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Zmir
New Member

Foreign savings account interest.

I am a usa citizen. New york city resident. Will be permanently moving to a foreign country. I am going to open a savings or a cd account which will be my only source of income. No work. Just bank interest income. 

 

Do I need to file taxes on that interest income which will be around $12,000 a year. That's my only source of income. 

 

How much tax can I be charged? Federal and nys tax. 

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2 Replies
pk
Level 15
Level 15

Foreign savings account interest.

@Zmir , 

In general , as a US citizen you will need to file a return on your world income and be taxed by the USA. This is even though your tax liability may be zero.  

You also have to file FBAR at least because your foreign bank account value  is likely to be above US$10,000;  and FATCA  ( form 8938 ) along with your return.  Neither of these forms result in any taxes but not filing these when required can expose you to onerous  penalties.

Here is a comparison between these two forms -->  Comparison of Form 8938 and FBAR requirements | Internal Revenue Service

 

Do you need more help on these forms  etc.?   

Which country are you moving to ?

Is there more I can do for you ?

Foreign savings account interest.

If your total gross taxable income is really only $12,000, you would not owe income tax because it is less than the standard deduction (unless you are married filing separately under some circumstances.).  But as noted, if you are a US citizen, you are required to report your world-wide income and pay US tax, no matter where you are living.    Whether you also owe foreign income tax on the same money depends on the laws where you move.  Also, as a US person, you must declare ownership or control of foreign bank accounts on a separate web site from your tax return.

 

Regarding NYS, the question is whether or not you are a resident of NY.  If you are not a resident, you don't owe state taxes and don't file a state tax return.  The rules for residency are discussed here.

https://www.tax.ny.gov/pit/file/pit_definitions.htm#domicile

 

Basically, if you maintain a domicile in NY, you might be considered a resident.  For example, you keep a small apartment, you visit a few times a year, you maintain your doctor, dentist, and other significant business and social relationships in NYS.   Even if you abandon your domicile in New York, you will need to file a part-year resident return for the year you move out of state, that reports and pays tax on income earned during the portion of the year that you were a state resident. 

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