You would enter the foreign interest AS IF you had a 1099-INT in the "Interest and Dividends" section under income
(this section in TurboTax may look a little different, continue, select "Add Investment" and "skip import" if needed)
When you enter the interest, you can also click the box for "My form has info in other boxes" so the drop-down will allow you to enter foreign tax paid in Box 6.
You may then return to "Deductions & Credits" and scroll to "Foreign Tax Credit" and continue that interview.
I have a foreign bank account and the interest earned is reflected in another currency. How do I reflect this in US dollars by adding a 1099 INT investment? The statement also reflects tax deducted on the interest credited. How do I take the credit for this tax on my tax returns?
HERE is an IRS link explaining how to covert to US Dollars.
IRS has avg exchange rate for each year which can be used or Treasury note has the Dec31 exchange rate which can be used
@KrisD15 Thank you.
The statement also reflects tax deducted on the interest credited. How do I take the credit for this tax on my tax returns?
It believe it means foreign tax paid. Just convert it according to exchange rate and enter under foreign tax paid
After entering your income statements such as interest, in USD, and any foreign tax paid on that income
(foreign wages are entered under: Wages and Income - Less Common Income - Foreign Earned Income and Exclusions)
Continue to claim the foreign tax credit by going to:
Deductions & Credits
Estimates and Other taxes Paid
Foreign Taxes START
Continue through the interview
HERE is a TurboTax link with more information
@sking10
Thanks @KrisD15
Just for clarification, I should NOT be entering a new 1099-INT under Investments and Savings with interest earned in Box 1 and Taxes paid on it in Box 6? Instead, I should enter it under - Less Common Income - Foreign Earned Income and Exclusions?
You SHOULD BE ENTERING a 1099-INT and the foreign taxes paid on that 1099-INT
YOU DID NOT EARN WAGES, you are reporting interest.
You are not looking to exclude wages, you are looking to get a credit for the foreign tax you paid on the interest.
For INCOME, Enter a "mock" 1099-INT, report the interest, and the foreign tax paid
THEN GO TO-
Deductions & Credits
Estimates and Other taxes Paid
Foreign Taxes START
(I only added the comment about the Foreign Earned Income Exclusion for those whom may be looking for that section.)
@KrisD15 Thank you, I follow it.
Just one last question, hopefully. When I start the Foreign Tax Credit interview under Deductions and Credits, I am answering NO to this question - "Did you pay taxes on income you made while working outside the U.S.?". Upon clicking Continue, it automatically tells me I am getting the credit in the same amount I entered in Box 6 on the 1099-INT. Am I doing this correctly? And if yes, is that all I need to do for this foreign interest and taxes?
Yes, you reported this correctly and that is all you need to do. You are receiving your foreign tax credit you are entitled to.
@DaveF1006 Thank you.
Under Miscellaneous investment income section, I am selecting the following option:
- I had a bank, broker, or other financial account in a foreign country
Was the total value of all your foreign accounts more than $10,000 at any time during 2024? is NO
Do I still need to select Yes for this question even though I had already indicated that I have a foreign bank account? "Do you have any foreign financial assets?"
No, if the value of your foreign accounts do not exceed $10,000, you would say no.
Form 8938 is entered only if foreign assets is more than 50000 for single and 100000 for joint filer. FBAR is filled separately only if you have more than 10000. You still have to enter interest earned. Turbo Tax premier explains everything
@DaveF1006 Sorry, I was asking about "Do you have any foreign financial assets?". Do I still need to select Yes for this question even though I had already indicated that I have a foreign bank account?
Yes, you should answer this question yes even if these accounts may not reach a minimum threshold for filing an FBAR or 8938. Examples of financial assets may include:
You may need to file a Form 8938 if the total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year, if you are filing Single. If you are filing Married Filing Jointly, the threshold amounts are $100,000 and $150,000 respectively.