Why This Blog Matters
Every year, thousands of Indian-Americans receive foreign gifts from parents or relatives in India. It might be a $100K wire transfer, property inheritance, or simply help for a U.S. home purchase. But here’s the catch: failing to report these properly can trigger IRS penalties up to $25,000 under IRC §6039F.
Many CPAs don’t understand this niche reporting, especially for Form 3520. At Kewal Krishan & Co, we help Indian-origin taxpayers declare foreign gifts accurately, avoid penalties, and stay compliant.
What Counts as a Foreign Gift?
According to IRC §6039F, a “foreign gift” includes:
Cash or property received from a non-U.S. person
Funds wired from Indian parents or relatives
Inheritance from a nonresident alien
Not included: Gifts from U.S. persons or foreign corporations/trusts (those may require different disclosures like Form 3520-A or Form 5471).
IRS Reporting Thresholds (2025)
Gift Type
Must Report If Total Gifts in 2025 Exceed
From a nonresident individual (e.g. Indian parents)
$100,000
From a foreign corporation or trust
$18,567 (indexed)
Common Scenarios for Indian-Americans
Scenario 1: Cash Gift from Parents
Your dad wires you ₹85 lakhs (~$102,000 USD). You must file Form 3520 and disclose it as a foreign gift.
Scenario 2: Joint Property Title in India
Your mom adds your name to a house title in India worth ₹1 crore. That’s a reportable gift of interest in a foreign property.
Not Reportable
You receive $90,000 in small chunks from your brother (each < $10K). Unless combined, it may fall below threshold-but still worth disclosing to avoid future issues.
Relevant Forms
Form 3520 – Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts
Form 709 – Not required (U.S. donor form; not relevant when receiving from a foreign donor)
Step-by-Step: How to Report Foreign Gifts from India
1. Track Total Annual Gift Value
Use your bank statements and currency conversion to tally USD value of all gifts received.
2. Determine Donor Type
Is the sender a foreign individual or a foreign trust/entity? That affects the threshold and form requirement.
3. Fill Out Form 3520
Complete Part IV of Form 3520. You’ll report:
Donor’s name and country (e.g., India)
Description and value of the gift
Date received
4. Attach to Your 1040 & Mail
Form 3520 must be mailed separately to:
Internal Revenue Service
P.O. Box 409101
Ogden, UT 84409
Do not e-file Form 3520. It must be printed and mailed even if you e-file your tax return.
5. Keep Backup Records
Maintain wire transfer proofs, property documents, and donor declarations in case the IRS inquires.
Conclusion
Receiving gifts from your Indian parents is completely legal-but if you ignore IRS filing requirements, it could cost you big. Filing Form 3520 protects you, shows transparency, and ensures no penalties under IRC §6039F.
Call to Action
Anshul Goyal, CPA EA FCA is a licensed U.S. CPA and IRS-authorized Enrolled Agent. He represents clients in cross-border audits, gift reporting, and Form 3520 reviews. If you’ve received money or property from India, get your reporting done the right way.
About Our CPA
Anshul Goyal is a U.S.-qualified CPA and Enrolled Agent, specializing in NRI tax strategy, Form 3520, FATCA, and FBAR compliance. He helps Indian-Americans avoid IRS traps and file confidently.
Disclaimer
This article is for informational purposes only and does not constitute legal or tax advice. Please consult a licensed tax advisor for guidance tailored to your situation.
Top 5 FAQs
1. Is the foreign gift from parents taxable in the U.S.?
No, foreign gifts are not taxable but must be reported if above threshold.
2. What happens if I don’t file Form 3520?
The IRS may assess penalties up to $25,000 or 5% of unreported gift value per month.
3. Do I report Indian property gifted to me?
Yes, if your ownership increases or you gain interest in property-it counts as a foreign gift.
4. Can I report foreign gifts electronically?
No. Form 3520 must be mailed to the IRS separately from your e-filed return.
5. Are foreign loans considered gifts?
If the “loan” has no repayment terms or interest, the IRS may treat it as a gift in disguise.