412 thoughts on “How to Report Your Foreign Bank Interest on Your US Income Tax Return”

  1. One more question I have is about the interest income reporting from foreign accounts. I have CDs in foreign accounts with maturity of more than a year and no interest is paid out or shown in bank statement until maturity. As these investments are for more than a year, any interest earned on them will be treated as long term capital gain in US or as a simple interest income which will be added to my total income. There will be no form 1099 issued by foreign bank as its non US financial institute.

  2. I have filled the 2014 US tax return and while reading this forum came to know about the requirement to file FBAR and form 8938. My question is

    1. Can I file the amended return now to file the form 8938. Since I did not file it with my original return due to reason, I was not knowing it will cause any penalties or trouble? I have reported income from foreign accounts correctly in form 1040 though.

    2. I forgot to report some of the accounts on my FBAR. Can I file the amended FBAR as well to include non reported accounts earlier?

  3. Hi,

    Thanks for the all the information. I had a quick question – I have always had less than $50,000 in my foreign bank account that was opened in 2012. As part of FATCA, will the IRS be able to access my bank account details all the way back to 2012 or is it only for the current year (2015). Thanks.

    Chuck

  4. Hi Jan Roberg!

    I have a fixed deposit (FD) in India which matures in 2017. My bank in India provides me with a statement that shows the accrued interest ending 12/31.

    I believe I am suppose to treat and report this as ordinary interest on Schedule B, but can you tell me if I should use 1099INT or 1099-oid?

    When reading IRS instructions, there is something about reporting any CD that matures after 1 year in the same manner as other oid. But not having received any 1099-oid from Indian bank, will this create a problem? Is it acceptable to report this interest using 1099-int, and check “no 1099 was actually received”?

    Thank you for your advice and guidance 🙂

  5. Hi Presby,
    In my opinion–I agree with your CPA. You use a cash basis of accounting and you have not “constructively received” that interest. So I agree that you don’t report the 9% accrued interest because you don’t really have it.

    If fairness, I’ve hear other people disagree with me. To me, as I go through the IRS publications, the exceptions to “constructively receiving” interest income – that’s the argument that your CPA and I are both using, involve OID (original issue discount). That’s when a debt instrument is issued for a lower price than it’s stated maturity price. You claim the OID as interest income on your tax return.

    So, the people that disagree with me and your CPA are basically stating that your foreign interest is similar to OID and therefore you should claim it.

    I can argue both ways. But I lean towards not claiming it because I believe it’s different from the OID.

    Sorry, I realize that’s not much help, but I’m afraid that I haven’t gotten a really clear answer on that.

  6. Hi Jan,

    I have some cumulative deposits in a foreign country at a 9% interest that will mature in 10 years. I can get access to the interest only at the time of maturity. If I were to withdraw the funds now, I would get a very low interest rate and will be assessed a heavy penalty. My CPA tells me that I have to report the interest only at the time of maturity since the taxes are based on cash basis and also the 9% interest is not accessible. Could you please confirm this?

    Thanks

    Presby

  7. Hi SG,
    You received a CP2000 notice from the IRS saying that you forgot to report $4000 of interest on your 1040 tax return and that you owe $1600 in taxes for that.

    If you did receive $4000 in interest and you paid not tax to the foreign country, I would just sign the letter and write a check. Easy and done.

    If you did receive the $4000 in interest but you paid tax on the money to a foreign country, then I would amend the tax return showing the interest on the 1040 and also include a form 1116 and claim a credit for the tax that was paid on the interest to a foreign country. On the CP2000 you would check the box saying you disagree with the assessment.

  8. Hi Cathy C,
    You are right, the inheritance isn’t taxable in the US. But you may need to report the money that is held in the bank account on the FBAR. If you have over $50,000 in the account you would need to also file a form 8938 with your federal income tax return.

    If you’ve earned interest on the account, then yes, you also report that on your income tax return. That goes on Schedule B, just like regular interest. If you paid tax on that interest to France, you could claim at credit for taxes paid to a foreign country on form 1116.

    The IRS says that you must report all interest earned on a bank account. Generally, most banks do not report less than $10 of interest and often those small amounts are not reported.

    And about the house, since the house was inherited, when you sold the house, you sold it at the stepped up basis (which is how you value it in a case of inheritance.) So, you wouldn’t pay any gain on the sale of the house.

    But you mentioned a loss. Since the house is personal property, you wouldn’t claim a capital loss on the home either. Now, if you held the house and rented it out (using it as an investment property) then if you sold it at a loss, then you would claim the capital loss.

    I threw a lot at you there, I hope it made sense.

  9. Hi Jan,
    I apologize in advance, as I am not familiar with these situations at all.
    Thank you for your help!

    I’m looking for information on Foreign inheritance/Foreign accounts.
    I have been googling foreign inheritance tax law. It appears that we don’t have a US tax liability for my husband’s inheritance, and we don’t need to claim it on our taxes…but….because the proceeds from the settlement of the estate were placed in a foreign account (currently held there), and the amount in the account is over $10k, we will need to register the account with the US Treasury – FBAR – Correct? Is there anything else we will need to do?

    I have to get the exact info from my husband, but I saw others mentioning that foreign banks withhold taxes on interest earned. Is that common? This account is in France. If it has, would that be something I could deduct on my taxes?

    If any interest has been earned since the money was deposited, does it need to be claimed on our taxes? Does it have to be over a certain amount to need to be claimed? Where do you claim this type of interest on your taxes?
    Best,
    Cathy
    I was also curious. If the estate originally included his mother’s house, but the house was sold at a low price due to the market at the time, to cover debts & expenses to settle the estate, would the difference ever be considered a capitol loss?

  10. Hi Arun,
    I wish I was as knowledgeable as you think I am To be quite honest, I often have to look these answers up. And sometimes, as I think you’ve found–you get different answers.

    But this one I feel pretty confident about.

    If your foreign CD has a separate account number, report it as a separate account on your FBAR. I had an issue with that for a client and that was what I was instructed to do.

    As far as reporting the maximums–I would report the highest dollar amount that is stated in any bank statement during the year. So if the bank reports that phantom interest in the account–put it on the FBAR. If the phantom interest isn’t listed, leave it off.

    Ideally, you want to be able to tie your FBAR documents to a document–like a bank statement, so I wouldn’t add a number that isn’t already being reported someplace.

    I hope that helps.

  11. Hi Jan,

    You must be the only one out there with such in-depth knowledge of foreign income and FBAR issues, my accountant certainly does not 🙂 I was able to find answers to most of my questions in past posts from you, but haven’t seen any advice on the following situation (I apologize for repeating the question if it has already been answered).

    I was wondering how the maximum account value for purpose of FBAR should be computed if some of the deposits in a foreign bank were in form of long-term (more than 1yr) CDs that don’t pay out the interest until after maturity, but show the accrued interest on quarterly statements. I know that the accrued interest should be claimed as regular interest income on 1040, but what about the maximum account balance for that account: Should it be reported on Fincen 114 as Princinpal only until after maturity of the CD, or should it be reported as Princinpal + the phantom accrued interest so far?

    Another related question: If this CD is linked to a foreign savings account in the same bank, can the aggregate sum of the two accounts (Savings and CD) be reported as a single line item on FBAR under the saving bank account number, or should the CD account number be mentioned as a separate line item?

    Thanks much for any inputs you can provide on this, and for all the hours you must have spent answering hundreds of these questions, creating such an excellent repository of information on complex issues of FBAR for everyone.

    -Arun

  12. Hello Jan,
    I am still hoping you can respond to my post 235: can the negative value I always have on line 41 of my 1040 serve to offset my foreign passive income tax liability?
    Thanks again.
    Calvin

  13. Hi Robertg,

    Below is my question, please do answer at your earliest convenience…Thanks in advance…

    last month, i received CP2000 notice from IRS for tax year 2013 with a change in Form 1040. I used one of the e-filing website to file my taxes & missed to report my Foreign bank accounts ($4000 interest for 2013 year). Now, IRS has mentioned to make the payment for the tax i owe($1600) after the changes to 1040. Can you please explain my options ???

  14. Hi Vish,
    you will report both of these accounts on your tax return with form 8938 and also on the FBAR. If you are supposed to file a regular US 1040 for 2013 then you will report on the 8938 there. If you file a 1040 NR for 2013, you will not be reporting those bank accounts.

    You will account for the tax that you have already paid on the account with form 1116 to claim a credit for that tax that you paid. Since you haven’t filed yet, I’d do that now. The FBAR is due on June 1. I’d file the 2014 on time. The 2013 will be late, but I would file it anyway and just claim in the reason box that you didn’t know until now. I think in your case that’s a pretty valid explanation.

  15. Hi Sam,
    Yes, you do have to report the interest earned on your Indian bank account. Even if you don’t intend to use it. You can call it “nonimee interest” and I’m attaching a link about that, but it’s probably just easier to pay the tax. Here’s the link explaining nominee interest: http://www.investopedia.com/terms/n/nomineeinterest.asp

    Now, about amending those returns. I’d do the last three years. Going back doesn’t really make any sense.

    And, since you and your wife hold those accounts separately, there’s not need to file the FBAR as I see it. The way I interpret the rules is that those accounts, unless you are joint owners, are treated separately.

  16. Hello Jan,
    My story so far…

    In Foreign bank # 1 I have $110,000 and in FB # 2 I have $10,000. The interest I earned from Apr 2014 to Mar 2015 is $12,000. The tax I paid in my foreign country is $3,600 ( All figures converted using standard exchange rate ). I came to the US on Dec 2012. I came to know about form 8938 and FBAR recently. I have not filed any of these two till now.

    1. Should I report FB #1 and FB #2 name and value in both these forms ?
    2. Since I have not filed in 2013 and 2014, what should I do ??
    3. How will I account for $3,600 tax that I paid in my foreign country in these 2 forms ??

  17. Hi Jane,

    I have 2 questions here:

    Situation/Facts:

    My parents are in India, and I transferred some money to India for their living (few years back). They have made one CD on my name and one on my wife’s name.
    All the interest income that’s earned on those 2 CD are 100% used by my parents in India. That interest income is not transfered to my US accounts. I don’t use a single penny of that interest in the US nor I use it when I visit India. We have no intent to use that interest at all.

    CD (in India) only on my name values $5,000 and
    CD (in India) only on my wife name worth $8000.

    Questions:

    1) Is that interest earned in India (not transferred in US) still taxable to us on Form 1040 (MFJ) here in US?

    —— If No, good

    —— If Yes, will I need to amend all my previous 5-6 years returns to show the interest income? Annual Interest Income is Less than 25% of the Annual AGI for those years, so do I have to worry about amending my old returns that has crossed 3 years amending limits?

    2) I just found out something about FBAR thingi, Per my above information, do me and my wife have to worry about FBAR disclosure requirement here? (Please correct me if I am wrong, per my understanding based on what I have read, I think I don’t since neither me nor my wife, individually, exceed $10,000 threshold ). Unless there is any threshold for MFJ.

    3) Can you please tell me if I need to file anything else?

    Thank you so much for helping me here!

  18. Hello again Jan, I don’t know if I was sufficiently clear in my post 235 (I still have not been able to figure that one out). If not, I can try to express it again more clearly. In the meantime, thanks again for your very informative and helpful blog.

  21. Hi Jan,
    Thank you for your reply. So, it means if we are filing joint return and have separate accounts, then even if one spouse files FBAR , other spouse dont need to file if balance is less than 10k.

    You mentioned that if Citibank is giving 1099 INT then it is not counted for FBAR. The NRE accounts are maintained in INR in India, and 1099 is issued in USD from NY branch. In post number 96 in this blog, you have mentioned about a case where there was an issue regarding the same and you mentioned that Citi should be reported. Kindly if you can guide that such an account should be counted to FBAR.

    Thanks a lot

  22. Hello Jan,

    I have a several term deposits in a foreign bank, Out of these term deposits only couple of them matured in 2014 and the others are not yet matured, the bank provides interests quarterly, however I will be encashing the interests only at the term deposit maturity. I have the below question

    1. Is it fine if I declare only the interest that I got on the matured term depost?

  23. Hi Sumit,
    I think your new question explains your situation about your wife’s foreign account a little better.

    So, you have $12 in one account and she has $4K in another. You would need to file an FBAR but she wouldn’t–assuming that you have those accounts titled separately.

    Now, if you put her as a joint owner on your account, then she’d have to file an FBAR also.

  24. Hi Sumit,
    If you are banking with Citibank and they issue you a 1098INT, then that is not counted as a foreign bank for FBAR purposes (even though there is Citibank India, and in years past they didn’t issue 1099INTs) but if you’re getting US style reporting, then it’s not considered reportable on an FBAR.
    You don’t need to file a Schedule B for that because your interest was too low to require the B at that time.

    Congratulations on your marriage! You will only file one Schedule B together. (If you need to file one.)

    For the FBAR, it depends on who owns the accounts. If all of your money is joint–then you file one FBAR with one spouse as the primary and the other as the secondary. But I find I’m often reporting two separate FBARS because many spouses have separate accounts or a retirement plan or something.

    If combined you have over $10,000 in foreign accounts, go ahead and file the FBAR.

    If you have $7K in one account and your transfer $5K to another account, then you’ll have $2K in one account and $5K in the other. So you won’t have $12K to report, it will still be $7K and therefore you won’t have a reporting requirement.

    On the joint account with your father, you report the entire balance but list that it is a joint account. For interest, who gets it? Do you receive half of the interest or does your father? Report what you actually receive. If it’s 50%, then report 50%.

  25. Hi DT,
    You are absolutely right. She doesn’t need to file the 8938 if she is not required to file a US tax return. But she should still file the FBAR.

  27. Hi Jan,
    I have few questions if you can help me.

    1. What is threshold for FBAR for joint filing. What if one has 12000k and spouse has 4000k, so then both should file FBAR? or only one with 12000k as the spouse does not qualify.

    2. I did show interest on NRE in my old return on 1040 but did not file schedule B (did not meet FBAR requirement). Do you think I should file schedule B for that year, or do I need to do anything to fix this.

    Thanks,

  28. Hi gcretro,
    No, I did not receive notice that the entire streamline package was accepted/agreed to. That’s the downside of the streamline filing compliance program. I’ve been told we will not get an acceptance letter–like you would if you did the Voluntary Offshore Compliance program. The closure I got was for the return that we had to fix.

  29. Thanks Jan. So the one streamlined that you heard back, looks it was a correspondence audit due to a mistake in one of the amendments and you corrected that? Just curious how you consider that to indicate closure. Did did hear from the agent that entire streamlined pkg was accepted / agreed to?

  30. Hi Jan,
    I have couple of questions
    1. I have NRE Account with Citibank for which last year they gave me 1099-INT (~100$) which I reported on my return on line 8a. I did not file Schedule B ( Not qualify for FBAR and did not know that time). Should I amend return and file schedule B to fill part 3.

    2. for this year I will be filing Joint return, do I need to fill separate schedule B for wife or it is only 1 form.

    3. I assume for joint return FBAR, it should be 10k per individual

    4. I have a big doubt on this point. what do we mean by aggregate total of 10k at any point of time. Suppose I have 7k in NRE and I transfer 5K into a savings account offshore. Now actually balance never excedded 10 (it is always 7 in total) on any single day. But FBAR asks for max balance , which will be 7+5, so how does it work , FBAR takes into account max balance, max balance at year end, or balance of >10k , on any single day. Do you think in this example, I need to file FBAR.

    5. I hold a joint account offshore with my father. The account says it is truly 50-50%( no primary holder). So for FBAR purpose, should I consider 50%. And for interest also 50%?

    Thanks

  31. Hi Jan! What a wonderful resource you’ve provided here!

    I’m just wondering if one still needs to file Schedule B even if they don’t need to file a return.

    A family member had very little gross income last year, well below the $3,950 threshold for Married Filing Separately for having to file. She is a US citizen living abroad, but according to the 1040 Charts A,B,C for Filing Requirements, she doesn’t need to file a return. However, she has two foreign joint bank accounts, where she is not the primary account holder, but she has signing authority if needed. Schedule B says that you must complete Part III if you had a foreign account.

    One of the foreign accounts was used as a holding account for a short period (two days) as one investment for the primary holder was moved into a new investment. So for those two days there was a large sum of money in the account.

    I’m guessing that if she doesn’t need to file a return at all (based on 1040 instructions), then the Schedule B, Part III section doesn’t apply to her either, since Schedule B is a part of the 1040 return.

    She would prefer to not file a return at all, because then she doesn’t need to file Form 8938 either, which she would prefer to avoid. (She knows she still needs to file the FBAR regardless.)

    So the Sch. B Part III requirement is void if she doesn’t meet the filing requirements for 1040, right?

  32. Hi Thank you for help:

    All I need is for Form 8938

    Exchange Rate for Indian Rupees for reporting interest ( January 1, 2014 to December 31 , 2014 )

    I am confused What Exchange rate to be used

    I found one ( after a lot of looking ) $ 1 = 63.2

    Now a Doctor Friend called and said I should use $ 1 = 63.469

    Help me if possible by e-mailing me Which one I should use.

    Thanks

    Dip

    bhattach@clarion.edu

  33. Hi gcretro,
    So far, I’ve only filed 5 Streamline Filing Compliance Procedures. Of these, only one seems to have come to a full closure. The only backlash–and I use the term loosely here, wasn’t about the reasons for filing, it was because I had an error in one of the amended returns. (My client gave me the wrong copy of his return to amend, not realizing that he had made a change.) We simply fixed the amended return, it didn’t change the tax that we had already submitted.
    Basically, every one of these that I’ve worked on said they didn’t know the rules–although I’ve tried to be very specific about how they didn’t know, not just writing “I didn’t know.”
    I’ve had no backlash as of yet. (I hope I’m not jinxing myself here.)

  34. Howdy Jan,
    Greeting in 2015!. I had spoken to you briefly back in Aug when streamlined domestic program was very new. Since it came out I’ve been researching/reading up around it. However, there is little real world information on how straight SDOP filings are fairing in the real world? (I am talking minnow / average-Joe cases with unpaid tax liability less than say 5K total over past three years who simply didn’t know that global interest income was taxable here in the states).

    Most information I have found deals with people who were already in OVDP trying to “transition” to Streamlined. That’s very different compared to someone doing/entering Streamlined directly. They have access to an agent already assigned etc…

    If you have done straight (non-transition) SDOPs, could you please share your findings/gut feelings thus far? Is IRS contacting you back and nitpicking the reasons given in the certification? Have any been accepted outright (without any pain) where unpaid tax liability and year end overseas balances are under some threshold value?

  35. Hi NJ,
    You’re on an H1B and you want to open an account in India for $15,000 that will incur interest. So, even though you won’t actually take the interest out of the bank yet, you will still report the interest that is earned on that account during the tax year the the money is earned.
    You are going to report the interest on Schedule B of your 1040 form. You will check the box that YES, you do have a foreign bank account.
    You will also file an FBAR. The FBAR is filed separately from the tax return.
    You will convert the interest that you earn from rupies to US dollars for reporting purposes.

    I hope that helps.

  37. Hi Halina,
    I think you did your 1116 form correctly! You see, the interest you paid to your original country was $57 on $300 dollars. That’s 19% interest. But on your US 1040, you could only get a credit of $32, that’s a little over 10%. The way it works is that you can only get a tax credit based on how much you would have paid on the interest if it was only owed in the US. I’m guessing that your tax bracket for that would have been 10%.
    Now, if you’re not in the 10% tax bracket–then there’s a problem.

    And you’re right that you can’t get a 1099 INT from foreign banks. Depending upon the bank and the country, sometimes getting that information at all can be a real hassle. I just filed a bunch of late FBARS because some folks really could not get the bank information until recently.

    I think that you’ve got a good argument that you used a tax professional but she didn’t tell you about filing the FBAR. That’s a valid excuse.

    Good luck.

  38. Thank you so much for your comments.
    I never had to use Schedule B (interest less than $1,500) in previous years. So it might be reasonable reason for “not knowing”.
    My taxes were done by Tax Pro from 2002 until 2011. Then from 2012 (+2011 amend) I started doing my taxes using TaxACT software (after my tax pro refused to help me with IRS letters/explanations/amend 2011 return). She is also immigrant from my country and should know about reporting foreign accounts requirement – but she never mentioned it to me.
    Form 1116.
    I tried amend 2013 tax by adding schedule B and Form 1116, but I wasn’t able to get full credit for foreign tax paid.
    Let’s say: my interest in 2013 was $300, and I paid $57 foreign tax. After putting all that info to my return I got foreign tax credit = $32 from Form 1116.
    I didn’t receive form 1099-INT from my bank, I got only statement showing beginning balance, interest earned, taxes deducted, and final balance. I know that I could get full credit for taxes paid ($57) only if I could get 1099-INT form from foreign bank (foreign banks don’t send this form to clients). But mentioned above statement isn’t good for IRS?
    Halina

  39. Hi Halina,
    You have asked a very good question. I would like to say, “I didn’t know the rule.” It’s a true answer. But the problem I’m hearing is that not knowing is not an acceptable answer. Although, I believe that most people with your problem honestly really didn’t know.
    So forgive me for giving such a long answer, but this requires some thinking. Did you prepare your own tax returns or did you use an accountant? Because if you used someone else, then if she didn’t tell you about foreign bank accounts that’s a good excuse, but the IRS wants you to name your preparer in you statement.
    If you prepared your own return, did you use the Schedule B? If you did, there were questions about foreign bank accounts, did you see them? If yes, that hurts your “didn’t know” answer. But if you didn’t file Schedule B and see the questions, then “didn’t know” is a more viable answer.
    Or, maybe you saw the questions, but because you earned the money while living in foreign country, you didn’t understand that the question applied to you.
    What I’m trying to say it–although “I didn’t know” is probably the truest and most accurate answer, the IRS is going to look at that carefully so why didn’t you know. If you can use an answer that works on that, that’s better than a plain, “I didn’t know.”

    Now, about your amended returns. I’m thinking that the 19% tax rate on your earned interest will erase most of the tax you might owe. Make sure you use form 1116 to take a credit for those taxes.

    Maybe–the fact that you paid taxes in the other country made you believe that the income wasn’t reportable in the US.

    And remember, you’ll want to include… “now that I know that the foreign bank account must be reported on the FBAR, I will be sure to file all appropriate paperwork every year.” Or something like that.

    On your FBAR, there’s a section for “reason for late filing”. You’re going to check the box “other” and type in Streamline Filing Compliance in the space.

    Good luck.

  40. Hi Jan,

    I have foreign account around 35,000 USD. I get around $300 interest every year, but my bank deducts from it 19% interest tax.
    Since today I had no idea that I had to report this account to FBAR and interest earnings to IRS (Sch B – tax return). This account is very “old”. It existed long before we came to USA and the money in this account are from my earnings and gifts in foreign country.
    Now, after reading your blog I realized that I may face the penalty for not reporting this account. I also found out that I can apply for Streamline Procedure (amend last 3 tax returns and file past 6 FBARs). Do I really have to pay another interest tax in US for the foreign interest that tax was already deducted in foreign bank?
    My question is: what explanation should I write on page 5 of Certification by US person residing in the US for streamlined Domestic Offshore Procedures):
    ” On the space below provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs.”

    Do I also need to write the same explanation on past FBARs?

    Please, help me
    Halina

  41. Correction to Comment 294:

    Hi Jan,
    I am afraid I confused the comment 294 especially the way I wrote it.

    Jan I am on H1B and want to open a fixed deposit account in India for around $15000 that will incur interest. I want to know how to report this interest and what all forms do I need to fill. Also, if the interest in not realized i.e. if it keeps getting added to the principal amount then do I still report the interest to the IRS. Also, the fixed deposit will be in Indian currency and so the quarterly statements that I will get will also report the interest in Indian currency. How to deal with the reporting of interest in this case. Finally, should I wait until this fixed deposit matures completely in India to report the interest income or report it for all the statements that I will receive for a given calender year.

    Thank you for your help.

    Sincerely,
    NJ

  42. Thank you SO SO SO much, Jan! I have talked to my aunt and she has given me the report regarding my mother’s accounts. I’m off the hook, what is a relieve, since I already pay a ridiculous amount of money here in the US for being a DINK. Again, muito obrigada!

  43. Hi Jan, can you explain what this statement means from the IRS website? ” I am a U.S. taxpayer but am not required to file an income tax return. Do I need to file Form 8938?

    Taxpayers who are not required to file an income tax return are not required to file Form 8938.
    The reason why I ask is that my income with standard deduction and capital loss carryover (3k) is at $10500 which is the same as my limit to not have to file, even though I am filing and reporting foreign bank interest income in Schedule B and the FBAR. Account is about $200,000. Thanks for the help

  45. Hi Lucy,
    Here’s a couple of thoughts that might help ease your mind a bit. First, you have signature authority over the accounts, you’re not the primary. That means that the interest earned on the account isn’t taxable to you, it’s taxable to your mom (despite the dementia) so that’s one thing not to worry about.
    The second is, it’s highly unlikely that she has over $10,000 USD in that account. If you have to send her $700 a month to cover her expenses, I’m guessing that she doesn’t have a lot of extra cash in that account. So you’re probably just fine.
    That said, it’s worth talking to your aunt. “Hi Auntie, I need to check with you, is there over $10,000 USD in mom’s bank account? If there is, I need to report it for my taxes, thanks.” (What is that? About 25,000 Brazilian Real? Around there somewhere.)
    So the worst thing is if you do need to report. But even here, it’s not so bad. You haven’t earned any income, right? So really all you’re doing is filing old FBARs. I wouldn’t go into any of the other reporting programs, I’d just file the FBARs because you would’t owe any taxes.

  46. Hi Jan,

    Thank you so much for all of your assistance. You have no idea what a big help you have been to us. Hopefully, one day we can return the favor. Thank you again and have a marvelous day.

  47. Dear Jan,

    I am an American citizen since 2012 and have been filling jointly with my husband since 1997. I have signature authority over my mother’s bank and savings accounts in Brazil since I moved to the US in 1992. She is now 85 years old and has dementia. I don’t know how much money there is in these accounts, but I send her about $700 every month to pay for part of her living-in nurse expenses, what means that she cannot possibly have a lot to spare. She is a widow and I’m her only daughter. My aunt, who also has signature authority, takes care of my mother’s finances and does all the necessary payments. In short, I’m totally ignorant of my mother’s monthly income and the status of her bank accounts. I know she needs financial help and I send it. How should I declare taxes on accounts I know nothing about? I’m about to burst an aneurysm over this situation. I’m afraid I’m going to be penalized over the signature authority issue and I don’t even know how to start fixing this mess. I thank you in advance for any help you can offer me.

  48. Hi Ron,
    You do not have to file a form 1116 if you are not claiming a credit for foreign tax paid.

    As I understand it, you are not required to file an amended return for the years prior to the three in your streamlined compliance program. But if you were to file those returns, I would use a schedule B to report the foreign interest if I were filing the return.

  49. Hi Jan,

    Please accept our apologies for the delay in thanking you for your earlier reply to our question about the Streamlined Foreign Offshore Procedures–Thank You. Your help is most appreciated.

    We do have a couple of additional questions regarding Form 1116. If we report the small interest income on each of the three tax returns on a Schedule B (just to be totally transparent), are we required to file a Form 1116 if we do not need the foreign tax credit?

    Lastly, if we are eventually required to file tax returns earlier than the three Streamlined tax return years, we did have foreign interest income totaling $120USD in one tax year without a 1099-INT or a qualified payee statement being issued. Is the Form also required to report foreign interest income whenever the taxpayer does not receive or have a 1099-INT?

    Thank you in advance for your kind reply.

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