Massachusetts Form 3520 2023-2025

Massachusetts Form 3520: What You Should Know

The United States imposes a tax on each flow of income from a trust which has, as part of its business, the receipt, ownership, or investment in property of  the trust with money in excess of U.S. federal income limits. However, there is no tax unless you were aware of your foreign trust status. Foreign trusts are also subject to an assessment of U.S. income tax even if the trust is not a U.S. citizen or resident and does not make such payments to the government. This section explains: Form 3520 Summary The Form 3520 you are required to file includes a Form 3520 Summary. This section explains: Form 3520 Summary — US Income Tax for U.S. Persons A. Purpose The purpose of Form 3520 is to report the income received by a foreign trust as income of the person or trusts with which it is associated on the Trust's taxable return and other tax return of its owner for income tax purposes. B. Foreign Trust Reporting for Income Tax If you are a resident of the United States, you generally are required to report income received by a foreign trust on your U.S. income tax return. Also, if you are a U.S. person or your U.S. person or trusts are owned or controlled by U.S. people, you are generally required to report income received by a foreign trust on your U.S. income tax return. The income shown in boxes 2 (amount in millions), 3 (amount in millions) and 4-6 of Form 3520 is reported on Form 1120-TR, Information Return for Foreign Trust, or Form 1120-TC, U.S. Trust Income (with respect to a U.S. person other than an individual). However, for the trust's reporting year of  the U.S. taxable year in which it is created,  (i) income reported in boxes 2 through 6 of Form 3520 is reported on Form 1120-TR or Form 1120-TC, depending on the type of trust, and box 7 is filled in with a code determined by the IRS (as described in  Form 3520: Foreign Trust Returns and Information Returns) and boxes 8 through 12 are filled in as provided in Chapter 4 of Form 2106 U, Information Return Regarding Foreign Trusts,  which provides the reporting codes to be used.

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