Understanding IRS Tax Form 3520: What You Need To Know It is essential to understand Form 3520 instructions to ensure you don’t pay more tax than you need to. Filing Form 3520 correctly and on time is vital to ensure that you avoid penalty fines. This article will tell you everything you need to know about Form 3520. It will also highlight the differences between the 3520 Form and Form 3520-A. What are the basics of Form 3520? As a provider of property accountancy services and an international ex-pat tax specialist, I understand that many people find Form 3520 confusing and daunting. It is important to get the right advice when it comes to 3520 Form instructions. IRS Form 3520 is an international form that is used to report certain transactions with foreign trusts, the ownership of foreign trusts, or if an individual gains certain gifts from foreign persons. It is important that you file Form 3520 correctly. If you file Form 3520 incorrectly or late, there is an increased chance of being audited by the IRS, as well as incurring large fines. There are different reporting triggers for Form 3520 depending on the nature of the foreign asset. This is why I strongly advise you to get the best guidance from ex-pat international tax specialists, such as my team members. There are three main reasons why a US ex-pat might file Form 3520: They are the owner of a foreign trust They make certain transactions with a foreign trust They receive a large gift or inheritance from certain overseas persons It is also vital that you understand the difference between Form 3520 and Form 3520-A. The main difference between Form 3520 and Form 3520-A is who files it and why. The only people who fill out Form 3520-A are those that manage foreign trusts with US beneficiaries. Form 3520 is a filing requirement of the recipient of foreign assets, while Form 3520-A is an additional form submitted by a trustee where there are beneficiaries or owners of the trust that are US taxpayers. I recommend that you visit here to see what the IRS says about Form 3520 instructions. Are you paying more tax on Form 3520 than you need to? I understand that some people may be paying more tax when filing their Form 3520 than they need to. Form 3520 instructions can be hard to understand. There are so many factors that go into what is included in Form 3520, that I advise you to get professional advice with Form 3520 instructions. If you are supposed to file Form 3520 and you don’t, you could be subject to fines of $10,000 or between 5% of the gross value of the trust’s assets that were not reported. Failure to report the creation or transfer to a foreign trust will mean a fine of 35% of the gross value of any property transferred to a foreign trust. Failure to report distributions received by a US person from a foreign trust will see a 35% fine on the gross value of the distributions. Your Form 3520 instructions and Form 3520 submission need to be accurate and timely. How can you pay less tax? By filing Form 3520 correctly, you could pay less tax to the IRS. Form 3520 is a tax form for Americans who interact with a foreign trust. Most US taxpayers who file Form 3520 will also have to file Form 3520-A. You will need to file Form 3520 if any of the following events occur: A foreign trust is created by a US person Property or money is transferred to a foreign trust by a US person Property or cash is transferred to a related foreign trust in exchange for an obligation You are a US person who is treated as the owner of any parts of the assets of a foreign trust You are a US person who gains distribution from a foreign trust during the current tax year You are a US person who is a US owner or beneficiary of a foreign trust, and you receive a loan or uncompensated use of trust property. I recommend that you get the appropriate advice before filing Form 3520, to ensure that you pay the least amount of tax possible. What you should do next To avoid paying more tax than necessary when filing Form 3520 or Form 3520-A, I suggest that you take action and speak to one of my expert team. You can book in time with one of them here. The consequences of reading this article and doing nothing afterwards could mean you pay more tax or a significant fine in the future. My team can guide and advise you in all matters relating to Form 3520, Form 3520-A and 3520 Form instructions.