Report the total amount of foreign interest income on your foreign bank account ($1,000 in your example) as Box 1 interest income (in USD) and not the net interest income received ($900).
You can include this under the 1099-INT section. Just
make sure that you include this amount in USD. Also, if you paid any foreign
taxes on this interest income, you will be able to take a Foreign Tax Credit for taxes paid on income that is also taxed in the
US.
The Internal Revenue Service has no official
exchange rate. In general, use the exchange rate prevailing (i.e., the spot
rate) when you received the income. Please refer to the following IRS links for
more information about Foreign
Currency and Currency Exchange Rates and Yearly
Average Currency Exchange Rates
To enter foreign interest income in TurboTax
Online (for TurboTax Online sign-in, click Here , then
select "Take Me to My Return") or Desktop, please follow these steps:
- Once
you are in your tax return, click on the “Federal Taxes” tab
("Personal" tab in TurboTax Home & Business)
- Next click on “Wages &
Income” ("Personal Income" in TurboTax Home & Business)
- Next click on “I’ll choose
what I work on” (jump to full list)
- Scroll down the screen until
to come to the section “Interest and Dividends”
- Choose “ Interest on
1099-INT” and select “start’
- Select "I'll type it in
myself"
- Enter the name of the foreign
bank, the amount (in USD) in box 1
- Check the box "My form
has info in more than just box 1 (this is uncommon)".
- Enter any foreign taxes paid
in box 6 (screenshot)
