Although gifts or inheritances from foreign persons are not subject to income tax or an inheritance tax, if the gifts of money or other property are valued over certain amounts, the recipient of the gifts must report them to the IRS on the Form 3520.
The IRS requires taxpayers to report:
1) Gifts or bequests valued at more than $100,000 from a nonresident alien individual or foreign estate (including foreign persons related to that nonresident alien individual or foreign estate); or
2) Gifts valued at more than $16,111 (adjusted annually for inflation) from foreign corporations or foreign partnerships (including foreign persons related to the foreign corporations or foreign partnerships).
3) With Foreign Trust Distributions, the IRS is very stringent. In fact, a person is required to file a form 3520 when he or she receives any trust distribution at all during the year from a foreign trust. There is no minimum threshold requirement for having to report the receipt of the trust. Therefore, if you are the beneficiary of a foreign trust in you received a trust distribution it is important that you file the Form 3520 timely.
Tags: Tax Tips, Tax, Income Tax, San Diego, California, Form 3520, Foreign Inheritance Tax