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With respect as to how to report earnings on your foreign bank
account, the answer 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 $1,500 or $15, 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 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. The following Internal Revenue Service webpage describes them 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 asked about the specific schedule and line where your foreign interest and / or dividends are reported, on Form 8938, 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.Hi Miss GeoffreyG
When I tried to "pretend" I have a Form 1099-INT TurboTax keeps showing me "Needs review" because I don't have the "Federal Identification Number (FEIN)" and doesn`t allow me to finish my tax report, what should I add there?
Thank you
If you have paid taxes on your interest income to both the US and foreign government, you may qualify for a foreign tax credit. Besides filing a Form 8938 and Schedule B, to claim this credit, you would need to file a Form 1116. Here are the steps:
If you can't claim a credit for the full amount of qualified foreign income taxes you paid or accrued in the year, you're allowed a carryback and/or carryover of the unused foreign income tax, except that no carryback or carryover is allowed for foreign tax on income included under section 951A. You can carry back for one year and then carry forward for 10 years the unused foreign tax. To read more, click here:
https://www.irs.gov/taxtopics/tc856
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