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Yes! You can use AI to fill out Form 3520 (Rev. December 2023), Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts

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Form 3520 (Rev. December 2023), Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, page 1
Very Complex · 89/100Form Complexity Index

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What this form asks for

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Form 3520 is an IRS information return required for U.S. persons who transfer property to a foreign trust, are treated as an owner of a foreign trust, receive distributions (including certain loans or use of trust property) from a foreign trust, or receive certain large foreign gifts or bequests. The form is organized into Parts I–IV to match these different reporting categories and may require additional schedules and attachments (for example, trust documents, beneficiary statements, or Form 4970 for interest charges on accumulation distributions). It is important because it supports compliance with U.S. international reporting rules and can carry significant penalties if not filed accurately and on time. A separate Form 3520 is generally required for each foreign trust involved.
Fillable fields462
Pages6
Sections103
Tables and lists4
Questions that depend on earlier answers215
Form Complexity IndexVery Complex, 89/100

The AI checks your answers before you download

16 checks built for this form, so a wrong date or a missing answer is caught before anyone else sees it.

Tax year period completeness and valid date range

Validates that the filer provides either a calendar year (e.g., 2023) or a tax year beginning and ending date, and that the dates are valid calendar dates. The ending date must be after the beginning date and the period should generally be 12 months (or a permitted short year). If this fails, the submission should be rejected or flagged because the IRS cannot determine the reporting period and downstream computations and due-date logic become unreliable.

Return type selection (Initial/Final/Amended) is present and mutually consistent

Checks that at least one return type box is selected and that incompatible combinations are not selected together (e.g., Initial and Final simultaneously, or Amended with missing original filing context if required by the system). This is important because processing rules, penalty considerations, and matching logic differ by return type. If validation fails, prompt the user to correct the selection before accepting the filing.

Filer entity type selection (Individual/Partnership/Corporation/Trust/Executor) required and consistent with decedent section usage

Ensures exactly one filer type is selected in section B and that the presence of executor/decedent fields (line 4) is consistent with selecting Executor. This prevents misclassification of the filer, which affects required identifiers (SSN/ITIN vs EIN) and signature/title requirements. If inconsistent, the system should block submission and request correction or additional information.

U.S. person identifying information completeness (Line 1) and English-only character set

Validates that line 1a name, line 1c street address, city, state/province, postal code, and country are completed, and that entries are in English (e.g., Latin characters) as required by the form instructions. This is critical for IRS correspondence, identity matching, and address standardization. If invalid or incomplete, the form should be rejected or routed to an exception queue for manual review.

TIN format validation for all TIN fields (SSN/ITIN/EIN) and required presence by context

Checks that each TIN field (taxpayer TIN, spouse TIN, foreign trust EIN if any, U.S. agent TIN if any, decedent TIN, estate EIN, preparer PTIN/firm EIN) matches acceptable formats (e.g., 9 digits with valid hyphen patterns where applicable) and is present when required by the filer’s situation. Correct TINs are essential for IRS matching and to avoid processing delays or penalty notices. If a required TIN is missing or malformed, the system should prevent submission and request correction.

Joint Form 3520 indicator requires spouse TIN and joint-return context

If the joint Form 3520 checkbox (line 1i) is selected, validates that spouse TIN (line 1d) is provided and that the filing context indicates a joint income tax return for the same year. This prevents invalid joint filings that can cause misapplied reporting and correspondence. If the spouse TIN is missing or the joint context is not supported, the system should block submission and instruct the filer to file separately or provide the missing data.

And 10 more checks
  • Extension indicators and form number logic (Lines 1j–1k)
  • Foreign trust identification completeness when any trust-related parts are selected
  • Country code fields must be valid ISO-style codes and consistent across trust sections
  • U.S. agent dependency rules (Line 3) and required follow-up sections
  • Decedent/estate section completeness and logical consistency (Line 4)
  • Schedule A qualified obligation rules: line 11/12 consistency and required loan document attachments
  • Schedule B gratuitous transfer arithmetic and nonnegative money fields (Line 13 totals)
  • Part III distribution and loan totals reconcile (Lines 24–27) and qualified obligation dependency (Lines 25–26)
  • Beneficiary statement logic (Lines 29–30) and schedule completion requirements
  • Part IV foreign gift thresholds and donor detail completeness (Lines 54–56)

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How to Fill Out Form 3520 Online for Free in 2026

What the AI walks you through.

  1. Select the filing period and return type (initial, final, or amended) and identify the filer type (individual, partnership, corporation, trust, or executor), including whether any excepted specified foreign financial assets are reported.
  2. Enter identifying information for the U.S. person(s) filing (name, TIN, address, spouse/joint filing indicators, and any extension information) and, if applicable, the foreign trust’s identifying details (name, EIN if any, address, creation date, and country information).
  3. Complete the applicable reporting part(s) based on your situation: Part I for transfers to a foreign trust (including Schedules A–C for obligations and gratuitous transfers), Part II for U.S. ownership (including Form 3520-A status and owner statement/substitute), Part III for distributions/loans/use of property (including beneficiary statements and accumulation distribution calculations), and/or Part IV for foreign gifts or bequests.
  4. Answer all required yes/no questions and fill the related tables (dates, descriptions, FMV in U.S. dollars, basis, gains, obligation terms, principal/interest payments), ensuring amounts are reported in English and U.S. dollars as required.
  5. Attach required supporting documents and statements (for example, loan/sale documents, trust instruments and related trust documents if no U.S. agent is appointed, Foreign Grantor/Nongrantor Trust Beneficiary Statements, Foreign Grantor Trust Owner Statement, substitute Form 3520-A if needed, and Form 4970 when required).
  6. Review for completeness and consistency across parts and schedules (totals, carryovers to lines such as total distributions, accumulation distribution amounts, and any additional tax/interest charge computations), then sign and date the return (and include paid preparer information if applicable) before filing.

Common Mistakes in Completing Form 3520

The ones the AI is built to catch.

Reporting amounts in foreign currency instead of U.S. dollars
Form 3520 requires all amounts to be shown in U.S. dollars, but filers often copy figures directly from foreign bank/trust statements in local currency. This can materially misstate FMV, distributions, and gift totals and may trigger IRS questions or penalties if thresholds are crossed incorrectly. Convert each transaction using an appropriate exchange rate (per instructions/consistent method), document the rate used, and keep supporting calculations.
Leaving entries in a non-English format or using non-English descriptions
The form states all information must be in English, yet filers frequently paste trust names, property descriptions, or attachments in another language. Non-English submissions can delay processing and lead to follow-up requests for translations, increasing the risk of late-filing penalties. Provide English translations for key terms and attachments, and ensure property descriptions and statements are readable and complete in English.
Filing one Form 3520 for multiple foreign trusts
A common misunderstanding is combining multiple trusts on one return to “simplify” reporting. The form explicitly requires a separate Form 3520 for each foreign trust, and combining trusts can cause incomplete reporting of transfers/distributions and mismatched identifying information. File a separate Form 3520 per trust and ensure each one has the correct trust name, address, creation date, and related schedules.
Checking the wrong filer type or failing to check required status boxes
Filers often skip or mis-check the boxes for Individual/Partnership/Corporation/Trust/Executor and the applicable category statements (transferor, owner, recipient, or gift recipient). This leads to completing the wrong parts (e.g., Part IV only when Part III is required) and can result in missing required disclosures. Carefully determine your role(s) for the year and check all applicable boxes, then complete every corresponding part and schedule.
Incorrect or missing TINs/EINs (U.S. person, spouse, trust, agent, decedent/estate)
Form 3520 requests multiple identification numbers (TINs/EINs) and filers frequently leave them blank, transpose digits, or use the wrong entity’s number. Missing/incorrect IDs can prevent proper matching to the taxpayer’s return and may prompt IRS correspondence or penalty notices. Verify each TIN/EIN against official documents (SSN/ITIN letter, EIN assignment, estate EIN) and ensure the spouse’s TIN is included when relevant.
Misunderstanding the U.S. agent question (Line 3) and missing required follow-up attachments
Many filers answer Line 3 incorrectly or don’t realize that a “No” answer (when Part I is required) triggers additional disclosures on lines 15–18 and requires attaching trust documents. Omitting beneficiaries/trustees/other power holders or failing to attach the trust instrument/agreements can lead to an incomplete filing and significant penalties. Confirm whether a qualifying U.S. agent was appointed and, if not, complete lines 15–18 and attach the required trust documentation (or relevant updates if previously provided).
Using the wrong dates or leaving the tax year fields blank
Filers often forget to fill in the calendar year/tax year beginning and ending dates, or they use the trust’s year instead of the U.S. person’s tax year. This can cause mismatches with the taxpayer’s income tax return and confusion about which transactions belong in the reporting period. Use the U.S. person’s tax year for the header and ensure each transaction date (transfers, distributions, loans) matches the period being reported.
Confusing transfers, distributions, loans, and uncompensated use of property
A frequent error is reporting loans or uncompensated use of trust property as regular distributions (or vice versa), or netting amounts without following the form’s structure. This can distort totals on lines 24–27 and may incorrectly trigger accumulation distribution calculations and interest charges. Follow the instructions: report distributions on line 24, loans/uncompensated use on line 25, and compute line 27 exactly as directed with proper FMV determinations.
Incorrect FMV and basis reporting for property transfers (Schedule B, Line 13)
When property (not cash) is transferred, filers commonly enter book value, original purchase price, or a rough estimate instead of FMV on the transfer date, and they often omit U.S. adjusted basis and gain recognized. Errors here affect the “excess” calculations and can change whether a transfer is treated as gratuitous and how it is reported. Determine FMV as of the transfer date (use appraisals/market quotes when needed), compute U.S. adjusted basis correctly, and complete all columns (c)–(i) without netting or skipping required fields.
Failing to attach required loan/sale documents and updates for obligations
Schedules A and B require attaching copies of qualified obligation loan documents and certain sale/loan documents (or relevant updates if attached within the prior 3 years). Filers often check “Yes” to qualified obligation questions but do not attach the underlying agreements, which undermines the claim that an obligation is “qualified.” Attach each required document (and any subsequent variances), and if relying on prior submissions, clearly provide the year attached and include only the updated pages/terms.
Marking an obligation as “qualified” but not agreeing to extend the assessment period (Lines 12 and 26)
People frequently check that an obligation is qualified (Line 11b or Line 25(e)) but then answer “No” to the required agreement to extend the period of assessment (Lines 12 or 26). The form notes that refusing the extension generally means the obligation is not qualified, which can recharacterize amounts as distributions and increase tax/penalties. Ensure the qualified obligation criteria are met and answer the extension question consistently; if you cannot agree, treat the obligation as nonqualified and report accordingly.

Frequently Asked Questions About Form 3520

 

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How does the AI fill out Form 3520?
You answer a few questions in plain words, or upload a document you already have. The AI reads what you give it and puts each answer into the right field of Form 3520, on every page, in seconds. It checks the answers against the form's own rules, and you review and change anything before you download, print or sign.
What happens to my information?
It is encrypted in transit and at rest, and it is never used to train AI.
How complex is Form 3520 to fill out?
Form 3520 has a Form Complexity Index of 89 out of 100, in the very complex tier: 462 fillable fields across 6 pages. Instafill.ai's AI fills it in under a minute, with every field there for you to review before you download.
What is Form 3520 used for?
Form 3520 is an annual IRS information return used to report certain transactions with foreign trusts and the receipt of certain large foreign gifts or bequests. It helps the IRS track transfers to foreign trusts, ownership of foreign trusts, distributions from foreign trusts, and qualifying foreign gifts.
Who is required to file Form 3520?
You generally must file if you are a U.S. person who transferred money or property to a foreign trust, are treated as an owner of any portion of a foreign trust, received a distribution (or certain loans/benefits) from a foreign trust, or received certain large gifts/bequests from foreign persons. Executors may also need to file for a U.S. decedent’s estate in specific foreign trust situations.
Do I need to file a separate Form 3520 for each foreign trust?
Yes. The form instructions on the face of the return state you must file a separate Form 3520 for each foreign trust.
Can I file Form 3520 in a language other than English or report amounts in foreign currency?
No. The form states all information must be in English and all amounts must be shown in U.S. dollars.
Which parts of Form 3520 do I complete (Parts I–IV)?
You complete Part I for transfers to a foreign trust (including certain obligations), Part II if you are a U.S. owner of a foreign trust, Part III if you received distributions/loans/benefits or have certain obligations involving a foreign trust, and Part IV if you received certain reportable foreign gifts or bequests. You may need to complete more than one part if multiple situations apply.
What identifying information is required at the beginning of the form?
You must provide the U.S. filer’s name, address, and taxpayer identification number (TIN), and in some cases a spouse’s TIN and joint-filing indicator. If applicable, you must also provide the foreign trust’s name, address, and EIN (if any), and the trust creation date.
What does the question about a U.S. agent for the foreign trust mean (line 3), and why does it matter?
Line 3 asks whether the foreign trust appointed a U.S. agent who can provide the IRS with all relevant trust information. If you answer “No” and you are required to complete Part I, you generally must complete additional lines (15–18) and attach specified trust documents.
What documents might I need to attach for transfers or obligations reported in Part I?
If you report qualified obligations in Schedule A, you must generally attach copies of each loan document (or relevant updates if previously attached within the last 3 years). If you report transfers in Schedule B and have sale/loan documents, you may need to attach those documents (or updates) as well.
If the foreign trust did not appoint a U.S. agent, what trust documents may be required (line 18)?
Line 18 lists documents that may need to be attached, such as a summary of agreements/understandings, the trust instrument, memoranda or letters of wishes, updates to trust documents, trust financial statements, and organizational charts/other trust documents. If these were attached to a Form 3520 or 3520-A within the previous 3 years, you generally attach only relevant updates.
How do I report a transfer to a foreign trust that was a gift or for less than fair market value?
Part I, Schedule B is used for gratuitous transfers where you received less than fair market value (FMV) or no consideration. You’ll list the date, property description, FMV, basis, any gain recognized, and what (if anything) you received in return.
What is a “qualified obligation,” and why does the form ask about extending the period of assessment (lines 12 and 26)?
A qualified obligation is a specific type of obligation/loan arrangement that can affect how transfers or loans involving a foreign trust are treated for reporting purposes. The form asks whether you agree to extend the IRS assessment period; if you generally refuse, the obligation may not be treated as “qualified,” which can change how it must be reported.
What if I am a U.S. owner of a foreign trust—do I need Form 3520-A too?
Part II asks whether the foreign trust filed Form 3520-A for the year. If it did, you attach the Foreign Grantor Trust Owner Statement you received; if it did not, you may need to complete and attach a substitute Form 3520-A to the best of your ability.
I received a distribution from a foreign trust—what information do I report in Part III?
You report the date and description of cash/property received and its FMV on the distribution date, and any property you transferred in exchange. You also report certain loans or uncompensated use of trust property, and then total the amounts to determine total distributions for the year.
What if I received a beneficiary statement from the foreign trust (lines 29–30)?
If you received the applicable Foreign Grantor Trust Beneficiary Statement or Foreign Nongrantor Trust Beneficiary Statement, you generally attach it and may not need to complete the remainder of Part III for that distribution (depending on the statement type and instructions). If you did not receive a statement, you generally use the default calculation schedule for that distribution and may need additional schedules if there is an accumulation distribution.
When do I report foreign gifts or bequests on Form 3520 (Part IV)?
Part IV is used if, during the year, you received more than $100,000 in gifts or bequests from a nonresident alien or foreign estate (with special rules for related donors), or if you received gifts from foreign corporations/partnerships above the threshold described in the instructions. You must list details such as dates, donor information (for certain gifts), property descriptions, and FMV.
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