Declaring foreign accounts for fixed deposits

Netmazter19 · Post by **Netmazter19** » Wed Jul 11, 2012 11:45 pm

Hi,
I needed some help. I recently (Jan 2012) transferred my entire savings ($15k) to an NRI bank account in India under my name in a fixed deposit scheme that matures after 2 years. I did not know that we had to notify the IRS and file a FBAR after doing so. Therefore this year, I filed my taxes without any mention of this account or the money I transferred. Now here are the things which I thought I could do:

1. Inform the IRS and file a FBAR while doing my taxes next year. I can declare my NRI account when I file the FBAR and declare the interest earned on the principal amount (15k) when I file my taxes next year. The problem with this is: I don?t know what I have to declare as the interest earned for the next year as the interest on the principal amount (15K) will only be credited after 2 years of maturity period.
2. Make my dad/mom the primary account operator and remove my name from the account. This way I would not have to go through the hassle of declaring anything or paying taxes on the interest earned.

Has anyone else been faced with a similar scenario? Any suggestions/Information would be appreciated and I thank you in advance for it.

Thanks

dbs · Post by **dbs** » Thu Jul 12, 2012 3:15 am

Netmazter19;464798Hi,
I needed some help. I recently (Jan 2012) transferred my entire savings ($15k) to an NRI bank account in India under my name in a fixed deposit scheme that matures after 2 years. I did not know that we had to notify the IRS and file a FBAR after doing so. Therefore this year, I filed my taxes without any mention of this account or the money I transferred. Now here are the things which I thought I could do:

1. Inform the IRS and file a FBAR while doing my taxes next year. I can declare my NRI account when I file the FBAR and declare the interest earned on the principal amount (15k) when I file my taxes next year. The problem with this is: I don?t know what I have to declare as the interest earned for the next year as the interest on the principal amount (15K) will only be credited after 2 years of maturity period.
2. Make my dad/mom the primary account operator and remove my name from the account. This way I would not have to go through the hassle of declaring anything or paying taxes on the interest earned.

Has anyone else been faced with a similar scenario? Any suggestions/Information would be appreciated and I thank you in advance for it.

Thanks

The FD rate of interest must be known. Just calculate and file as estimated income. The accrued income has to be reported not necessarily when received.

If dad/mom become the owners then it is no longer an NRI/NRE account and different rates of interest and taxability will become applicable.

sriradh · Post by **sriradh** » Thu Jul 12, 2012 4:42 am

AFAIK, if you xed money in Jan-2012 you need to declare FBAR only next year (by June 2013)

greyfri · Post by **greyfri** » Thu Jul 12, 2012 3:51 pm

Netmazter19;464798Hi,
I needed some help. I recently (Jan 2012) transferred my entire savings ($15k) to an NRI bank account in India under my name in a fixed deposit scheme that matures after 2 years. I did not know that we had to notify the IRS and file a FBAR after doing so. Therefore this year, I filed my taxes without any mention of this account or the money I transferred. Now here are the things which I thought I could do:

1. Inform the IRS and file a FBAR while doing my taxes next year. I can declare my NRI account when I file the FBAR and declare the interest earned on the principal amount (15k) when I file my taxes next year. The problem with this is: I don?t know what I have to declare as the interest earned for the next year as the interest on the principal amount (15K) will only be credited after 2 years of maturity period.
2. Make my dad/mom the primary account operator and remove my name from the account. This way I would not have to go through the hassle of declaring anything or paying taxes on the interest earned.

Has anyone else been faced with a similar scenario? Any suggestions/Information would be appreciated and I thank you in advance for it.

Thanks

You do not have any filing requirement until next year, when you file taxes and FBARs for this year. However, you have that filing requirement whether you transfer ownership to your parents or not this year. And if you transfer ownership to your parents, you may have a form 709 reporting requirement (unless you split the gift, $7500 to each parent). In any case, you have a legal obligation to file an FBAR for this account next year. As far as declaring interest goes, just pro-rate or calculate the interest for this year. Its not rocket science.

Netmazter19 · Post by **Netmazter19** » Fri Jul 13, 2012 4:35 am

Hi,
Thanks a lot for all the replies. However I forgot to mention an important detail. Currently I am an international student on F1 visa (for three years now). I read on the IRS website that only residents have to file FBAR and since I am on F1, I am not a resident yet. Therfore, I don't think I have to file an FBAR or declare the interests earned on the principal account to the IRS. Am I correct in making this conclusion?

Thanks
Aashish

greyfri · Post by **greyfri** » Fri Jul 13, 2012 4:15 pm

Netmazter19;465109Hi,
Thanks a lot for all the replies. However I forgot to mention an important detail. Currently I am an international student on F1 visa (for three years now). I read on the IRS website that only residents have to file FBAR and since I am on F1, I am not a resident yet. Therfore, I don't think I have to file an FBAR or declare the interests earned on the principal account to the IRS. Am I correct in making this conclusion?

Thanks
Aashish

If you have not been here 5 years, then you do not need to pay taxes on income outside the US.

FBARs are slightly different. There is no completely clear cut answer to this since FBARs are not tax forms. My take is that at the very least, you have an excellent case for not submitting FBARs.