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The short answer
If you are a US person and receive more than US$100,000 in a tax year from a foreign estate or a nonresident alien, including an inheritance from Nigeria, you report it on Form 3520, Part IV. It is due on the 15th day of the fourth month after the year ends, normally 15 April, with 15 June if you live abroad and 15 October with an extension. There is no tax on the inheritance itself, but the penalty for filing late is 5% of the amount for each month, up to 25%.
Why the form exists
The IRS's page on gifts from foreign persons (April 2026) calls Form 3520 an information return, not a tax return, because foreign gifts and bequests are not subject to US income tax. The IRS wants to know about large transfers from abroad, and it enforces that wish with a penalty out of proportion to the paperwork. Families often learn about it only after the money has arrived.
Who has to file
The Instructions for Form 3520 (December 2025) require a US person to complete Part IV if, during the tax year, they received more than US$100,000 treated as gifts or bequests from a nonresident alien individual or a foreign estate. Points that matter for Nigerian inheritances:
- A Nigerian estate administered in Nigeria is a foreign estate, so distributions from it count.
- Related people are added together. Gifts and bequests from persons related to each other are combined for the US$100,000 test, so money from your late father's estate and a gift from your mother in the same year can push you over.
- Itemising. Once over the threshold, each gift or bequest above US$5,000 is identified separately, according to the IRS page.
- If the person who died was a US citizen or resident, the estate is not foreign in the same way; the form is aimed at transfers from foreign persons. Check this with the executor before assuming either way.
The timing
The instructions tie the deadline to your income tax return:
| Your situation | Form 3520 due |
|---|---|
| Calendar-year filer living in the US | 15th day of the 4th month after year end (15 April) |
| US citizen or resident living abroad | 15 June, with the statement the instructions describe |
| Income tax return extended | 15 October (the extension carries over to Form 3520) |
The form goes to the year in which you receive the money, not the year of death. Nigerian estates can take years to wind up: probate, letters of administration and property sales all take time. If your father died in 2024 and the estate pays you in 2026, the 2026 Form 3520 is due in April 2027. If the estate pays in instalments across two years, test each year separately, remembering the related-person rule.
Form 3520 is filed separately from your Form 1040. The instructions give the mailing address as the IRS service centre at P.O. Box 409101, Ogden, UT 84409; check the current instructions before posting.
The penalty, and how to avoid it
Section 6039F, as described in the instructions, sets a penalty of 5% of the amount of the foreign gift or bequest for each month the failure continues, up to 25%. No penalty applies if the failure was due to reasonable cause and not wilful neglect. The IRS page adds that if you file late or incompletely, the IRS may decide the income tax consequences of the receipt itself.
Example only. Ngozi in Maryland receives ₦300 million from her late mother's estate in Lagos in March 2026, which converts to an example US$200,000. Nothing is taxable, but she must file Form 3520 by 15 April 2027 (or 15 October 2027 if she extends her 1040). If she files in mid-August 2027 without an extension, about four months late, the penalty could be 4 × 5% × US$200,000 = US$40,000 unless she shows reasonable cause. Filing on time costs nothing.
What is taxable, and what comes next
- The inheritance itself is not income. But interest or rent the money earns after you receive it is, and so is any interest or rent that accrued to the estate and is paid out to you as income; ask the executor for a breakdown.
- Property inherited rather than cash takes a basis of fair market value at the date of death, under IRS Publication 551 (December 2025). That figure matters when you sell; see stepped-up basis on inherited Nigerian property.
- If the money lands in a Nigerian account, that account counts toward the FBAR US$10,000 test (FBAR for Nigerian accounts).
What to check first
- Was the person who died a nonresident alien, and is the estate administered outside the US?
- Add every gift and bequest from that person and related persons received this tax year. Is it over US$100,000?
- Record each receipt date and the dollar value on that date.
- Diary 15 April, and extend your 1040 if you need until 15 October.
- Keep the estate documents: death certificate, letters of administration or grant of probate, and the estate account.
Where Pryme fits
An estate payment is easier to report when it arrives in an account that shows the date, the payer and the amount on one statement. A Pryme account holds NGN and USD separately, so the inheritance can stay in naira until you decide to convert, with the rate shown before you approve (multicurrency account). Verifiable statements through VerifyDoc.ai can support your Form 3520 file if questions come later (receipts and statements). For the wider picture, see receiving an inheritance from Nigeria.
Questions people ask
Do I pay US tax on an inheritance from Nigeria?
No US income tax on the inheritance itself, but if it is over US$100,000 in a year you must report it on Form 3520.
When is Form 3520 due for a foreign inheritance?
By the 15th day of the fourth month after the tax year ends, normally 15 April, or 15 October if your income tax return is extended. US persons living abroad have until 15 June with a statement.
What is the penalty for filing Form 3520 late?
5% of the inheritance for each month late, up to 25%, unless you show reasonable cause.
Which year do I report an inheritance that arrives years after the death?
The year you receive it. Each year's receipts are tested separately against the US$100,000 threshold.
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 551 (Rev. December 2025), Basis of assets · 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.