I had more than $10,000 in a foreign bank, and had earned interest, and paid taxes to that country. The amount was less than $100, 000. Do I need to report the assets?

[justforvps]

Turbo Tax walks me through the steps, and then reports that "based on what you told us, it turns out you don't need to report your financial assets".
This is very confusing. I thought all financial assets if more than $10, 000 should be reported?

[GeoffreyG · Accepted solution]

Reporting the existence of foreign financial accounts, as well as declaring any income earned thereon, can certainly be very confusing.  We would not disagree with you, as compliance in this area involves understanding several sets of often overlapping rules.  However, we will present a complete answer to your question below, in the hope that reading this material carefully will enable you to comply with existing federal law.

With respect as to how to report earnings on your foreign bank account, the solution here is that you will do this on a United States tax return just as you would as if the bank were domestic in nature instead of foreign.  It does not matter what is the dollar amount involved, whether it is $50,000 or $5, the reporting process is just the same -- although you do need to convert any foreign currency amounts back into US dollars, simply for tax compliance and reporting.

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 federal 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 at a special US Treasury Department website.  The following Internal Revenue Service webpage describes both compliance disclosures 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 ever asked in the software 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, and we hope that this information helps to alleviate some of the confusion.

[samcali]

This reply doesn't seem to answer the original question.  Let's say you have the equivalent of $11000 USD in Canada.  Turbo tax first starts with saying an FBAR will need to be filed. Then, after answer all the questions:

Tell us about any foreign bank accounts.  I HAD A BANK, BROKER, OR OHER FINANCIAL ACCOUNT IN A FOREIGN COUNTRY.

Was the total value of all your foreign accounts more than $10k at any time during 2022?  YES

List of any foreign country where you had a financial account: CANADA

Tell Us About Any Foreign Trusts.  NONE OF THE ABOVE

Do you have any foreign financial assets? YES

Did you live in a foreign country? NO

Total value more than $100k on the last day of 2022 or more than $150k any time during the year?  NO

TurboTax says: Based on what you told us, it turns out you don't need to report your foreign financial assets.

This seems to indicate an FBAR doesn't need to be filed?

[pk]

@samcali , TurboTax , in the example you provided, is talking ONLY about reporting required  for FATCA -- form 8938  -- because this is filed with the return.  The FBAR form is ONLY available on-line at FinCen.gov.  and NOT filed with your return -- see  this --->

Report of Foreign Bank and Financial Accounts (FBAR) | Internal Revenue Service (irs.gov)

FATCA details are here;

 Instructions for Form 8938 (Rev. November 2021) (irs.gov)

 The blurb that you saw in this thread is just that--

Is there more I can  do for you ?

pk

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