Part 1 International Information Reporting question: nonresident alien living in Italy

Part 1International Information Reporting

In 2025 Mia, a U.S. citizen, received $150,000 as a gift from her grandmother, a nonresident alien living in Italy. What must Mia do?

A Nothing, as gifts from relatives are exempt from reporting
B File Form 709 and pay gift tax
C Report $150,000 as income on Form 1040
D Report the gift on Form 3520; no income tax is due on it

Show the answer and explanation

Answer: D. Report the gift on Form 3520; no income tax is due on it

A U.S. person who receives gifts from a nonresident alien individual or foreign estate totaling more than $100,000 in a year must report them on Form 3520, due with the income tax return. The gift itself is not taxable income, and the donor (not the recipient) would be responsible for any U.S. gift tax. Penalties for not filing can be 5% of the gift per month, up to 25%. Source: IRC 6039F, 102; Form 3520 instructions (2025). Tax year: 2025 (law as of 31 Dec 2025).

Common mistake

Treating the gift as income, or ignoring the reporting requirement.

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Original study material mapped to the public IRS SEE content outlines; not a real exam question.Not affiliated with or endorsed by the IRS or PSI. Verify figures and rules against current guidance before relying on them.