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My foreign currency bank account has interest credited but lost value because the currency has lost value against USD. What taxes/credits are due in this situation?

Foreign currency is in Indian Rupee (INR). Interest income is in INR and worth around 2000$ 
I have filed FBAR.
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1 Reply
pk
Level 15
Level 15

My foreign currency bank account has interest credited but lost value because the currency has lost value against USD. What taxes/credits are due in this situation?

@megferkctt2019 , there is two part to this  scenario:

(a) the interest earned  in the savings account is recognized / reported  in the year your account is credited ( construtively received ) and in equivalent US$ at the time of receipt.  Since your operating currency is in US dollars currency effects are included.  You are taxed on the dollar income.

(b)  the loss of principle ( in US$ terms ) is  seen only when the money is repatriated to US.  However, there is really no recourse to this unless you are in forex business.   It will be essentially a personal loss barring a totally unforeseen  / act of God issue.

 

Hope this helps .  Is there more I can do for you ?

 

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