Which schedule and line should I enter for reporting other income type of foreign financial assets on Form 8939?

[reneerex]

I have foreign endowment insurance income. I followed the procedure to enter "Other Reportable Income" for this income, as shown below. Then, when I come to the section reporting my foreign accounts. I need to file Form 8938. I selected "Other Income" and enter the account for "Amounts Attributable to Foreign Financial Accounts". Then, it asked me to enter the "Schedule and Line" for this "Other Income". The example showed by TurboTax is "Form 1040, Line 21". However, I checked another post (https://ttlc.intuit.com/community/taxes/discussion/how-do-i-report-foreign-life-insurance-policy-sur...), it says that it should be "Schedule 1, Line 8".

So, my questions are:
1. Should I choose "Other Income" for this type of insurance income when reporting my foreign financial account?

2. If yes, then, which schedule and line should I enter, "Form 1040, Line 21" or "Schedule 1, Line 8"?

Thank you very much.



Click on Federal
Click on Income & Expenses
Scroll to the bottom of the "Your income and expenses" page, and click on "Less Common Income"
Click on "Show more"
At the bottom of the page, next to "Miscellaneous Income..." click on Start/Revisit
Other reportable income - click on Start, then answer Yes
Give a description and enter amount of income from the policy surrender

This amount will also be reported on line 8 of Schedule 1 (Form)

[reneerex]

To be more specific:

The income from my foreign endowment insurance policies are:

1. One policy is matured in 2019. I received the total payment $6012. It includes premium I paid ($4309) and maturity survival money ($1859).  

2. The second policy is still active, but I don't need to pay premium. I received the annual survival money $157. 

Will the type be different for the two policies? Or, they are all "Other Income" as I entered them as "Other Reportable Income" in the section? 

Thank you very much!

[SusanY1]

You will enter it all as other income in the section that you describe.  For the entries on Form 8398, you will indicate that it is Other Income from Other Foreign Assets and you will list it as both Form 1040, Line 21 and Schedule 1, Line 8. 

Here is an example of what that will look like in the TurboTax entry screens for Form 8938:

[reneerex]

Hello @SusanY1 

Thank you very much for your reply. I have two related questions. 

1. The payments were deposited to my foreign bank account. Since I already reported this income as "Other Income" in form 1040, Line 21 and schedule 1, Line 8,  I don't need to report these income separately for the bank account. I mean, I will only report the interests from the foreign bank account. Is that correct? 

2. In 2019, I moved from CA to this state. The incomes were deposited to my foreign bank account when I was in CA. For state tax report, should I report these foreign incomes totally for CA?

Thank you very much.

Best regards,

Renee

[LinaJ2020]

1.  You will only report the income once on your tax return to avoid double taxation. 

2.  You would need to check with CA.  Click here: Your state

[reneerex]

Hello @LinaJ2020 

Thank you very much for your reply. Should I also check with my current state about this income? 

I have some additional questions regarding your reply. Thank you very much. 

>>1.  You will only report the income once on your tax return to avoid double taxation. 

So, I will only report it as Other Income. Thanks. 

>>2.  You would need to check with CA.  Click here: Your state

I checked with CA. I could only get to the website. It showed me as a part-year resident. It said that ''

• All worldwide income received while a California resident

"

When the received the income of the insurance policies, I was still in CA. From the description, does it mean that I should pay tax on the income to CA. Is that correct? 

Part-year resident

If you lived inside or outside of California during the tax year, you may be a part-year resident.

As a part-year resident, you pay tax on:

• All worldwide income received while a California resident
• Income from California sources while you were a nonresident

[reneerex]

Hello @SusanY1 

I am sorry to bother you again. I just saw that in your example, it is "Amounts Attributable to Other Foreign Financial Assets" and enter the "Other Income". The income is from foreign life insurance. I thought they are "Foreign Financial Accounts". Is that Correct? Should it the income in the category of "Amounts Attributable to Foreign Financial Accounts"?

Would there be a difference for paying tax if I enter the value in  "Amounts Attributable to Foreign Financial Accounts" and "Amounts Attributable to Other Foreign Financial Assets"? Does it depend on whether my foreign insurance policy is considered as a "cash value life insurance"?

Thank you very much. 

I read the description for foreign financial accounts as:

A Foreign Financial Account includes:
- Any depository, custodial or securities account (bank account, savings account, mutual funds, etc.) maintained by a foreign financial institution
- Any equity or debt interest in a foreign financial institution (other than interested that are regularly traded on an established securities market)
- Any cash value life insurance or annuity contract maintained by an insurance company or other foreign financial institution
- This includes a financial account maintained by a financial institution that is organized under the laws of a U.S. possession (American Samoa, Guam, the Northern Mariana Islands, Puerto Ricco, or the U.S. Virgin Islands

Best regards,

Renee

[reneerex]

Hello @SusanY1 

I am very sorry to bother you again. Could you please help? I don't know whether should I enter the income from my foreign insurance policy as "Other Income" to 

Amounts Attributable to Other Foreign Financial Assets

Or

Amounts Attributable to Foreign Financial Accounts

?

Would there be a difference for paying tax if I enter the value in  "Amounts Attributable to Foreign Financial Accounts" and "Amounts Attributable to Other Foreign Financial Assets"? Does it depend on whether my foreign insurance policy is considered as a "cash value life insurance"?

Thank you very much. 

Best regards,

Renee

[SusanY1]

Sorry for the delay in getting back to you, Renee.

There is no difference in the tax and only a subtle difference in the way these items are classified on the tax return.  

I would classify your insurance, and the income attributed to it,  as "Foreign Financial Account."

[reneerex]

Hello @SusanY1 

Thank you very much for your reply.

For entering the insurance as  "Foreign Financial Account":

1. Should I enter "Deposit" or "Custodial" as the account type?

2. I could only enter the number of the policy as account number. Is that correct? 

Best regards,

Renee

[SusanY1]

Use "custodial" and yes, use the policy number as the account number. 

[slitwinschmid]

Would I enter the same information (FORM 1040, LINE 21 // SCHEDULE 1, LINE 😎 were I reporting Dividends or Gains? Or would that be a different form/schedule/line? 

[ReneeM7122]

You would create a form 1099-D or Schedule B to report your dividends and gains.  

What is Form 1099-DIV?

Form 1099-DIV Dividends and Distributions is the form financial institutions typically use to report information to you and the IRS about dividends and certain other distributions paid to you.

The financial institutions are required to fill out this form if your total dividends and other distributions for a year exceed $10. It includes information about the payer of the dividends, the recipient of the dividends, the type and amount of dividends paid, and any federal or state income taxes withheld.

What is Schedule B?

Schedule B Interest and Ordinary Dividends is the schedule you use to list interest and ordinary dividends when filing your tax return with the IRS. As far as dividends go, you only have to use this form if you have over $1,500 in taxable interest or ordinary dividends in a tax year, or if you receive interest or ordinary dividends as a nominee.

The IRS states you must also use this form to report dividends if you are a signer on an account in a foreign country, or if you grant, transfer, or receive any funds to or from a foreign trust. You may have to use Schedule B for other situations as well.

How have taxes on dividends change

Here is a TurboTax article about dividends.

@slitwinschmid