Ask Me Help Desk - Interest earned on foreign account

My grandparents who lived in France opened a bank account for me many years ago that I didn't know about. Very little money was ever deposited in the account while my grandparents were alive.

My mother (who also lives in France and is a french citizen) recently made me aware of the account and started putting money into the account for me, but I've never gave it much thought. Now that the account is becoming more substantial, I started asking questions of my mom to determine whether this account may be of concern to the IRS. I've only recently found out that the balance in the account is now over $10K and I'm concerned about not having claimed any interest earned on the account on my tax returns over the last few years. I am now also aware that I will need to file a FBAR since the account recently reached a $10,000 balance.

What should I do about my previous tax returns that never considered the fact I have earned interest on the account balance over the years? I'm in my 50's at this point and have no idea when I should have started reporting this money to the IRS. The balance on the account was so low for such a long time I am hoping I have not been delinquent, and that there is no need for me to amend my tax returns at this point.

I'm not sure if this plays into the mix, but I do have dual citizenship - I'm pretty sure that doesn't impact things though.

Check the interest earned starting with 2009. If it exceeded $50 each year, amend your 2009, 2010 and 2011 tax returns, as three years is the most the IRS requires to be amended for something like this.

Quote:

Originally Posted by AtlantaTaxExpert

Check the interest earned starting with 2009. If it exceeded $50 each year, amend your 2009, 2010 and 2011 tax returns, as three years is the most the IRS requires to be amended for something like this.

Okay, thank you.

As you said, basically, you who have a financial interest in or signature authority or other authority over any financial account in France, as long as the aggregate value of these accounts exceeds $10K at any time during the calendar year, you must file Form TD F 90-22.1 due by June 30 of the year following the year that the account holder meets the $10K threshold. Failure to file an FBAR when required to do so may potentially result in civil penalties, criminal penalties or both. If you learn you were required to file FBARs for earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. No penalty will be asserted if the IRS determines that the late filings were due to reasonable cause. Keep copies of what you send for your records. Cumulative FBAR penalties can exceed the amount in your foreign account. The current FBAR form (revised in October 2008) may be used to report a financial interest in, or signature or other authority over, financial accounts that were maintained in years prior to 2008. However, since the changes to the current FBAR form reflect a change in the reporting requirements, the instructions for the prior version of the FBAR form (revised in July 2000) may be relied upon for the purpose of determining the filing requirements for properly reporting financial accounts maintained in calendar years prior to 2008.As long as you are considered a U.S. resident for tax purpose (incl a dual status alien) you must report the interest earned in your foreign bank account. As a U.S. resident for tax purpose, most likely you will be filing form 1040 or 1040A or 1040EZ. You need to report your interest income that you earned in UK on Sch B of 1040 as long as you had over $1,500 of taxable interest.ALSO, you may need to file 1040X to correct previously filed Forms 1040, 1040A or 1040EZ. An amended return cannot be filed electronically, thus you must file it by paper.NOTE;TPs who need to report additional income and to correct overstated deductions can file an amended return at any time. Be aware that the IRS has three-years to audit your tax return, and may have a longer period if there's substantial under-reporting.I guess you need to contact a CPA/EA in your local area for more accurate professional help for your fed/state returns.