July 22, 2025
If you’re a U.S. taxpayer living in San Diego County and you’ve received a large gift or inheritance from a foreign person or estate, you may be required to report it to the IRS. Even if it’s not taxable. Failing to report foreign gifts can lead to significant penalties.
What Counts as a Foreign Gift or Inheritance?
A “foreign gift” typically includes:
📌Cash or property received from a nonresident alien individual or foreign estate
📌Transfers from foreign corporations or foreign partnerships that are treated as gifts
Reporting Requirements
You must report:
✅More than $100,000 from a nonresident alien individual or foreign estate in a single year
✅More than $18,567 (2025 threshold) from a foreign corporation or partnership
These are reported on IRS Form 3520, “Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.”
Is the Foreign Gift or Inheritance Taxable?
In most cases, foreign gifts and inheritances are not subject to U.S. income tax. However, they must still be reported for transparency and compliance. The IRS uses this information to track potentially abusive transactions.
Penalties for Not Filing
If you fail to file Form 3520 on time, you could face penalties starting at $10,000 or 5% of the value of the gift per month, up to 25%. That’s a hefty price to pay for something you may not owe tax on!
Local Expertise Matters
Taxpayers in San Diego, Carlsbad, and surrounding areas often have cross-border family or financial ties. Whether you received a foreign inheritance from relatives abroad or a gift from a foreign business associate, it’s crucial to get expert guidance to stay compliant.
Don’t Take Chances with the IRS
Even if you think a gift doesn’t need to be reported, it’s worth confirming with an international tax specialist. At USIBTS, we help clients across San Diego County understand their reporting obligations and avoid costly mistakes.
Schedule a Tax Consultation with USiBTS in Carlsbad, CA
At USiBTS, our experienced tax professionals are here to help you resolve your tax issues with clarity and confidence. Whether you’re facing IRS challenges or need guidance on complex filings, we’ll take the time to understand your situation and walk you through the best options available.
Schedule your consultation today and take the first step toward resolving your tax concerns.
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