AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
You file Form 3520 if, in one tax year, you receive more than $100,000 in gifts or bequests from a nonresident alien individual or foreign estate, counting gifts from related foreign persons together. It is an information return with no tax due on the gift, but the IRS penalty for not filing is 5% of the gift for each month it is late, up to 25%.
Who has to file
Form 3520 has several parts; families sending money from Nigeria are almost always dealing with Part IV, which covers large gifts and bequests. According to the IRS Instructions for Form 3520 (revised December 2025), a US person files Part IV if, during the tax year, they received either:
- more than $100,000 from a nonresident alien individual or a foreign estate, including amounts from foreign persons related to that individual or estate; or
- more than the inflation-adjusted threshold from foreign corporations or foreign partnerships: $20,116 for 2025 and $20,573 for 2026, according to the IRS gifts page updated 17 April 2026.
“US person” includes citizens, green card holders and others who are US tax residents. A Nigerian parent living in Nigeria is the nonresident alien here; the duty to report sits with you as the recipient, never with the sender.
How the $100,000 adds up
The threshold is per year and aggregated across related foreign persons. In a Nigerian family that matters: gifts from your father, mother and siblings in the same year are typically added together. Once you are over $100,000, the IRS page says each gift over $5,000 must be identified separately.
Worked examples (illustrative figures)
| Gifts received in one year | Total | File Part IV? |
|---|---|---|
| Mother $30,000; father $45,000 | $75,000 | No |
| Mother $30,000; father $45,000; brother $30,000 | $105,000 | Yes; list each gift over $5,000 |
| Family company in Lagos pays you $25,000 described as a gift (2026) | $25,000 | Yes; over the $20,573 corporate threshold |
| Father $60,000 in December, $60,000 in January | $60,000 each tax year | No, unless other gifts push either year over $100,000 |
Deadlines and where to send it
- Standard due date
- The 15th day of the 4th month after your tax year ends: 15 April for most people.
- Living and working abroad
- 15 June, with a statement attached.
- With an income tax extension
- No later than 15 October.
- Weekend or holiday
- The next business day.
- Where to file
- Internal Revenue Service Center, P.O. Box 409101, Ogden, UT 84409 (per the December 2025 instructions).
Form 3520 is filed separately from Form 1040, so a preparer filing your return does not automatically file it. Ask.
Penalties and late filing
Under section 6039F, the penalty for unreported foreign gifts is 5% of the gift’s value for each month the failure continues, capped at 25%. No penalty applies if you show reasonable cause and not wilful neglect. The IRS gifts page adds that when the form is late, incomplete or wrong, the IRS may decide the income tax consequences of the gift itself, which is a stronger reason than the penalty to file correctly. If you missed a year, talk to a tax professional about the IRS’s routes for late filing rather than simply filing the next year and hoping.
What does not count as a gift
Payments for services, salary, rent and loan repayments are not gifts and do not go on Part IV; they are income or capital and follow other rules. Money a relative sends you to pass on to someone else, or to spend on their behalf, is not your gift either, but keep a note showing that. Mislabelling earnings as gifts is exactly what the IRS can correct when it determines the income tax consequences of a gift.
Records to keep
The form asks for the date and value of each gift and a description. Build the file as the money arrives:
- A short gift letter from the giver: name, relationship, amount, date, and that nothing is expected in return.
- Transfer receipts or statements showing the sender and the amount in naira or dollars.
- The exchange rate you used for naira gifts, since Publication 54 requires amounts in US dollars.
- For estates, the grant of probate or letters of administration and the distribution account.
Two other filings often sit beside Form 3520. If the gift stays in a Nigerian account and your foreign accounts together exceed $10,000 at any time, the IRS FBAR page says FinCEN Form 114 is due. And income the gift earns later is taxable; our guide Is money I receive from Nigeria taxable in the US? separates the two, and receiving an inheritance from Nigeria covers estates. This is information, not tax advice.
Where Pryme fits
Pryme does not file tax forms for you, but it can make the record-keeping easier. Gifts that reach a Pryme Personal Account show the sender and amount on each transaction, and you can generate verifiable statements through our partner VerifyDoc.ai for your preparer. Naira gifts can stay in naira until you choose to convert with Swap, which shows the rate and the fee before you approve.
Questions people ask
Do I need to file Form 3520 if my parents in Nigeria send me $50,000?
No, not on that alone. Part IV applies when gifts from nonresident alien individuals and related persons exceed $100,000 in the tax year.
Do I pay tax when I file Form 3520?
No. The IRS calls it an information return; foreign gifts are not subject to income tax.
When is Form 3520 due?
15 April for most calendar-year filers, 15 June if you live and work abroad, and up to 15 October with an income tax extension.
What is the penalty for not filing Form 3520 for a foreign gift?
5% of the gift for each month it is late, up to 25%, unless there is reasonable cause.
Sources
- IRS: Instructions for Form 3520 (Rev. December 2025) · accessed Oct 2026
- IRS: Gifts from foreign person (updated 17 Apr 2026) · accessed Oct 2026
- IRS Publication 54 (12/2025): Tax Guide for U.S. Citizens and Resident Aliens Abroad · accessed Oct 2026
- IRS: Report of Foreign Bank and Financial Accounts (FBAR) (reviewed 30 Jul 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.