Hello Friends/specialists!
I now understand the rules for "Report of Foreign Bank and Financial Accounts". If one is a US resident or Citizen and hold accounts outside US and the total value of the account/s (all combined) is more than $10000, that person have to file this form "TD F 90-22.1" to the treasury department.
My Questions:
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1. The aggregate value of account/s is more than $10000, not just the interest portions valuing more than $10000, correct? The total value of NRE account can be $50000, the interest earned is only $1500 (@ 3% PA) for example, we still need to file this form to Treasury right? Or since the interest in from this account is only $1500 it is not needed to report?"anandyrsk@yahoo.com"
I have some info about this as I've talked to some CPA's. Yes if your aggregate value at any point of 2008 was greater than $10K you have to file that report. Even if you earned $0 as interest or had gold in your account it does not matter, this report must be filed or there is a huge fine.
2. NRE account is not taxible in India so far which everyone knows about, but again I am given to understand that it is taxible in US for US Citizen or resident, that's understood. Without getting a 1099-INT or any other form or statement about the interest earned for the calendar year from the NRE account, how one can show the interest earned from that account?
You should know how much you received in interest in rupees. Convert that into USD on filing day by asking your bank for a suitable conversion rate, if in doubt call a CPA.
3. No 1099 and hence it will be difficult to report interest income. Is it enough that we declare Account or we have to calculate the interest close to the best or correct value as below and sumbit the value with Schedule-B after usual US income report from local banks? This case, IRS do not have a copy from the bank themselves and how can they take it as correct value or where they can cross check with? Is is tough to understand and seems a bit complicated.
For example, Just get or ask a statement for all interest earned from Jan 01 2008 to Dec 31 2008 from the bank where the account is and use one exchange rate (say the rate on Dec 31 2008 - close of the year) or use the correct exchange rate for each time when the interest is paid and covert to dollars before reporting? How this works and whether we have report this or just declare the entire account value to Treasure via the form TD F 90-22.1 is good enough?
Any suggestions/input/advise is greatly appreciated. I just received my GC (just by end of March 2008) and hence was reviewing/researching about this topic and also got to know about this from one of my friends. Otherwise I would not even know about this.
oh poor you, you got your GC, now you are stuck with not just paying worldwide income but a whole host of other taxes like gift taxes, estate taxes, capital gains tax on worldwide income etc. So next time you plan to gift a car to your children make sure IRS gets 3-4K as tax. Also the tax structure is so complex that you need to talk to several CPA's to get a clear picture.
Coming to your question, yes you have to report interest income after/with local bank interest income. IRS will never receive a copy of anything from foreign banks, if they suspect you have a lot of property/income in India, they'll file a lawsuit against you and you have to show them that you declared all worldwide income.
For your exchange rate question, please contact your bank or CPA, they have a formula/particular source for calculating it.
You have to report each bank account using TD F 90-22.1 , even if each of those accounts had less than $10K. There is space on that form to report several bank accounts.