topic How to report interest income on foreign bank accounts in Deductions & credits

How to report interest income on foreign bank accounts

Agrawal — Wed, 26 Jun 2019 22:52:33 GMT

I have interest income of around 150$ from foreign bank account which I have to report in my tax return, where do I report it? Currently I have added it along with other Interest income from US bank accounts as a seperate row. I dont have 1099 INT form for this income since banks in India don't issue this. I have converted the INR to USD per rate conversion available on IRS website for FBAR.

I will file FBAR by the due date to report this account.

Please enter your foreign interest income AS IF you have...

MargaretL — Fri, 07 Jun 2019 23:03:23 GMT

Please enter your foreign interest income AS IF you have received 1099-INT for it and enter interest income in box 1. If you paid any foreign taxes on the interest income, enter them in box 6 of 1099-INT form (be sure to indicate that you have more than just box on the form - see pic). And you are correct to do so in U.S. dollars.

Federal Taxes
Wages and Income
Interest and Dividends, select Interest on 1099-INT

Note: You may have to file form Fincen 114, if your foreign account(s) exceed $10000 at any time during 2016. You have to file it through the Treasury website: http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

Thanks a lot for your detailed answer. I verified and upd...

Agrawal — Fri, 07 Jun 2019 23:03:25 GMT

Thanks a lot for your detailed answer. I verified and updated the information, You're awesome.

Thank you and good luck in 2017!

MargaretL — Fri, 07 Jun 2019 23:03:26 GMT

Thank you and good luck in 2017!

Hi, I did the same, but when I am filing mississippi stat...

d_p — Fri, 07 Jun 2019 23:03:28 GMT

Hi, I did the same, but when I am filing mississippi state tax, payer id for these banks becomes mandatory, what to enter there? without payer id system do not allow to file and foreign banks do not have payer id. ???

This explanation is very helpful. Can something be done...

jeffjlaw — Fri, 07 Jun 2019 23:03:31 GMT

This explanation is very helpful. Can something be done to amend the TT software to remove the confusing and misleading language? When entering interest income the website says that if you have interest from something else - which would clearly seem to include foreign interest which is not on a 1099INT - it will be added later. Despite this statement, the software does not provide the option to add foreign interest later. It just loops back to the summary income page. (I suspect that what the wording meant to say is "later" in a different section, not in the current 1099INT section). Even the "learn more" link for 1099INT does not mention that foreign interest income should be input in this section. The 1099INT section has a graphic image of the top of a 1099INT form as well as questions about various boxes on the 1099INT form, all of which creates the impression that without a 1099INT you are in the wrong place. The other alternative was to assume that foreign interest income might be input into the field for "foreign accounts" but again the TT software does not allow you to do this (this section is limited to form 8938 data input). The easy solution would be to amend the wording on the 1099INT page to state that even without a 1099INT, foreign interest income should be added in this section. It seems quite simple to correct this (time consuming!) impression with a few extra words or some additional info in the "learn more" link. Judging by the sheer number of questions on the Intuit website regarding foreign interest income this amendment would be time well spent. Again, thanks to TTML for the helpful clarification and explanation.

Was there an answer to what should we add in the 'Payer I...

srishtiupasana — Fri, 07 Jun 2019 23:03:32 GMT

Was there an answer to what should we add in the 'Payer ID of Federal tax ID number'? A foreign bank does not have a federal ID number from US

I left the payer iD section blank.

Agrawal — Fri, 07 Jun 2019 23:03:33 GMT

I left the payer iD section blank.

To go to Box 6 of 1099-INT, you should go to 1099-INT sec...

syam506 — Fri, 07 Jun 2019 23:03:36 GMT

To go to Box 6 of 1099-INT, you should go to 1099-INT section and check the box "My form has information in more than just box 1". Then it shows all boxes. It took me an hor to find this.

I have a follow up question about reporting interest inco...

babupol — Fri, 07 Jun 2019 23:03:38 GMT

I have a follow up question about reporting interest income from foreign bank deposits. I incurred losses by investing money in fixed deposits in India due to changes in currency rate though banks deposited some interest.  The percentage loss incurred due to change in conversion rate (last year to this year) is more than the interest gain percentage.

Do I pay taxes for the interest income deposited by Indian bank though overall my bank balance when converted into USD this year is lower than last year’s balance even after including the interest income (no other debits or credits on the account other than interest income deposited).

Taking some numbers for example below.

Last year, my bank balance was say 5,00,000 INR = 7843 USD (using exchange rate for 2017 noted in <a rel="nofollow" target="_blank" href="https://fiscal.treasury.gov/reports-statements/treasury-reporting-rates-exchange/historical.html">https://fiscal.treasury.gov/reports-statements/treasury-reporting-rates-exchange/historical.html</a>)
       Interest rate for this fixed deposit amount = 5%
       Current balance including interest income = 5,25,000 INR i.e. 7521 USD (using exchange rate for 2018 noted in <a rel="nofollow" target="_blank" href="https://fiscal.treasury.gov/reports-statements/treasury-reporting-rates-exchange/historical.html">https://fiscal.treasury.gov/reports-statements/treasury-reporting-rates-exchange/historical.html</a>)

       If I just look at interest deposited by the bank, I made interest income of 25,000 INR i.e 358 USD.  Am I supposed to pay tax on this income though overall there is a loss  (or) should I just report zero interest income (or) is there a way I can report the loss in this investment and reduce my tax liability from other investments/income I made in US.

PS: For the last 5+ years, I have been paying taxes by just converting interest deposited by bank in INR to USD without considering the losses due to falling INR conversion rate with respect to USD. However, it doesn’t feel reasonable. I may have overpaid in taxes

Re: Please enter your foreign interest income AS IF you have...

SabrinaK — Sun, 18 Aug 2019 11:43:19 GMT

I also have interest income of a forgein bank (Germany). It's about $17.52. If I enter this amount and click on "continue" button the amount automatically switches to $1,752.00. It does it all the time. And it is just not right. I just received $17.52. That's it. What can I do?

Re: Thank you and good luck in 2017!

maverick — Sun, 02 Feb 2020 01:12:09 GMT

I have a follow-up to this question. When I enter a value in Box 1, my tax refund value decreases. However, when I enter a value in Box 6 for foreign taxes paid, it doesn't seem to give me any credit for it, so I end up losing in the bargain. That doesn't seem right to me. Is there a workaround for this?

Re: Thank you and good luck in 2017!

LinaJ2020 — Sun, 02 Feb 2020 15:05:37 GMT

In order to receive a foreign tax credit on your taxes, you need to file a Form 1116 Foreign Tax Credit. In TurboTax online, here are the steps:

Open up your TurboTax account and select Pick up where you left off
At the right upper corner, in the search box, type in "foreign tax credit" and Enter
Select Jump to foreign tax credit
Follow prompts

@maverick

Re: Thank you and good luck in 2017!

LinaJ2020 — Sun, 02 Feb 2020 15:11:39 GMT

Try to round it up to $18.00 to see if it works.

@SabrinaK

Re: How to report interest income on foreign bank accounts

Andythewall — Sun, 16 Feb 2020 05:31:07 GMT

Was there an answer to what should we add in the 'Payer ID of Federal tax ID number'? A foreign bank does not have a federal ID number from US and TT won’t allow to file without it being added to the 1099 INT form

ihave tried all 9s and all 0s. Please can someone clarify!

Re: How to report interest income on foreign bank accounts

KarenJ2 — Sun, 16 Feb 2020 14:05:06 GMT

Please try all 1s as the Payer ID and see if that will work.

Re: How to report interest income on foreign bank accounts

Andythewall — Sun, 16 Feb 2020 15:20:05 GMT

Is there no way to disable it? What if all 1s is an actual entity. Wiki says the first two digits indicate that geographical area in the us the entity exists. If we put all 1s, then 11- would mean that the bank is in Austin. It’s not in Austin, it’s overseas. This doesn’t seem right to do. Is this what Turbo Tax Intuit Tax CPA would recommend to do?

Re: How to report interest income on foreign bank accounts

Andythewall — Sun, 16 Feb 2020 19:17:30 GMT

Here is what I was able to find out from one of TTs CPA.

https://ttlc.intuit.com/community/taxes/discussion/received-interest-from-foreign-bank-what-do-i-put-in-federal-id-number-on-1099-int-screen/00/1059309

Re: Please enter your foreign interest income AS IF you have...

LinaJ2020 — Fri, 28 Feb 2020 18:10:48 GMT

Can you try to enter 18?

@SabrinaK

Re: I have a follow up question about reporting interest inco...

Garima — Mon, 16 Mar 2020 04:25:00 GMT

Did you get an answer to that?