I closed a personal bank account in 2023 that I believe has always had less than $2,000. I thought for 20 years the account was closed but found out a few years ago that it wasn't. I just received the statements this year. Since discovering this, when doing my annual tax filing, I understood the IRS info to say that an FBAR filing wasn't needed under $10,000. Last year the foreign bank closed the account and I received this small amount in my credit union account last summer. I don't know how to report this. I don't remember if the northern European bank would have reported it to the IRS given its closing amount under $1,700. I'm not sure what do. Can you assist me? I need to file by Oct. 15, since I did file for an extension. Other than this problem my taxes have been easy enough for me to do.
Thank you in advance for any tips.
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Check back later. I will page Champ @pk.
If this is your money, just being moved from one country to another, it is not taxable. If part of the money includes interest or dividends, that part is taxable income. You can report it as interest income, just select "I did not receive a 1099-INT" and answer the questions about who the payer was. (The interest is reported as the USD equivalent as of the date it was paid, you can look up the exchange rate online.)
Thanks for your quick response. I really appreciate it.
It is my money, but the source is a bank. Won't that cause a red flag? The dividends/interest go back several years. I just received all the statements earlier this year. I am concerned about reporting the source and about the dividend/interest amount I'd report.
Is it worse to not report and re-file later, OR under-report and then re-file later?
Thank you very much for your thoughts.
@SingerHiker wrote:
Thanks for your quick response. I really appreciate it.
It is my money, but the source is a bank. Won't that cause a red flag? The dividends/interest go back several years. I just received all the statements earlier this year. I am concerned about reporting the source and about the dividend/interest amount I'd report.
Is it worse to not report and re-file later, OR under-report and then re-file later?
Thank you very much for your thoughts.
There is no particular red flag when banks transfer money. There is an automatic report generated for transactions over $10,000, but even that does not create an automatic assumption that the money is "taxable income." Moving your own money is not income.
You need to declare the interest income as taxable income. Technically, if the money was in your account and spendable by you, then the interest was reported and taxable in the year it was paid, even if you forgot you had it. I think how serious this is depends on how much money. Suppose you received $5 of interest in 2020-2023--technically, that should be reported on your 2020-2023 tax returns, which would mean filing amended returns for all the prior years. I probably would not file amended returns for that small an amount, just include all the income with your 2023 tax return. (This is not a legal opinion, just what I would do.) If the interest payments are large, then it might be more important to amend your prior returns.
@SingerHiker , agreeing with my colleagues @Opus 17 & @tagteam on steps to take to regularize the monies from your account in a foreign country.
While it may be slightly "off" , but I would report/recognize all the growth in that account in the year that you found out that the account was still valid. This is especially true since the total amount is reasonable ( corpus + growth = US$17XX) and the growth has been for a number of years. Additionally I would keep all the paperwork from the foreign bank that you received this year ( to show that these were received ONLY this year and that you took action to correct your tax records ). What you are trying to show is that there was No intent to hide income.
That is my two cents.
Thanks to all of you @pk , @Opus 17 , @tagteam
I found out in summer 2020 so I will modify TY 2020 through 2022, and try my best with editing and finalizing 2023. I have a letter trail for the IRS if/when needed showing good faith efforts in the midst of the foreign bank not cooperating, Covid struggles we all had, and my out of state mother declining and dying from Alzheimers. It has been a difficult 4 years.
Thanks so very much for your time and expertise.
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