missing foreign bank interest in prior year filing

[AndreC1]

Hi,

I'm a canadian citizen who moved to the US and I hired an accountant for my 2022 taxes. While checking over those returns in preparation for filing this years returns I noticed that myself and the accountant forgot to include the interest earned from my canadian bank accounts and TFSA in the 1040 Schedule B. I asked the accountant if I should file an amended return but they recommended against it since the missing interest income is only about $300.

My questions are

1) I should include the 2023 interest income in my return this year correct? If I have multiple bank accounts within the same banking institution, should I be filling in a 1099INT for each account, or just combine them into a single 1099INT?

2) Is the accountants advice correct, or should I be pushing to file an amended return?

Thanks

[MayaD]

To answer your questions: 

1. Yes, you need to include the 2023 interest income in my return this year. Report each 1099 int form separately. 

2. All income should be reported on your return. If you don't amend your 2022 return, you will probably receive a letter from the IRS to pay the amount you owe on your interest income +penalty and interest. 

[pk]

@AndreC1 , generally each tax year stands on its own.  Thus you should file an amended return recognize the  unreported income. Even though I do not know the full circumstances  and facts, I would prima facie disagree with the accountant  advice.( to not file an amended return)

General rule is  if your AGI or Taxable income  for the year does not change by amending a return, then there is no need to file.  It is just more paperwork to process.

Also did you pay any  taxes to Canada on this interest ?   That may also play into  your tax liabilities.

Is there more I can do for you?

[AndreC1]

Hi,

I did not pay Canadian taxes on the interest and the accountant did not file a Canadian tax return as I was a US tax resident.

[RobertB4444]

Canadian taxes would have been a deduction for a foreign tax credit.

Your accountant was dismissive because the interest will generate less than $100 in taxes.  But he's not the one that has to pay any penalties or interest if you receive a notice from the IRS.  You should make that decision for yourself.

But definitely include the Canadian interest this year.

@AndreC1