Question about Form 3520 for reporting gift from foreign parent - community property concerns

So I'm facing a weird tax situation and I hope someone can help clarify the rules. My mom isn't a US citizen or resident, but my dad is a US person for tax purposes. They live together in a country with community property laws (basically whatever one spouse owns, the other spouse also legally owns half of it). My mom doesn't file US taxes or elect to be treated as a US person for tax purposes. Here's my question: My mom wants to give me a substantial financial gift (around $125,000). Since she's technically a "foreign person" under tax rules, I'm wondering if this triggers the Form 3520 reporting requirement for receiving a large foreign gift. But I'm confused because under their country's community property laws, technically half of that money also belongs to my dad, who IS a US person. Does the entire gift amount need to be reported on Form 3520 because it's coming from my non-US mom? Or is it partially exempt from reporting because some of it technically belongs to my US dad under community property rules? I don't want to miss filing something important but also don't want to deal with unnecessary paperwork if I don't have to.

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18 comments

Lindsey Fry

•8M

This is a great question that touches on some complex international tax reporting rules. The Form 3520 is used to report certain transactions with foreign trusts and receipt of certain foreign gifts. The general rule is that US persons must report gifts from foreign persons that exceed a certain threshold (adjusted annually for inflation - for 2024, it's $100,000 from foreign individuals). Since your mother is a non-US person, gifts from her would normally trigger this reporting requirement if they exceed the threshold. However, your situation has a community property twist. The IRS generally respects community property laws of foreign jurisdictions. This means that if your parents live in a true 50/50 community property jurisdiction, the gift from your mother could technically be viewed as coming 50% from her (a foreign person) and 50% from your father (a US person). The gift portion deemed to come from your US father wouldn't trigger Form 3520 reporting, but the portion from your non-US mother would still be subject to reporting requirements if it exceeds the threshold.

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Lindsey Fry

•8M

If the funds your mother is gifting came from her separate property (like inheritance) that isn't considered community property under local law, then the entire gift would be considered as coming from a foreign person. In this case, the full amount would count toward the Form 3520 reporting threshold. Each country's community property laws have specific rules about what constitutes separate property versus community property. Inheritance is often treated as separate property, but this varies by jurisdiction. If these funds are legally considered your mother's separate property under her country's laws, then the entire gift would likely trigger the Form 3520 reporting requirement if it exceeds the threshold.

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Kayla Morgan

•8M

I had a similar situation with my foreign parent last year. I spent hours researching and stressing about Form 3520, then found https://taxr.ai which literally saved me. Their AI analyzed my exact scenario with foreign gifts from my dad who lives in Spain (also a community property country) and explained exactly what I needed to report. The tool walked me through whether I needed to file the 3520 based on the specific details of my situation. It even looked at the source of funds, which made a huge difference in my case since some of the money came from my dad's inheritance (separate property in Spain).

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Kayla Morgan

•8M

It absolutely works with international issues - that's actually where it shines compared to other tools I tried. You input the specific country and it applies the right rules for that jurisdiction. I was surprised how much it knew about Spanish community property laws. For source of funds, you need to be pretty specific - it asked me questions about whether the money was earned during marriage, inherited, or from assets owned before marriage. Those details matter a lot for the community property analysis. It cited specific IRS rulings and even had references to tax court cases about community property from foreign jurisdictions.

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Jasmine Hancock

•8M

I need to eat my words about being skeptical! After our discussion, I tried https://taxr.ai for my own foreign gift situation (mom in Germany sending money for my house down payment). The tool immediately identified the reporting threshold for 2024 and asked detailed questions about German marital property laws that apply to my parents. It explained exactly which portion of the gift I needed to report on Form 3520 and showed me where on the form to document the community property split. The tool even generated a statement to attach to my return explaining the legal basis for only reporting part of the gift. Way more sophisticated than I expected an AI tax tool to be.

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Cole Roush

•8M

You might want to try Claimyr (https://claimyr.com) to get direct clarification from the IRS. I called them about a Form 3520 question after getting conflicting advice about a gift from my uncle in Brazil. Normal wait time was 2+ hours, but Claimyr got me connected to an IRS agent in under 20 minutes. You can see how it works at https://youtu.be/_kiP6q8DX5c The agent confirmed that I needed to consider both the source of the funds and the community property laws. They told me to attach a statement explaining the community property situation and how I calculated the reportable portion. Having that direct guidance gave me a lot more confidence than just guessing.

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Cole Roush

•8M

They use technology that continuously redials and navigates the IRS phone system for you. When they actually get through to a human, they call you and connect you directly to the agent. You don't have to do any of the waiting or dealing with the phone tree. The quality of the agents is still hit or miss, but at least you're not wasting hours of your life on hold. I asked specifically for someone in the international tax department, and they actually transferred me to a specialist who knew about Form 3520 and community property issues. It was definitely worth it compared to the frustration of trying to call directly.

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Arnav Bengali

•8M

I take back what I said about being skeptical of Claimyr. I finally broke down and tried it after spending literally 6 hours over 3 days trying to reach the IRS about my foreign gift situation. Got connected to an agent in about 25 minutes while I was just going about my day. The agent confirmed that gifts from a foreign spouse in a community property country can be treated as 50% from the foreign spouse and 50% from the US spouse IF the funds are community property under that country's laws. But the burden is on you to prove the property status! I'm attaching a detailed explanation with my Form 3520 showing why only half the amount is subject to reporting. The agent said this approach is acceptable as long as I document everything thoroughly.

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Sayid Hassan

•8M

You're right to ask about that. Form 3520-A (Annual Information Return of Foreign Trust With a U.S. Owner) has a different deadline - it's due March 15 for calendar year trusts, while Form 3520 is due with your individual tax return. But in the original poster's case, we're talking about Form 3520 for reporting a foreign gift, not Form 3520-A which is for foreign trusts with US owners. So the deadline would be the same as their regular tax return filing date (April 15, or October 15 with an extension). Always good to be clear about which form we're discussing since they have similar numbers but different purposes and deadlines.

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