Interest payments

[Ozk]

Hello, 

Do saving bank account interest payments less than $1 need to be reported for tax returns as a resident alien for tax purposes? I was told if it is between $0.5 and $1 it should be reported as $1. It is correct?

[DaveF1006]

Yes, it would need to be entered as $1 as IRS accepts only whole numbers.

[Ozk]

Do we have to report that small amount of interest?

[DianeW777]

Yes, that is correct. The IRS does round up for $.50 and higher, they round down for $.49 and lower.  That being said, if you have other interest then you should add this dollar, however if this is the only interest income you have then below $1, you may be all right to file without it.

It's rare that $1 makes the difference in shifting a person to another tax bracket because the brackets change at $50 increments in the tax table. Here are the tables if you want to check it out.

• IRS 2021 Tax Tables (used with the taxable income on line 15, Form 1040 if there are no capital gains).

[Ozk]

I want to understand if this is a must ans we have to report as I do not know the answer. That is the only interest I have and it is between $0.5 and $1 per year.

[ErnieS0]

Yes. The IRS requires you to report all income as super knowledgeable Tax Experts @DaveF1006 and @DianeW777 have said @Ozk.

The IRS says to round off numbers, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3.

[Ozk]

Very clear thanks a lot. 

as a last question. Donwe need to report foreing bank accounts if we have less than $100 in them and if we are resident alien for tax purposes? Thank you

[DianeW777]

The requirements for both FBAR and Form 8938 are included with thresholds below.

FBAR Reporting:

Who:

A United States person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report:

1. a financial interest in or signature or other authority over at least one financial account located outside the United States if
2. the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

Generally, an account at a financial institution located outside the United States is a foreign financial account. Whether the account produced taxable income has no effect on whether the account is a “foreign financial account” for FBAR purposes.

When:

The FBAR is an annual report, due April 15 following the calendar year reported. 

You’re allowed an automatic extension to October 15 if you fail to meet the FBAR annual due date of April 15. You don’t need to request an extension to file the FBAR.

How to File:

You must file the FBAR electronically through the Financial Crimes Enforcement Network’s BSA E-Filing System. You don’t file the FBAR with your federal tax return. 

If you want to paper-file your FBAR, you must call FinCEN’s Regulatory Helpline to request an exemption from e-filing. See Contact Us below to reach this Helpline. If FinCEN approves your request, FinCEN will send you the paper FBAR form to complete and mail to the IRS at the address in the form’s instructions. IRS will not accept paper-filings on TD F 90-22.1 (obsolete) or a printed FinCEN Form 114 (for e-filing only). 

Form 8938: Purpose of Form - Instructions Form 8938

Use Form 8938 to report your specified foreign financial assets if the total value of all the specified foreign financial assets in which you have an interest is more than the appropriate reporting threshold. 

Who Must File

Unless an exception applies, you must file Form 8938 if you are a specified person (see Specified Person, later) that has an interest in specified foreign financial assets and the value of those assets is more than the applicable reporting threshold.

• Reporting Thresholds Applying to Specified Individuals. If you are a specified individual, your applicable reporting threshold depends upon whether you are married, file a joint federal income tax return, and live inside (or outside) the United States.
• Thresholds:
  • Taxpayers living in the United States. If you do not live outside the United States, you satisfy the reporting threshold discussed next that applies to you, and no exception applies, file Form 8938 with your income tax return.
  • Unmarried taxpayers. If you are not married, you satisfy the reporting threshold only 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.
  • Married taxpayers filing a joint income tax return. If you are married and you and your spouse file a joint income tax return, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.

For more information use the link above or add clarification here.

[Ozk]

From here i understand that it does not have to be reported as the amount is not exceeding $10.000. Could you confirm?

[DaveF1006]

Yes, amounts of $10,000 or below do not have a FBAR or 8938 filing requirement.

@Ozk

[DanP0428]

Tax law says you have to report it.  Most of us forget to report it.  You won't get a 1099-INT unless you get more than $10.00.  

[Ozkozk]

Hello, 

does saving account interest payment less than $5 per year need to be reported as an income? And secondly do foreign bank accounts less than $50 in the balance without interest payment need to be reported as income for resident aliens for taxt purposes? Thanks

[JulieS]

Yes, you are supposed to report your interest income of $5. If your amount is $.49 or less, you can disregard it as it would round down to $0. 

No, you don't have to disclose a foreign bank account with a balance of $50 unless it is a part of a group of foreign accounts whose value exceeded $10,000 at any time during the calendar year reported. 

Click here to learn more about FBAR.

[Ozkozk]

Saving account interest is $2.54 should I still report it? Thanks

[JulieS]

Yes, you should report it as interest income greater than $.49, even if you didn't get a 1099-INT.

To enter interest income in TurboTax:

1. Open your return and select Federal.
2. Select Wages & Income.
3. Scroll down, or expand the list and find Interest and Dividends.
4. Expand that section and find Interest on 1099-INT.
5. Click on Add/ Edit to the right.
6. Select, I'll type it in myself, and click Continue.
7. For Received from, enter the name of the bank or the company.
8. Enter the amount and click Continue. 
9. Answer the next question No.