Money from Parents in India: Gifts, Inheritance, Property & Form 3520 for US NRIs
Gifts from your parents, an inheritance from India, money for a US down payment — none of it is taxable income to you in the US, but the reporting (Form 3520, FBAR, FATCA) and the Indian paperwork still matter. This hub ties the whole picture together.
When money or assets come to you from family in India — a cash gift from your parents, help with a US home down payment, or an inheritance of property, bank balances, gold, shares, or mutual funds — two questions get tangled together: "will I be taxed on this?" and "do I have to report it?" They are not the same question, and confusing them is where US-based Indians get into trouble. This hub walks through both sides — the US reporting (Form 3520, FBAR, FATCA, PFIC) and the Indian documentation and tax — and links to deeper guides and a free Form 3520 checker.
Read this first — educational only
- This is general educational information, not US tax, India tax, or legal advice. The Form 3520 thresholds, PFIC rules, and Indian gift/inheritance taxability change over time and depend on your specific facts.
- Confirm what applies to you with a qualified cross-border CPA (US side) and a Chartered Accountant (CA) (India side), and verify current rules on the IRS and the Income Tax portal.
- This is a reporting & documentation guide. It does not compute any tax. Map your own case with the Form 3520 India gift checker.
The big idea in five lines
- A gift or inheritance from family abroad is generally not taxable income to you in the US.
- But reporting can still apply — most importantly Form 3520 for large foreign gifts/bequests.
- Once you own the asset, the income it earns (interest, dividends, rent, capital gains) is taxable and reportable.
- The Indian accounts/assets themselves can trigger FBAR and FATCA (Form 8938).
- Keep the Indian paperwork (gift deed, will, death & legal-heir certificates, valuation, title) — both countries may want it.
1. Tax vs reporting — the distinction that matters most
The single most important idea on this page: a gift or inheritance is generally not income, but it can still be reportable.
Usually NOT taxable income to you
- Form 3520 for a large foreign gift / bequest
- FBAR / FATCA on the Indian accounts you now hold
- US tax on the income those assets later earn
- Form 8621 / PFIC if you inherit Indian mutual funds
But reporting may still apply
- A cash gift from your parents in India
- An inheritance from a parent's estate
- Money gifted toward your US home down payment
- Inherited Indian property, FDs, gold, or shares
Say it out loud
- "I don't pay US income tax just for receiving a gift or inheritance from abroad."
- "But I may have to tell the IRS about it, and I do pay tax on the income it earns afterward."
- Getting the first part right but missing the second is the classic, expensive mistake. Form 3520 is an information return — penalties are for not filing, not a tax on the gift.
2. Cash gifts from parents in India
A cash gift from your parents is not taxable income to you in the US. The thing to watch is the Form 3520 reporting threshold for the year and the paper trail.
What to keep for a cash gift
- A simple gift deed / gift declaration from your parents (who, how much, when, relationship)
- The bank wire records on both sides (sender and receiver)
- Proof of the source of funds if the amount is large
- A note of the date and USD value for the Form 3520 test
Read the deep dive: Gift from parents in India to the USA.
3. Gift for a US home down payment
Using a gift from parents toward a US down payment adds a third party — your lender — to the documentation. Lenders typically want a gift letter confirming the money is a gift (not a loan), plus a clear source-of-funds trail.
- Gift letter for the lender — states it's a gift, not a loan, with the relationship
- Source-of-funds trail — where your parents' money came from
- Wire records — matching the amount that lands in your account
- Form 3520 check — if foreign gifts in the year cross the threshold
See gift for a US down payment in the gift guide.
4. Gift received in an Indian account vs a US account
Where the gift lands changes the India-side picture more than the US one.
Received into your US account
- India side: the NRO account becomes an FBAR / FATCA item
- Moving it to the US later needs 15CA/15CB + FEMA paperwork
Received into your Indian (NRO) account
- US side: gift income rules + Form 3520 test unchanged
- Wire is direct; one set of bank records
If the money sits in an Indian account, see the Form 15CA / 15CB repatriation guide for moving it to the USA, and remember the account itself feeds FBAR / FATCA.
5. Inheritance of Indian property
Inheriting Indian property is not taxable to you in the US when you inherit it — tax enters the picture only when you sell, and is driven by your cost basis and the capital gain. The work up front is documentation.
Documents that establish your inheritance and basis
- Death certificate of the owner
- Will / probate or, if intestate, succession documents
- Legal heir certificate establishing you as heir
- Property title and the original purchase records
- A valuation report near the date of inheritance
Read the deep dive: Inherited Indian property & US tax. For the sale itself, see repatriating property-sale proceeds and the India property capital-gains calculator.
6. Inheritance of Indian bank accounts, FDs, gold, shares, mutual funds
The receipt of each of these is generally not taxable income to you in the US — but each one carries its own reporting and future-income consequences.
| Inherited asset | Watch on the US side |
|---|---|
| Bank accounts / FDs | FBAR + FATCA on the account; interest is taxable income going forward |
| Gold | No income until sold; keep a valuation for basis; capital gain on sale |
| Shares (direct equities) | Dividends + capital gains taxable; basis and holding records matter |
| Mutual funds | Likely PFIC — possible Form 8621; punitive default tax rules |
Inherited Indian mutual funds are the trap
- Indian mutual funds are generally PFICs for US tax, which can mean Form 8621 and punitive default tax treatment on gains and distributions.
- This is the one inherited asset where getting US advice before you act can save the most. See inherited Indian mutual funds & PFIC.
7. The Form 3520 review threshold
Form 3520 is the US information return for, among other things, large gifts and bequests received from foreign persons. It is not a tax — it's a disclosure. The thresholds depend on who the giver is.
Two different thresholds — confirm the current figures
- From a nonresident alien individual or a foreign estate: report on Form 3520 when the total such gifts/bequests in the year exceed US $100,000.
- From a foreign corporation or foreign partnership: a separate, much lower threshold that the IRS adjusts annually for inflation (in the high-five-figures range) — verify the current-year figure on irs.gov.
- The $100,000 test is on the aggregate for the year, and related donors can be combined. Gifts from your parents are the nonresident-alien-individual case.
Why people care about Form 3520
- The penalties for not filing (or filing late) can be steep — a percentage of the gift — even though no tax is due on the gift itself.
- It is filed separately from your Form 1040 and has its own deadline (generally the same as your return, including extensions). Confirm the mechanics with your CPA.
Deep dive + a printable list: Form 3520 Indian gift & inheritance checklist.
8. Indian documentation to collect
Both countries can ask for proof. Gather the relevant subset early — chasing Indian documents from the US after the fact is painful.
- Gift deed — for a gift: who gave what, when, and the relationship
- Will / probate / succession documents — for an inheritance
- Death certificate — of the person you inherited from
- Legal heir certificate — establishing you as a lawful heir
- Valuation report — value near the date of gift / inheritance (for basis)
- Property title — clear title and the chain of ownership
- Bank statements — showing the credits, FDs, and the source of funds
9. US reporting questions to work through
For your US CPA
- Form 3520 — did my foreign gifts/bequests this year cross the threshold for my type of donor?
- FBAR (FinCEN 114) — do my Indian accounts (including inherited ones) cross the aggregate threshold?
- Form 8938 (FATCA) — do my specified foreign assets cross the (higher, residency-based) threshold?
- Form 8621 / PFIC — did I inherit Indian mutual funds, and how should they be handled?
- Income after inheritance — interest, dividends, rent, and capital gains are taxable and reportable going forward.
See FBAR & FATCA for NRIs, the FBAR/FATCA checker, and PFIC & Indian mutual funds.
10. India-side questions to work through
For your CA in India
- Taxability — is this gift/inheritance taxable in India (gifts from specified relatives like parents are generally exempt)?
- Capital-gains basis — what cost and holding period carry over when I eventually sell the inherited asset?
- Repatriation documents — what do I need to move the money to the US (15CA/15CB, source proof)?
- Form 15CA / 15CB — does my remittance need them, and which part?
See the Form 15CA / 15CB & repatriation cluster and Form 15CA / 15CB checklist.
11. Questions to ask your CPA / CA
Bring these to the table
- Did my foreign gifts/bequests this year trigger Form 3520 — and what's the deadline?
- Do the inherited or gifted accounts push me over FBAR or FATCA thresholds?
- Are any inherited holdings PFICs (Indian mutual funds), and what's the cleanest treatment?
- What is my cost basis in inherited property / shares / gold for an eventual sale?
- Is the gift/inheritance exempt in India, and what paperwork proves it?
- What's the repatriation route and documentation to bring the money to the US?
Map your own situation in two minutes
Answer a few questions — who gave it, what it was, how much, and where it landed — and get a Form 3520 / FBAR / PFIC review flag, the documents to collect, and questions for your CPA and CA.
- Go deeper: Gift from parents in India to USA · Inherited Indian property & US tax · Inherited Indian mutual funds & PFIC · Form 3520 checklist
- Related guides: Gifting money to/from India · Inheriting Indian assets & US tax · FBAR / FATCA · PFIC & Indian mutual funds
- Tools: Form 3520 gift checker · FBAR / FATCA checker · 15CA / 15CB checklist
Frequently asked questions
Is a gift from my parents in India taxable in the US?
No. A gift from your parents is not taxable income to you in the US. However, if your total gifts and bequests from foreign individuals or estates in the year exceed $100,000, you generally must report them on Form 3520 — a disclosure, not a tax. Confirm the current rules with a cross-border CPA.
Do I pay US tax on an inheritance from India?
Receiving the inheritance is generally not taxable income to you in the US. Tax enters later, on the income the inherited assets earn (interest, dividends, rent) and on the capital gain when you sell. Large bequests from a foreign individual or estate over $100,000 must be reported on Form 3520.
What is the Form 3520 threshold for gifts from parents?
Gifts and bequests from a nonresident alien individual or a foreign estate are reported on Form 3520 when the year's total exceeds US $100,000. Gifts from a foreign corporation or partnership use a separate, much lower threshold that the IRS adjusts annually — verify the current figure on irs.gov.
Do inherited Indian bank accounts and mutual funds need FBAR or FATCA reporting?
Yes, potentially. Inherited Indian bank accounts and FDs count toward your FBAR and FATCA (Form 8938) thresholds once you own them. Inherited Indian mutual funds are generally PFICs and may require Form 8621 with punitive default tax rules. Get cross-border advice before acting.
Is Form 3520 a tax on the gift?
No. Form 3520 is an information return — a disclosure. There is generally no US tax on receiving a foreign gift or inheritance. The risk is the penalty for failing to file or filing late, which can be a percentage of the unreported amount, so the filing itself is what matters.