US gifts and taxes: when you need Form 3520 or Form 709

Parents in Europe send their daughter, who holds an American passport, the money for her first home. An American abroad gives his son part of his investment portfolio. A grandmother in Ohio leaves her house to her granddaughter in Europe. In each case two countries have a say, and they ask different questions: the US taxes gifts at the giver's end and requires the recipient to report gifts from abroad, while your home country may have its own rules. This page sorts out the US side for US citizens and green card holders living in Europe.

1Three questions before any transatlantic gift

Before you think about forms, ask three questions. Who is giving: a US person or someone with no US tax liability? Who is receiving: you as a US person, or a family member without a US passport? And where do both of you live? The answers tell you which tax could apply at all and which report is due.

Under 26 U.S.C. § 2501, US gift tax is tied to the giver. It applies to US citizens and US residents on their worldwide assets. Someone who is neither a US citizen nor a US resident pays it only on certain assets located in the US, and under § 2501(a)(2) not on intangible property such as securities. The recipient pays no US gift tax but does have reporting duties. For the full picture of your US tax obligations, see our overview of US tax obligations for Americans living in Europe.

2You receive a gift: Form 3520 for gifts from abroad

If you are a US person and receive a gift or inheritance from a foreign person, you pay no US income tax on it, as long as it really is a gift. But the IRS wants to know once the amounts pass a threshold. You report it in Part IV of Form 3520.

The threshold depends on who gives. For gifts and bequests from a nonresident alien or a foreign estate, you report once the total for the tax year exceeds $100,000, and gifts from people you know or have reason to know are related to the giver are added together. So if your father and mother each give you $60,000, you are over the threshold. From that point on, you list every individual gift over $5,000 separately. For purported gifts from foreign corporations or partnerships, the threshold is $20,573 for 2026, and the IRS can recharacterize such payments.

Form 3520 is filed separately from your tax return and sent to the IRS Service Center in Ogden. It is generally due on the 15th day of the fourth month after the end of your tax year. If you are a US citizen living outside the US, the deadline moves to the 15th day of the sixth month. If you have requested an extension for your return, it also covers Form 3520, but only up to October 15. A further extension of the return to December does not extend Form 3520. To make sure the form is not treated as late when you have an extension, check box 1k.

Under § 6039F(c), the penalty for a late, incomplete or incorrect report is 5 percent of the gift for each month, up to 25 percent, unless you had reasonable cause. The IRS can also decide for itself how the gift is treated for income tax purposes. If you file Form 3520 late, you can attach an explanation, a reasonable cause statement. According to IRS guidance, for Form 3520 it is considered before any penalty is assessed, provided you note at the top of the first page that it is attached.

Two things are not gifts for this report: tuition and medical expenses paid directly on your behalf. And distributions from a foreign trust do not belong in Part IV but in Part III of the same form. To learn how trusts work from a US perspective, see US trusts for clients not resident in the US.

3You give a gift: US gift tax and Form 709

If you are a US citizen, US gift tax applies to you worldwide, even if you have lived in Europe for decades and the gift involves an account in Oslo or Amsterdam. Most gifts still trigger no tax, because the law has two exclusions.

The first is the annual exclusion. For 2025 and 2026, the first $19,000 you give any one person in a year is excluded, as long as it is not a gift of a future interest. Stay below that and you file no Form 709.

The second is the combined exclusion for gifts and estates, the basic exclusion amount. For 2026 it is $15 million, adjusted for inflation after that. If a gift exceeds the annual exclusion, you file Form 709 and use up part of this exclusion. Tax is only due once it is used up, and then at rates of up to 40 percent. Form 709 is due by April 15 of the following year. Spouses do not file a joint gift tax return; each files their own.

A spouse without a US passport changes the math. Under § 2523(i), the unlimited marital deduction for gifts between spouses does not apply if your spouse is not a US citizen. Instead there is a higher annual exclusion: $190,000 for 2025, $194,000 for 2026. You only need Form 709 for gifts to your spouse above that amount or for a gift of a future interest. And gift splitting, treating a gift to a third party as made half by each spouse, is not allowed if either of you was neither a US citizen nor a US resident at the time of the gift.

4Gifts from a spouse, parents or children without a US passport

When someone with neither US citizenship nor US residence makes a gift, US gift tax is limited to assets in the US, and under § 2501(a)(2) intangible property such as shares, fund units or receivables is exempt. For the typical family in Europe, that means grandparents who transfer a portfolio to their American grandchild pay no US gift tax. The grandchild reports the gift on Form 3520 if it exceeds $100,000.

Things can look different when the gift is real estate or tangible property in the US. A vacation home in Florida that a European mother gives her son is a US asset, and she may owe gift tax on it herself. For the full story on how the US treats non-Americans for estate and gift tax, see US estate tax for non-US citizens.

One more thing matters for tax on later gains. With a gift, under § 1015 the recipient generally takes over the giver's cost basis; only for calculating a loss does the lower market value apply. With an inheritance, under § 1014 the market value on the date of death applies. So if you later sell gifted assets, you pay US tax on the entire gain since the giver bought them.

5Inheriting: US estate tax for Americans in Europe

When a US citizen dies, US estate tax covers their worldwide assets, no matter where they lived. The basic exclusion amount of $15 million for 2026 covers lifetime gifts and the estate combined; whatever was used during your lifetime is no longer available at death.

Married couples where one spouse has no US passport face a special rule here too. Under § 2056(d), the marital deduction, which lets assets pass tax-free to the surviving spouse, does not apply if the surviving spouse is not a US citizen, unless the assets pass into a qualified domestic trust. What that means in practice is explained under If you die first, your wife pays.

If you are a US person and inherit from someone with no US tax liability, for example European parents, the estate pays no US estate tax on the assets in Europe. What remains for you is reporting on Form 3520 if the amount exceeds $100,000, plus any inheritance tax in your country of residence.

Switzerland has no federal inheritance or gift tax. Every canton except Obwalden and Schwyz levies an inheritance tax, and every canton except Lucerne, Obwalden and Schwyz levies a gift tax. The canton where the deceased or the donor lived has jurisdiction; for real estate, it is the canton where the property is located. Each canton sets its own allowances and exemptions, for example for spouses and descendants.

8Gifts from former Americans

A special rule applies to families where someone has given up US citizenship or a green card. If that person counts as a covered expatriate, Section 2801 imposes a tax on the US recipient of their gifts and bequests. It equals the top estate tax rate and applies to the amount above the annual exclusion, which is $19,000 for 2026. For the details, the IRS refers to the final regulations issued in January 2025. Who counts as a covered expatriate is explained under Exit Tax and Form 8854.

9What to check before making a gift

• Status of both sides: Is the donor a US person, is the recipient a US person, and where do they both live?
• Type of asset: Cash and securities, real estate in Europe, or assets in the US?
• Annual totals: Do the gifts from one family add up to more than $100,000, or are you giving one person more than $19,000?
• Earlier gifts: In the US, what counts is how much of the lifetime exemption you have already used.
• Deadlines: April 15 for Form 709; June 15, or October 15 with an extension, for Form 3520 if you live abroad.
• Account reporting: An account or portfolio you receive as a gift belongs in your FBAR filing from the moment you acquire it.

In short

• If you are a US person and receive a gift or inheritance from someone who is not a US taxpayer, you pay no US gift tax on it, but you report it on Form 3520 if it exceeds $100,000 in a year.
• If you make a gift as a US citizen, US gift tax applies worldwide. Up to $19,000 per recipient per year, no Form 709 is needed; for a spouse without a US passport, the limit for 2026 is $194,000.
• Above that, Form 709 draws down the combined gift and estate exemption of $15 million for 2026; tax is only due once it is used up.
• In Switzerland, gift and inheritance tax is up to the cantons.

How we help you

• US taxes for US citizens abroadForm 1040, FBAR and Streamlined for US citizens living in Europe.
• US Tax ConsultationYour US tax question, answered by people who know both sides.