Reporting Interest on Foreign Accounts

[Tribhovan]

this year I will have to file FBAR as the total amount has exceeded the threshold. I have not reported interest income from these foreign bank accounts in previous years, which was somewhere between $100 to $500 each year.

How should I proceed?

[JulieS]

Yes, you are supposed to report your foreign interest income if you file a US tax return.

If you have not yet filed your tax return for 2022, be sure to include your foreign interest in US dollars on this year's return. If you already filed, you should amend your tax return to report the interest.

The IRS publishes conversion rates for foreign income. Click here to see the conversion rates you should use on your tax returns. 

This is how to report interest income for which you have no 1099-INT:

1. Select Federal on the left side menu, then Wages & Income.
2. Scroll down to Investments and Savings, expand the section.
3. Click Start or Revisit to the right of Interest on 1099-INT.
4. Click + Add investment.
5. Click Continue.
6. Scroll to the bottom and click Enter a different way. 
7. Select Interest Paid from bank or investment accounts 1099-INT and click Continue.
8. Select Type it in myself
9. For Payer's information, enter the name of the bank who paid the interest, or a descriptive term like "Bank interest".
10. Enter the interest amount in box 1, leave the rest blank.
11. Click Continue.
12. Select None of these apply, and click Continue.
13. The amount will appear on Schedule B as interest. 
     

If you paid foreign tax and have not already claim a credit or deduction for it, you can also add that to your tax returns. Click here for more about foreign tax credit. 

You should also amend your prior year US tax returns to include your foreign interest. Click here for more about amending your tax returns.