I am an Australian living in USA. I earn interest on my Aus bank a/c. The interest has non-resident withholding tax deducted - does this need to be in my US tax return?

[donnamkendall]

I was advised that since I have the non-resident withholding tax deducted I do not need to include the interest on my Australian tax return but I am uncertain if I should include it on my US tax return?

[DS30]

Are you filing a US tax return as a resident alien (1040) or as a nonresident alien (1040NR)?

[donnamkendall]

Resident alien - I am now a non-resident in Australia but a resident here

[donnamkendall]

Hence the non-resident withholding tax automatically deducted from my interest in Australia

[DS30 · Accepted solution]

Yes if you are filing a 1040 and are considered a US resident, you are required to report all your worldwide income on your tax return.

You will report this foreign bank interest on your tax return along with your foreign tax withholdings on this bank interest.

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 this transaction in TurboTax Online or Desktop, please follow these steps:

1. Once you are in your tax return, click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages & Income” ("Personal Income" in TurboTax Home & Business)
3. Next click on “I’ll choose what I work on” (jump to full list)
4. Scroll down the screen until to come to the section “Interest and Dividends”
5. Choose “Stocks, Interest on 1099-INT” and select “start’
6. Select "I'll type it in myself"
7. Enter the name of the foreign bank, the amount (in USD) in box 1
8. Check the box "My form has info in more than just box 1 (this is uncommon)".
9. Enter any foreign taxes paid in box 6 (screenshot)