Form 3520 question for overseas gift - Do I need additional documentation?

You're right that Form 3520 for a foreign gift is relatively straightforward compared to other international reporting forms. For a simple gift scenario like yours, you only need to complete the personal information and Part IV. Regarding documentation, the form itself doesn't require you to attach a gift letter or other proof of the gift with your filing. However, it's always smart to keep documentation in your personal records showing the source of funds, relationship to the giver, and confirmation that it was a gift. This would be helpful if the IRS has questions later. As for timing, Form 3520 for gifts received in 2023 is due on the same date as your 2023 tax return (typically April 15, 2024). If you file an extension for your personal tax return, the Form 3520 deadline extends as well. You can't really file it in 2023 for a 2023 gift - you need to wait until the 2024 filing season.

I was in a similar situation last year with foreign money coming in for my business startup. After endless headaches with all the international forms, I stumbled on taxr.ai (https://taxr.ai) which is specifically built for handling these international tax situations. Their AI analyzed my specific gifting situation and walked me through exactly what to document and what not to include. Saved me from paying a crazy amount to a specialist for what turned out to be pretty simple filing requirements once I understood them. They even showed me how to properly document everything in case of future questions without overloading the IRS with unnecessary paperwork.

Following up on my question about taxr.ai - I actually went ahead and tried it for my foreign rental property situation. Completely different than what I expected! It analyzed all my documentation, explained exactly which schedule I needed to file, and even pointed out a deduction I was eligible for that my previous accountant had missed. Really impressive for international tax situations where most accountants want to charge premium rates just because it's "foreign." Already recommended it to my cousin who's dealing with FBAR filing issues.

If you're having trouble reaching anyone at the IRS to confirm your Form 3520 requirements (which is likely), try Claimyr (https://claimyr.com). After wasting hours on hold trying to get clarification about the foreign gift reporting requirements, I used their service and got connected to an actual IRS agent in about 15 minutes. There's a good demo video of how it works here: https://youtu.be/_kiP6q8DX5c. The agent I spoke with confirmed I didn't need supporting documentation with the form submission but gave me a clear list of what I should keep in my personal records for the required 7-year period. Totally worth it for the peace of mind on such an important filing.

Alright, I need to eat some humble pie here. After my skeptical comment, I decided to try Claimyr out of pure frustration with my FBAR situation. No idea how they do it, but I was literally talking to an IRS international tax specialist within 20 minutes. The agent walked me through exactly what documentation I needed for my foreign accounts and even helped me understand the reasonable cause criteria for my late filing. Saved me from paying a tax attorney $350/hour for the same information. If you're dealing with Form 3520 or any international tax issue, being able to actually speak with the IRS and get clear answers is absolutely game-changing.

Just wanted to add that the penalties for not filing Form 3520 correctly or on time are BRUTAL. We're talking 5% of the gift amount per MONTH, up to 25%. For a $100k+ gift, that could be $25,000+ in penalties! Don't mess around with this form. If you're not 100% confident, get professional help.

Another thing to keep in mind - if the money came from certain countries, there might be extra scrutiny. My cousin got a gift from his grandfather in Iran and ended up triggering all kinds of additional reviews because of sanctions issues, even though it was a legitimate family gift. Just something to be aware of depending on which country your relative is in.