I have a bank account overseas that is earning interest. I opened the account in December 2012 and the current balance is over $10,000. The first interest and dividend payment will be made in 2013. I understand that I need to file form 1116 and another form. Can you please provide the proper filing procedures?

ANSWER

The BIDaWIZ Team's Answer:

Since the bank account's value exceeds $10,000, you need to file Form TD F 90-22.1 on or before June 30th, 2013. As for reporting the interest earned, you would not have to do so for the 2012 tax year, but rather the 2013 tax year. Taxpayers generally report on a cash basis of accounting. Thus, the interest and dividends will not be reported until the 2013 tax year. You would then need to file form 1116 to claim the foreign taxes paid on the interest and dividends received.