Foreign Bank Account - Interest and Taxes Paid

[kgraghu]

I have two bank accounts in a foreign country. I received Interest from both the banks and paid Taxes for interest received from Bank 1. I didn't receive 1099 from both banks.  I entered the Interest amount in 1099-INT box 1 and taxes paid in box 6 for Bank 1; Interest amount in 1099-INT box 1 for Bank 2.

1. Is this correct?

2. How do I mark these incomes are from foreign bank?

3. Do I need to mark "FACTA filling requirements are checked"? 

4. How I get credit for Taxes Paid in foreign from State (NJ)? 

[pk · Accepted solution]

@kgraghu ,

(a)  for interest reporting, you report the  earnings just as if you had received  1099-INT , except there will be no EIN -- just the amounts of interest earned  by identification ( such as Bank name and country ). US will tax these as ordinary income.

(b) for foreign taxes paid , you tell TurboTax under  credits and deductions tab, that you have foreign taxes to report -- it will walk you through filling out the information needed -- please make sure that you do fill in the  foreign source income(s) -- total and the total taxes paid.  Note that if the foreign country has a different tax year, US still recognizes only calendar year -- hopefully you do not have to allocate the income and/or the taxes paid.

(c) Note that if the total amount of foreign taxes paid is equal / less than the safe harbor amount ( US$300 per filer  i.e. $600 for a joint filer) the you can choose simplified method  and you will get the total amount of your tax credit this year.

(d) for your State Tax  --- most do not recognize  taxes paid to foreign entity.  Please check with your  own state DOR -- will have the  most accurate information.

Namaste ji

Is there more I can do for you ?

[kgraghu]

Thank you for the detailed explanation!