How to report foreign interest income without a FEIN?

[chag2020]

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.

[pk]

@chag2020  

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 .

[chag2020]

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.

[pk]

@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

[chag2020]

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.

[pk]

@chag2020 

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 ?

[chag2020]

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?

[chag2020 · Accepted 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 😉

[pk]

@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.

[chag2020]

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.

[dk2025]

How did you file the foreign tax credit, which form if you could share?

[AmyC]

Form 1116.  It can be a deduction or credit. Most people take the credit.

See:

• Where do I enter the foreign tax credit (Form 1116) or deduction?
•  Form 1116, Foreign Tax Credit (Individual, Estate, or Trust). 

@dk2025 

[dk2025]

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. 

[chag2020]

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.

[pk]

@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 )?