Foreign Gift Tax Limit 2026: Form 3520 and Inheritance

Form 3520 thresholds for 2025 and 2026

The thresholds apply to the total you receive in a tax year, not to each transfer.

IRS: Gifts from foreign person Rev. Proc. 2025-32 Instructions for Form 3520

Do you pay tax on a gift from abroad?

Usually not, for a genuine gift. The IRS calls Form 3520 "an information return, not a tax return," because foreign gifts aren't subject to income tax. IRS

• Gift tax is the donor's tax. When U.S. gift tax applies, the person making the gift is generally responsible for it, not the recipient. IRS: Gift tax for nonresidents
• When a foreign donor can owe gift tax. A nonresident noncitizen donor is generally subject to U.S. gift tax on gifts of real estate and tangible property located in the United States, while gifts of intangible property are generally outside it. 26 U.S.C. § 2501(a)(2) Such a donor may need to file Form 709-NA. Whether a donor counts as a nonresident here depends on domicile under the gift tax rules, not on the green card and substantial presence tests used for income tax. Cash transfers can also raise situs questions, so a large gift of cash already in the U.S. is worth checking first.
• What the money earns afterward is taxable. Interest, dividends or rent from gifted money or property is your income from the day you own it.
• Exception: covered expatriates. Gifts and bequests from certain former U.S. citizens and green card holders who are "covered expatriates" can be taxed to the U.S. recipient under section 2801.
• California has no gift tax or inheritance tax for gifts made and deaths after June 8, 1982, and no estate tax for deaths since January 1, 2005. California State Controller

Who files and how to count gifts

Form 3520 is filed by U.S. persons: U.S. citizens, green card holders and people who are U.S. residents under the substantial presence test. In the year you move to the U.S., what matters is whether you were a U.S. person when you received the gift; see our guide to taxes for green card holders for how the first year works.

Add up gifts from related people

You must combine gifts from foreign persons you know, or have reason to know, are related to each other or are acting as nominees or intermediaries. Instructions for Form 3520, line 54 If your mother sends $60,000 and your father sends $50,000 in the same year, you count $110,000, and Form 3520 is required.

Gifts from foreign individuals who are genuinely unrelated aren't automatically combined: $60,000 from your aunt and $60,000 from a family friend, with no connection between them, are tested separately. Check the related-person and nominee rules before treating donors separately.

The $5,000 rule

Once your total is over $100,000, you list each gift of more than $5,000 with its date and value. For gifts from individuals, you describe the gift but don't have to name the donor. If no single gift is over $5,000, you still file, answer "Yes" and note that no gift exceeds $5,000.

Convert to U.S. dollars

Use the exchange rate in effect when you received each gift. IRS: Currency exchange rates A total close to $100,000 can cross the threshold just because of the rate, so keep the bank confirmations.

What isn't a foreign gift

• Tuition and medical bills paid directly. If a relative abroad pays your university or hospital directly for qualified tuition or medical care, it isn't a gift for Form 3520. IRS
• Money from a U.S. person. A gift from a U.S. citizen or green card holder living abroad isn't a foreign gift, even if it comes from a foreign bank account.
• Payment for work or services. Money you receive for doing something is income, whatever the sender calls it.
• A real loan. A loan you have to repay isn't a gift. Put it in writing with repayment terms; an informal "loan" that is never repaid may be treated as a gift.
• Money from a foreign company. Transfers from a foreign corporation or partnership, including one owned by your family, count toward the lower $20,573 threshold, and the IRS can recharacterize these "purported gifts," for example as income. IRS
• Distributions from a foreign trust. These are reported in a different part of Form 3520, under separate rules that can create taxable income.

Inheritance and inherited property

A bequest from a foreign estate is tested against the $100,000 threshold, together with gifts from persons related to it during the year. Ordinary inherited property, such as money in a bank account or an apartment, is generally not taxable income to you.

Not every payment received because of a death is a tax-free inheritance. Unpaid salary, certain pension and retirement distributions and other income in respect of a decedent can be taxable to the person who receives them, and they don't get the date-of-death basis described below. IRS Pub. 559 A foreign pension or retirement account inherited from a relative needs a separate review.

If you inherit property, such as an apartment, your U.S. tax basis is generally its fair market value on the date of death. 26 U.S.C. § 1014 That date matters when you sell: in simplified terms, the U.S. gain is the sale price minus selling costs and that value, adjusted for any improvements or depreciation, all in U.S. dollars. Get an appraisal or other evidence of the value at the date of death and keep it.

Property you receive as a lifetime gift works differently: it generally keeps the donor's basis, with special rules for losses, instead of a new value. 26 U.S.C. § 1015 An apartment your parents give you while alive and one you inherit can lead to very different gains when sold.

Selling inherited property abroad can lead to tax in both countries; see how to avoid double taxation.

How and when to file Form 3520

• Deadline: April 15 of the year after you receive the gift. For gifts received in 2026, that is April 15, 2027.
• Abroad: U.S. citizens and residents who live and work outside the U.S., or are in military service abroad, and meet the conditions in the instructions get until June 15, with the required statement attached. A foreign address alone isn't enough.
• Extension: a timely income tax extension on Form 4868 also extends Form 3520 to October 15. Check box 1k on Form 3520 and enter the form number of your tax return. If you live abroad and get an additional discretionary extension of your income tax return to December 15, it doesn't extend Form 3520: that stays due October 15.
• Paper only, filed separately: mail Form 3520 to Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409. It doesn't go with your Form 1040, even if you e-file the return.
• Complete form: the IRS treats Form 3520 as timely filed only if it is complete, with all required attachments.

Instructions for Form 3520 IRS: Gifts from foreign person

Send it by a method that gives you proof of mailing, such as certified mail, and keep a copy of everything you send.

Separate reporting for foreign accounts

Form 3520 reports the gift itself. Foreign accounts have their own reporting, and moving the money to the U.S. before year-end doesn't remove it if your foreign accounts crossed the threshold during the year:

• FBAR (FinCEN Form 114): required if the total of your foreign accounts exceeded $10,000 at any time during the year. See our FBAR filing guide.
• Form 8938: required with your tax return if your foreign financial assets exceed certain amounts, for example more than $50,000 at year-end or $75,000 at any time for a single taxpayer living in the U.S.
• Interest: interest on a foreign deposit is taxable in the U.S., even if the foreign bank already withheld tax.

IRS: Form 8938 and FBAR

Penalties and late filing

If you don't report a foreign gift on time, the penalty is 5% of the gift's value for each month the failure continues, up to 25%. The IRS can also determine the income tax consequences of the gift itself. No penalty applies if you show reasonable cause and not willful neglect. IRS 26 U.S.C. § 6039F

If you missed the deadline

For gifts received in 2025, the deadline was April 15, 2026, June 15, 2026 for those who qualified to file from abroad, or October 15, 2026 with an extension; disaster relief may have moved it for some taxpayers. If you missed your deadline and the IRS hasn't contacted you about it:

1. File the late Form 3520 following the form instructions, to the Ogden address.
2. Attach a reasonable cause statement explaining why you didn't file on time, and write "Reasonable Cause Statement attached" at the top of the first page.
3. For Forms 3520 and 3520-A, the IRS says it considers the statement before assessing a penalty. That doesn't guarantee the IRS will accept the explanation or waive the penalty.

IRS: Delinquent international information returns

These procedures aren't available if you are under examination or criminal investigation, or the IRS has already contacted you about the missing returns. If you already received a penalty notice, respond by its deadline; our IRS representation team handles these cases.

Two examples

Simplified illustrations with assumed figures.

Parents abroad help with a down payment

A transfer from a relative's company

Checklist

• List each donor and donor type (individual, estate, company), group related donors together and apply the right threshold.
• Convert each amount to U.S. dollars at the rate on the day you received it.
• Keep bank confirmations and a short gift letter from the donor stating that the money is a gift with no repayment.
• For an inheritance: the will or inheritance certificate, the date of death and evidence of the property's value on that date.
• Review every foreign account and foreign financial asset you held during the year, including accounts closed or emptied before year-end, and check the separate FBAR and Form 8938 rules.
• Mail Form 3520 separately to Ogden by April 15, or October 15 with an extension, with proof of mailing.

We prepare Form 3520 alongside your federal and California returns and file it separately, as required; see individual tax preparation.

FAQ

What is the foreign gift reporting limit for 2026?

For gifts from a nonresident alien individual or foreign estate, Form 3520 is required when the total for the year is more than $100,000, counting gifts from related persons together. For gifts from foreign corporations and partnerships, the 2026 threshold is $20,573. These are reporting thresholds, not limits on tax-free gifts.

Do I pay U.S. tax on money my parents send me from abroad?

Generally no. A genuine gift from a foreign person isn't taxable income to the recipient. You may still have to report it on Form 3520 if gifts from your parents and other related foreign persons total more than $100,000 in the year.

Do gifts from my mother and father count separately?

No. You must combine gifts from foreign persons you know or have reason to know are related. $60,000 from your mother and $50,000 from your father in the same year make $110,000, which is over the $100,000 threshold.

Do I pay tax on an inheritance from abroad?

Ordinary inherited property is generally not taxable income, but a bequest from a foreign estate counts toward the $100,000 Form 3520 threshold. Inherited salary, pension and retirement payments need a separate review because they can be taxable. Inherited property generally takes a basis equal to its fair market value at the date of death.

What is the penalty for not filing Form 3520 for a foreign gift?

5% of the value of the gift for each month it goes unreported, up to 25%. The penalty doesn't apply if you can show reasonable cause and not willful neglect.

Can I e-file Form 3520?

No. The current instructions direct filers to mail Form 3520 to the IRS in Ogden, Utah, separately from the income tax return. It is due April 15, June 15 for taxpayers who meet the conditions for filing from abroad, or October 15 with an income tax extension.

Does California tax gifts or inheritances?

No. California has no gift or inheritance tax for gifts made and deaths after June 8, 1982, and no estate tax for deaths on or after January 1, 2005. Income later earned from the gifted money or property is generally taxable to a California resident under California income tax rules.