Interest from the foreign account got missed out in my tax filing during last 2 years ..amendment or - PLEASE help !!!

[phillyfan11]

Hello, I have interest from foreign account which got missed in my tax filing during last 2 years as I never got 1099 like form. Was not aware of FBAR form either. The principal which earned interest was originated from US only and full tax was paid on principal. Can I simply file an amendment of my last 2 years taxes or anything more required? Can IRS penalize me if I simply file amendments? I am not sure how this is different if I missed one 1099 from a US bank. 

When I googled..folks are talking about Streamlined Filing Compliance Procedures. That involves penalty 5% on entire balance and much more. I am so confused and sleepless as this is my hard earned money. I paid taxes every year and ready to pay missing reported interest. PLEASE PLEASE HELP!

[IsabellaG · Accepted solution]

You definitely need to amend the returns for the years that you left off this interest. 

And you need to file the FBARs if you are required to. Here is a link to the IRS website, which indicates that you may not be penalized if you reported all your taxable income and you haven't already been contacted by the IRS about the delinquent FBARS. https://www.irs.gov/Individuals/International-Taxpayers/Delinquent-FBAR-Submission-Procedures

[phillyfan11]

Hello, First thanks much for your reply.  A) Would adding 15K interest in amended returm likely to trigger audit, penalties or any red flag? Please advise.
 B) per link above...<<The IRS will not impose a penalty for the failure to file the delinquent FBARs if you properly reported on your U.S. tax returns, and paid all tax on, the income from the foreign financial accounts reported on the delinquent FBARs>> My original return did not have interest. I assume, they must be referring to amended returns too.

[IsabellaG]

I can't say that it would/wouldn't trigger an audit, but you will definitely pay interest on the balance due. I'd include a statement with my 1040X that you didn't realize the interest was taxable. There are possible penalties<a rel="nofollow" target="_blank" href="https://www.irs.gov/irm/part8/irm_08-017-007.html">https://www.irs.gov/irm/part8/irm_08-017-007.html...> , but the main point is to file the amendments and the FBARs as soon as possible, before the IRS contacts you about this issue.