilities plus net worth equals total assets, and you should maintain balance sheets that reconcile to foreign trust assets held in a foreign jurisdiction.
8. Prepare Separate Foreign Grantor Trust Owner Statements (Pages 3–4)
For each U.S. owner treated as owning the foreign trust, prepare an individual statement including: trust identification, U.S. agent status (if appointed), owner name and TIN, beginning/ending dates of the trust’s 2023 tax year, gross value of the owner’s portion, and a detailed list of all distributions and property transfers with dates and FMVs. You should provide a copy to the owner and include the foreign grantor trust owner statement with Form 3520-A records for consistent U.S. tax compliance.
9. Prepare Separate Statement of Foreign Trust Income Attributable to U.S. Owners (Page 4)
For each U.S. owner, report their allocable share of income (taxable interest, tax-exempt interest, ordinary dividends, qualified dividends, rents, royalties, partnership income, capital gains, ordinary gains, and other income) and expenses (interest, foreign taxes, state/local taxes, amortization, fees, charitable contributions, and other). Total income and total expenses must correspond to the owner’s beneficial interest percentage, and you should ensure the owner receives a copy for use in completing their reporting (and, if the trust fails to file Form 3520-A, include the required statements with any substitute Form 3520-A attached to the U.S. owner’s timely filed Form 3520).
10. Prepare Separate Foreign Grantor Trust Beneficiary Statements (Page 5)
For each U.S. beneficiary who received distributions during 2023, prepare an individual statement detailing trust identification, trustee and agent information, beneficiary name and TIN, and a line-by-line accounting of distributions, loans, or indirect uses of trust property (with dates, descriptions, FMVs, and property transferred). You should provide a copy to the beneficiary and include foreign grantor trust beneficiary statements with Form 3520-A, and you should answer the statement question regarding whether the trust will permit IRS or beneficiary inspection and copying of trust records, as applicable.
11. Verify All Signatures and Dates
Obtain the trustee’s signature, title, and date on the main form signature block. If a U.S. owner is filing a substitute Form 3520-A, ensure the substitute is signed and dated by the U.S. owner as required, and you should confirm preparer entries are complete when a paid preparer assisted.
12. Assemble and File the Complete 3520-A Package
Confirm all pages are in order: Form 3520-A (main), Beneficiary Statement, and separate Owner Statements and Income Statements for each U.S. owner. You should ensure all text is in English and all amounts are in U.S. dollars, and you should verify that attachments (trust documents, expense/asset schedules, distribution lists, ownership explanations) are complete and consistent with your broader foreign trust information reporting process.
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.
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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.
