Do I file Form 3520-A even if no tax is owed?
Information return obligations of this kind are generally required on the facts rather than on the tax result, so a nil position does not remove one. Foreign trusts treated as grantor trusts with a US owner — with the US owner responsible for ensuring the trust files.
What happens if I have missed Form 3520-A for several years?
Missed years are dealt with as a package rather than one at a time, because the route chosen for the first year affects the relief available for the rest. We map the years and the obligations before anything is filed.
Is Form 3520-A the same as the other reports I already file?
No. The annual information return of a foreign trust with a US owner, reporting the trust's income, distributions and US beneficiaries. Satisfying a different obligation, even one covering the same accounts or entity, does nothing for this one.
Is my foreign retirement or education plan a trust for US purposes?
It might be, whatever it is called locally. The reason this catches people is that ordinary arrangements abroad — a family settlement, certain retirement and education arrangements — can be treated as trusts for US purposes even though nobody involved has ever used that word. The label the scheme carries in its home country does not settle the question. What settles it is how the arrangement actually works: who holds the property, on what terms, for whose benefit, and who is treated as its owner. Read the constituting documents before concluding that there is nothing here to report.
Who actually has to file Form 3520-A, me or the trust?
The filing duty sits on the trust, but the exposure sits on the US owner. That split is the whole difficulty. A foreign trustee in another country often has no interest in a US information return, no experience of preparing one, and no obligation to the US owner to do so. The owner is nonetheless the person who carries the consequence of its not being filed. In practice the US owner has to drive the process, obtaining the trust's accounts, having the return prepared and making sure the trustee signs and files it, rather than waiting for the trustee to act.
My foreign trustee refuses to file anything with the IRS. What now?
This is common and it has to be planned around rather than argued about. Start by establishing what the trustee will do: many will provide accounts and sign a return prepared for them, even where they will not prepare one themselves. Where the trustee will not engage at all, the US owner's position has to be worked out on that footing, which means documenting the attempts made, assembling the trust's financial information from whatever sources exist, and taking a considered view on what the owner can file. The worst outcome is silence maintained in the hope that nobody ever looks.
What information does a foreign trust return actually need?
It reports the trust's income, its distributions and its US beneficiaries, so it needs the trust's accounts for the year and a clear picture of who received what. Foreign trust accounts are frequently kept on a different basis from the one the return expects, and for a small family settlement are sometimes not kept at all. Much of the real work is therefore conversion and reconstruction: turning local accounting into the categories the return uses, identifying distributions that were made informally between relatives, and establishing which of the beneficiaries are US persons.
I inherited an interest in a family trust abroad. Do I have a filing problem?
Find out early, because the answer depends on facts you can still get at. The questions are whether the arrangement is a trust for US purposes, whether you are treated as an owner of it or only as a beneficiary, and what has happened in the years since your interest arose. An inheritance often brings an arrangement set up decades ago into US reporting for the first time, and the people who understand how it works may not be around indefinitely. Getting the documents and the history while the family can still explain them is worth more than any later reconstruction.
What is the difference between Form 3520 and Form 3520-A?
They sit on different shoulders. The annual return of a foreign trust with a US owner reports the trust's own year, meaning its income, its distributions and its US beneficiaries, and the duty to file it belongs to the trust. The other return is the US person's own, reporting their transactions with foreign trusts and the receipt of large gifts or bequests from foreign persons. One file frequently needs both, and they draw on the same underlying documents, so it is usually sensible to assemble the trust's records once and work out both positions together.
What happens if I have not filed for several years?
Missed years are handled as one package, not one at a time, because the route chosen for the first year determines the relief available for the rest. Each country has a disclosure or relief programme with its own conditions, and entering the right one — before the authority contacts you — is usually what keeps penalties down. Filing quietly outside a programme forfeits that protection. See catching up on missed returns.
Is moving money between my own accounts in two countries taxable?
Moving your own capital between your own accounts is not itself income, so the transfer is not what creates tax. What can create tax or reporting is the income the money earned before it moved, a foreign-exchange gain on certain holdings, and the reporting obligations the balances themselves trigger — foreign account and asset reports keyed to balances rather than income. Remittances out of some countries also need certification before the bank will send them. See foreign account reporting.
