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 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.
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
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.
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 updated the information, You're awesome.
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 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 ID of Federal tax ID number'? A foreign bank does not have a federal ID number from US
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 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
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?
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?
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:
@maverick
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!
Please try all 1s as the Payer ID and see if that will work.
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?
Here is what I was able to find out from one of TTs CPA.
Technically, you would enter a Form 1099 for interest, dividends to create a Schedule B. However, with a foreign entity, you would not have a US FEIN to qualify for the e-file. For the workaround, I would suggest you enter the information under Other Income in the program. To the IRS, as long as the total amount is reported on your taxes as Other income on line 7a Form 1040, you should be Okay.
To report it under Other Income so that you will be able to e-file. Here are the steps:
In TurboTax online,
TURBO MANAGEMENT
MOST URGENT
In last ten years, using Turbo, we used to leave the payer ID section blank for filling interest income earned in a foreign bank because foreign banks in foreign countries are not under USA. They do not issue 1099 Int. But, this year, Turbo gives an error at the time of federal review and it insists that we must enter payer ID (FEIN) in the box.
I called CA Turbo CA and asked her to fix the error in review. She failed to do anything about it. I checked with another tax website. There was no such problems in other websites. So, I am quite certain that a programmer or developer made a small error in programming and it must be corrected ASAP.
I know several people who have interest income in foreign banks. All of them will face similar problems. I, therefore, urge Turbo management to ask some competent programmer to fix this error. Please take it MOST URGENT. Thanks
You can still e-file with the error on the EIN. Skip the error and follow prompts to proceed.
If it doesn't work, report it under "Other Income" as directed above.
I do not think we can report foreign interest income as "Other Income". Interest incomes - within USA or from a foreign bank in a foreign country, should be reported on Schedule B. I am wondering why TURBO programmers are not able to fix this simple problem in federal review or template for 1099 Int. Many customers of Turbo reported this issue. I know many people are not happy with TURBO because of this issue. I request Turbo programmers should address this issue ASAP.
Hi Margaret, would I have to report foreign interest income for a foreign bank account only if that interest income was over 10 USD (since in the US, banks only send you a 1099-INT if they paid you interest over $10)? Or would I have to report it no matter the amount?