Form 3520-A
IRS, Foreign Trust With a U.S. Owner
The annual information return for a foreign trust treated as owned by a US person, normally filed by the trustee.
What is Form 3520-A?
When a US person is treated as the owner of a foreign trust, the trust itself has a US reporting duty. Form 3520-A sets out the trust's income, balance sheet and beneficiaries. The trustee is normally responsible, but the US owner carries the risk if it is not filed.
The trust's own return to the IRS
A foreign trust is a grantor trust for US purposes when a US person keeps certain powers or benefits, or funded it in circumstances the Code treats as ownership.
An American who sets up a UK trust with themselves as a potential beneficiary is the common case. The trust's income is then taxed to the owner each year, and Form 3520-A reports what the trust holds and earned so the IRS can check that income on the owner's return.
The form includes an owner statement and a beneficiary statement, which the trustee sends to the people concerned. The trust is also expected to appoint a US agent for IRS purposes. Without one, the IRS can determine the owner's income from the trust itself. The form is due by the fifteenth day of the third month after the trust's year end, which is earlier than the owner's own return, and an extension can be requested.
UK trustees are rarely familiar with US forms and may refuse to prepare one. In that case the US owner files a substitute Form 3520-A, attached to their own Form 3520, containing as much of the information as they can obtain. The penalty falls on the US owner and is measured against the value of the trust's assets. Rev. Proc. 2020-17 removes certain foreign retirement trusts from this form where its conditions are met.
At a glance
- Normally the trustee; a substitute by the US owner
- Filed by
- Fifteenth day of the third month after year end
- Due
- Owner and beneficiary statements sent to recipients
- Statements
- Measured against the value of trust assets
- Penalty exposure
Figures are for the tax year stated in the official instructions linked below.
How we handle it
- Estate & Trust Planning
Wills, trusts and estate planning for families with US and UK connections, including foreign trust reporting and the inheritance tax position.
- Private Client
Ongoing tax advice for wealthy families with US and UK ties, covering residence, investments, trusts, gifts and the estate position together.
- Cross-Border Tax
US and UK returns prepared together from one set of workpapers, so credits, tax years and exchange rates line up across both.
Where people go wrong
The Form 3520-A errors we correct most often.
Who files it
- Trustees of UK trusts with a US grantor or owner
- US owners filing a substitute when the trustee will not
- Americans who settled a UK trust before or after moving
- Families where a trust owner became a US person after funding it
01
Relying on a UK trustee who does not know the form exists
02
Missing the earlier due date because it differs from the owner's return
03
Failing to appoint a US agent and losing control of the income figures
04
Treating a UK trust as foreign-owned after the settlor became a US person
Why US UK Tax Returns
Every form is prepared against the official instructions, and every position on it is one we can point to in the Code, the treaty or HMRC's guidance.
One File
US and UK returns prepared in the same engagement and reconciled line by line.
Primary Sources
Every position traced to the Code, the treaty, IRS instructions or HMRC guidance.
Scope First
Returns, forms, years and fee agreed in writing before work begins.
The Same People
The team that files this year carries the elections and credits into the next.
Questions we are asked
My UK trustee says they do not file anything with the IRS. What should I do?
If you are treated as the owner of the trust, the obligation still exists and the risk falls on you. You can file a substitute Form 3520-A attached to your own Form 3520, using the information you can gather from the trustee. It helps to ask the trustee for accounts in a usable form early, because the due date comes before your own return.
I became a US resident after setting up a UK trust. Am I now its owner?
Possibly. The grantor trust rules include provisions that can treat a person who funded a foreign trust shortly before becoming a US person as its owner. Whether they apply depends on when the trust was funded, who can benefit and what powers you kept. It is worth settling this before the first US return as a resident, because it drives Forms 3520 and 3520-A.
What is a US agent and why does the trust need one?
A US agent is a person in the US authorised to accept IRS requests about the trust, such as requests for records. Appointing one lets the owner rely on the trust's own figures. Without an agent the IRS has power to determine the income attributable to the owner itself. The appointment is recorded on the form, and the terms of the agreement follow the instructions.
Primary sources
What this page says is drawn from the official material below. Read it yourself; we would rather be checked than trusted.
Last reviewed
From the Blog
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