Does a large foreign gift trigger IRS interest or attention? When to worry about Form 3520

Filing Form 3520 correctly and on time is the most important thing you can do here. The IRS requires this form specifically to track large foreign gifts, but filing it properly doesn't automatically trigger an audit. There's no specific threshold beyond the $100K reporting requirement that automatically flags you for extra scrutiny. What matters most is transparency and consistency in your reporting. Make sure you have documentation about the source of funds (like a gift letter from your uncle), proof of the transfer, and your uncle's information as required on the form. One thing to keep in mind: the penalties for not filing Form 3520 or filing it late are pretty steep - up to 25% of the gift amount. So you're definitely doing the right thing by researching this in advance.

I went through something similar last year when my parents from Canada gifted me money for my condo. Was totally stressed about the IRS coming after me! I ended up using this AI tool called taxr.ai (https://taxr.ai) that specifically helped me with the Form 3520 situation. It analyzed all my documentation and walked me through exactly what I needed to report and how to fill out each section. The tool actually pulled up similar cases and showed me what kind of documentation I should keep beyond just the basic form. Saved me from making some mistakes that could have caused problems later. They have expertise with these foreign gift situations and can explain everything in plain English instead of tax jargon.

Just wanted to update after trying taxr.ai for my situation with the gift from my grandmother in Japan. It was actually really helpful! The system walked me through all the form requirements and showed me examples of properly completed 3520 forms. What I found most valuable was the section about common audit triggers to avoid - like making sure dates and amounts match exactly across all documentation. It also generated a customized gift letter template that covered everything my lender needed. Now I feel much more confident about receiving the money without creating problems with the IRS. Definitely worth checking out if you're dealing with a foreign gift!

When I was dealing with a foreign inheritance last year, I tried calling the IRS directly to get clarification on Form 3520 requirements and it was IMPOSSIBLE to get through. After being on hold for literally hours across multiple days, I found this service called Claimyr (https://claimyr.com) that somehow got me connected to an actual IRS agent in under 20 minutes. The agent was able to confirm exactly what documentation I needed for my situation and assured me that properly filing Form 3520 wouldn't automatically trigger an audit. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. Seriously, it saved me days of frustration, and the peace of mind from talking to an actual IRS representative was worth it.

I have to come back and admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it myself since I've been trying to reach the IRS about some back taxes issues for weeks. The service actually worked exactly as described. I got a call back in about 35 minutes, and was connected to a real IRS agent who helped clarify my questions about foreign gifts (I have family overseas too). The agent confirmed that filing Form 3520 correctly doesn't automatically trigger audits, and explained that the IRS is mainly concerned with unreported foreign income, not properly documented gifts. Saved me hours of hold music and frustration - definitely worth it if you need actual answers from the IRS rather than guessing what might happen.

Something nobody's mentioned yet - make sure you're aware of any potential tax implications in your uncle's country too. Some countries have gift taxes that the GIVER has to pay, not the receiver. This wouldn't affect your US taxes, but it might be something your uncle needs to know about. Also, the Form 3520 is just an information return - you're not actually paying any tax on the gift in the US. Foreign gifts aren't taxable income to you. But failing to report them properly can lead to those nasty penalties others mentioned.

Just want to add something important - make sure you file Form 3520 SEPARATE from your regular tax return, even though it's due the same day. A lot of tax software doesn't include this form, so you might need to prepare it separately. I made this mistake last year with a gift from my parents in Korea. I included it with my return as an attachment, and the IRS initially couldn't find it and sent me a penalty notice! Had to call and straighten it out. The form should be mailed to a specific address in Ogden, Utah (unless they've changed it for 2025).

One more thing to know - your mortgage lender might have their own requirements about foreign gifts that go beyond what the IRS needs. When I got money from my aunt in Brazil, my lender wanted the funds to "season" in my account for 2 months before I could use them for the down payment. They also required a certified translation of the gift letter since it was originally written in Portuguese. Every lender is different, so make sure you talk to yours about any special requirements for foreign gifts specifically. Some are more strict than others.

Regarding the e-filing question - Form 3520 currently cannot be e-filed and must be mailed as a paper form to the IRS processing center. The address is typically the Ogden, Utah location, but double-check the current year's instructions since processing centers can change. This is one of the few major tax forms that hasn't moved to electronic filing yet, which is why many tax software programs don't include it. You'll likely need to download it directly from the IRS website and complete it manually or use specialized tax software that handles international reporting forms. Also worth noting - the form is due by the same date as your regular tax return (including extensions), but the penalties for late filing are calculated separately and can be quite severe, so don't assume that filing for an extension on your regular return automatically extends the 3520 deadline.

I actually went through this exact situation two years ago with a $120K gift from my parents in the UK for my home purchase. The key thing that gave me peace of mind was being proactive with documentation from the start. Beyond just filing Form 3520, I created a comprehensive file with: the original gift letter, bank transfer records showing the exact conversion rates, screenshots of my uncle's bank statements (with his permission), and even a brief family tree document showing our relationship. This might seem like overkill, but having everything organized and readily available made both the mortgage process and tax filing much smoother. The IRS really isn't looking to make life difficult for people receiving legitimate family gifts - they just want to make sure foreign money isn't being used to hide taxable income or avoid other reporting requirements. As long as you're transparent and thorough with your documentation, you should be fine. The $140K amount, while substantial, isn't unusually large in the context of real estate down payments these days.