I earned interest income from a CD in a foreign bank account.
1. How do I report it properly on my tax return?
2. How do I claim the foreign tax credit regarding the taxes I paid in this country related to this income?
I tried to enter this income as a 1099-INT, however, the system won't accept it unless I enter a FEIN. This bank is outside the US and doesn't have a FEIN. I read multiple posts on this topic, but nobody seems to have found a satisfying solution. Just entering 11-1111111 or 99-999999 is not acceptable.
I called TurboTax support this morning and the agent was very helpful. Foreign interest income needs to be reported under Less Common Income --> Miscellaneous Income --> Other reportable income. The agent recommended to enter the net interest amount rather than reporting gross income and then trying to claim a foreign tax credit. If entered this way, this income will show up on Schedule 1, Line 8z. You need then indicate this income also on the form 8938. I guess I answered my own question at the end 😉
which country ?
My copy of Windows Home & Business does not restrict -- it wants just the amount , name of the payor and country.
Can you give me more details-- where and how you are entering the data .
Mexico.
Here is how I enter it:
- Go to section 'Interest and Dividends'
- Select 'Interest on 1099-INT'. I also went to '1099-OID, Foreign Accounts', where it lets me enter the value in the account and the interest but then asks where in the return I am declaring the income.
- I click on 'Add Investment' and 'Skip Import'
- I select 'Interest'
- I then see a form that mimics the 1099-INT with the FEIN field on top.
@chag2020 , I followed your entry method per your reply ( rather than my preferred method of " I will choose what I work on " ) and the software behaved exactly as expected -- Only name of the payor and the Box-1 interest amount required.
Generally US treats all interest income the same way ( unless tax treaty calls out any restrictions etc. ) -- domestic or foreign.
For the interest income I used a name like Bancomer and a dummy amount of US$300.
Who is the payor of your interest income -- is it from a normal financial firm or as part of your OID for shares ?
Why did you go to 1099-OID and foreign account ? Did you actually have a 1099-OID to recognize ?
I do not see the issue you are reporting -- please help me duplicate the situation , so it can be resolved or reported . If you are uncomfortable sharing data her you can PM me ( just NO PII -- Person ally Identifiable Information )
pk
Are you using the Premier version (desktop) of TurboTax?
On my end the Federal Identification Number (FEIN) is a required field. I wanted to include a screen shot but that doesn't seem to be possible.
I went to foreign account as I am required to declare all foreign accounts, which is part of a FinCen requirement.
I don't feel comfortable providing specific information. It should be irrelevant what country or bank we are talking about. I am not able to get around entering a valid FEIN either way
If it is up to me I'd rather not declare this income, but I know I am required to declare. So why is this such an issue, we wasting so much time on to resolve? I can't be the only one with this situation.
you wrote : "I went to foreign account as I am required to declare all foreign accounts, which is part of a FinCen requirement. "
Sorry that FBAR ( as you say it ) is NOT CORRECT. Please see the following:
FBAR --- Report of Foreign Bank and Financial Accounts (FBAR) | Internal Revenue Service
Note this has a threshold of US$10,000 ( there are a few ands, ifs, buts ) and you file this online -- form 114 at FinCen.gov
FATCA -- About Form 8938, Statement of Specified Foreign Financial Assets | Internal Revenue Service
-- this you file with your return and has a threshold that is dependent on your filing status and your tax home.
Is there more I can do for you ?
I need an answer to my question: how to report foreign interest income without a FEIN. Please review my original post. Does anybody else have the solution?
I called TurboTax support this morning and the agent was very helpful. Foreign interest income needs to be reported under Less Common Income --> Miscellaneous Income --> Other reportable income. The agent recommended to enter the net interest amount rather than reporting gross income and then trying to claim a foreign tax credit. If entered this way, this income will show up on Schedule 1, Line 8z. You need then indicate this income also on the form 8938. I guess I answered my own question at the end 😉
@chag2020 . Great
However, I don't know what you mean by :
"The agent recommended to enter the net interest amount rather than reporting gross income "
If by this you mean "net" foreign interest earned ( i.e. gross interest LESS foreign taxes paid) then it is NOT Correct. You need to recognize Gross ( i.e. total interest income ) and then under deductions and credits, claim the foreign taxes paid. Also note that you can ( depending on the amount and your filing status , facts and circumstances ) use safe-harbor foreign tax credit rather than the form 1116 , with its limitations.
Your answer doesn't make sense. As in the case of my original question, your system seems to be behaving differently than mine. You explained how to report this in your configuration, but I don't see that same option. Thus your answers are not helpful to me, but maybe it will be helpful to people that use the same product like you use.
How did you file the foreign tax credit, which form if you could share?
Form 1116. It can be a deduction or credit. Most people take the credit.
See:
Basically, TurboTax experts could not tell me how to report the foreign tax credits if I reports this interest as misc income instead of as 1099-INT. If we talk with IRS, they say ask TurboTax on how to do that and why we are entering 1099-INT if we did not get one from the bank. It gets stuck at that. I spent more than 4 hours with TurboTax calls and got no where. I faced the same problem last year and the work around above worked but this year claiming foreign tax credit on TurboTax is allowed only if you worked outside of US and not for passive income.
Finally, one of their reps found the FEIN of the bank (it was ICICI bank) and I used that to bypass the review check. She told me that they have a system to look-up FEIN of international banks. However, such scenario may still happen for non-international banks which is yet to be solved by Turbotax.
I ended up reporting the foreign interest income under Less Common Income --> Miscellaneous Income --> Other reportable income. I reported the gross income and claimed the tax credit by filling out form 1116 as passive income. Not a straight forward process but finally got it all taken care of.
@dk2025 , glad it worked out for you. Note however, that the ICICI bank that you are using the EIN of is small New York bank, while the ICICI bank in India is a large financial institution. If that allowed the TurboTax checks to pass rather than using an obviously dummy EIN, then it is alright.
Glad you posted your way out of the predicament.
Was your foreign tax paid to India above the safe harbor limit such that you had to use form 1116 ( with its treaty based limitations )?
Just want to say how very helpful your post and insights were....I received interest last year as part of a payment of previously-unpaid income earned in 2021 from a former foreign employer and was tearing my hair out on how to report the interest separately from the earned income and the tax I paid to the country where I earned it. Like yourself, reporting the interest in 1099-MISC and then adding the foreign tax paid to Form 1116 did the trick.
I had the exact similar situation for both foreign interest and dividends. For the interest, I followed the advice of the original poster and put it into misc. income. For dividends, I could not find a solution and called TurboTax. She had no solution and we decided to ignore the FEIN issue and leave dividends in the 1099-DIV section and submit return. You simply click on "file" in the left hand bar and follow the prompts.
It worked!. Seems like you can ignore the "issue message" and file anyway. I checked the return and the dividend amount, ended up in the right place on my 1040. Hope that helps.
I have TurboTax Premier. I do not see "Less Common Income --> Miscellaneous Income --> Other reportable income" anywhere. Which section of "Wages and Income" did you use? Thanks.
Yes. Follow this navigational path.
Thank you for the prompt response - I can see it.
Will remove the foreign account interest information from the "Interest and Dividends" section, and will use the "Less Common Income" section.
Thanks again for the screenshots.
regarding "Finally, one of their reps found the FEIN of the bank (it was ICICI bank)".......so what is the FEIN that worked for ICICI Bank?
It's not necessary if you follow the steps to enter your foreign interest income using the steps below and remove it from interest and dividends.
Other Miscellaneous Income:
This work-around for not being able to submit a 1099-INT for a foreign bank that does not have a FEIN works:
works for reporting the "interest income". However, unlike the 1099-INT there is no field to enter "foreign taxes paid", ie the taxes that were collected by the foreign bank that also paid you interest. Later if your try to claim credit for the foreign taxes paid via "Deductions & Credits" --> "Foreign Taxes" --> "Take a Credit" --> "Reporting Foreign Taxes Paid" -->"Select the Country from drop-down list" --> "Report Income" button --> here it lists other 1099-DIV forms that had "foreign taxes paid" but no option to select the "other reportable Income" where I had listed the foreign interest that was paid.
In summary, the work-around of reporting foreign interest via "other reportable income" works for reporting the interest paid by the foreign bank without a FEIN but then this work-around does not not work for claiming tax credit for the taxes that the foreign bank had collected.
@ericfons , I have been following this thread for some time. However, unless this is an "on-line" specific issue, I don't know how to duplicate this. On my Windows Home & Business download, I can -- under personal income tab, select "I will choose what I work on", then from the list of incomes, go to "Interest / Dividend".. , choose " I will type it in myself " --- this then puts up a screen with "tablets " for Interest, Dividend .... . Click on the Interest income ---- Now it want the name of the Interest provider ---- , does not ask for EIN, but does allow me to say "I have more boxes " and selecting this allows many items including " Federal Taxes withheld"., Foreign Taxes paid etc.
Sorry, I do not see the problem / issue .
Check this to search for the FEIN of the international financial institution:
then I applied the found GIIN in the FEIN field, and the TurboTax error was gone!