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alecdias10
New Member

How to report a $100 interest from a foreign bank account

I am Alien resident in the US, my only income in 2016 was from Brazil. I am a certified physician in Brazil and I worked  from August to December there. I also have a bank account with money in Brazil (since 2007) and I got $100 in 2016 from the bank as an interest because I have my money in the bank. I have had trouble to report this $100, I do not know where to report it and how to complete the boxes with form and line, schedule and line.
1 Reply
GeoffreyG
New Member

How to report a $100 interest from a foreign bank account

As a resident alien for United States tax purposes, you are generally subject to the same income tax reporting requirements and standards as are US citizens.

That said, please also note that this answer does not address the tax treatment of your (Brazilian) wage income, which is a separate matter.  It also does not consider any tax treaty provisions that may be in effect between the US and Brazil.  In other words, the scope of this answer is restricted to the US tax treatment and reporting of the Brazilian bank account interest that you identify if your question.

Any taxes due or forms required by Brazil are beyond the purview of this response.  If you wish to inquire about the US taxation of your Brazilian wage income (earned while working as a doctor there), then please open up an new AnswerXchange question to address this.

With respect as to how to report earnings on your foreign bank account(s), the answer is that you will do this on a United States tax return just as you would as if the bank(s) were domestic in nature instead of foreign (Brazilian).

In other words, whether or not you receive an actual US Form 1099-DIV (for dividends) or Form 1099-INT (for interest) you will simply "pretend" that you did, and proceed to enter your dividends and interest in that manner.  As such, you can can follow the mechanical data-entry instructions for each type of passive income, as described in each of the following links:

https://ttlc.intuit.com/questions/2952456-where-do-i-enter-my-1099-div

https://ttlc.intuit.com/questions/1899701-where-do-i-enter-form-1099-int


If you also paid any foreign taxes on those dividends or interest, you can input that data on the very same 1099-DIV and 1099-INT input screens in TurboTax. There will be boxes provided there, in which you can indicate any foreign taxes paid.

Now then, reporting the income from your foreign financial accounts is one thing.  Reporting the existence of your foreign financial accounts is entirely another.  In other words, there is a "disclosure" requirement for every US taxpayer who holds assets in a non-US account financial account, even if the account or asset generates no taxable income.  This applies to mainland US citizens, territorial residents, and expats, including those who never return to the US, but still maintain their US citizenship.  Essentially, the government wants to know about your non-US assets -- how much and where you keep them.

In fact, there are two separate disclosure forms that may be required; each also has different reporting rules.  One is known as IRS Form 8938, and can be attached to the relevant yearly Form 1040 tax return.  The other is FinCen Form 114, which can only be filed via the internet.  The following Internal Revenue Service webpage describes them in some detail, and provides their dollar value reporting levels:

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

 

Form 8938 is included in TurboTax.  FinCen Form 114 is not included in TurboTax, and you would need to access that reporting webpage separately, if your foreign financial assets total over the limit(s).  Note that you can get to the FinCen reporting internet site directly through the above IRS link.

If you are asked about the specific schedule and line where your foreign interest and / or dividends are reported, you would answer that as follows.  For interest income it will be Form 1040, Schedule B, Line 1.  For dividend income it will be Form 1040, Schedule B, Line 5.

Thank you for asking this important question.

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