My understanding is that the interest we receive on our Thai passbook savings accounts is net interest after tax is paid by the bank to the Thai government.

On American 1040's there is a Foreign Tax Credit. Has anyone ever claimed this credit for the Thai tax on our interest?

I believe that to have the tax credit it is for earned income from employment only. Not positive of that though.

I won't get involved with the 1040 tax credit subject (as the earlier) commenter replied, unless you are fetching a salary overseas and certain criteria are met?

also importantly are you filing a TDF 90-22.1 form annually for your Intl. bank account? its a requirement by the Department of the Treasury. (you can download this form, just google the TDF number)

I won't get involved with the 1040 tax credit subject (as the earlier) commenter replied, unless you are fetching a salary overseas and certain criteria are met?

also importantly are you filing a TDF 90-22.1 form annually for your Intl. bank account? its a requirement by the Department of the Treasury. (you can download this form, just google the TDF number)

I read the Instructions of Form 1116 and as I read it, taxes paid on interest income are eligible for the credit. For the tax year 2008 I simply deducted the amount of the tax from the interest income I received and entered in the 1040 that amount (interest earned minus tax paid). For 2009 I actually claimed the credit. It is too early of course to tell wheter the IRS will flag it for an audit. If you read the Instructions of Form 1116, I believe that you will come to the same understanding as I did, that the credit is available to us.

I entered my interest income on Line 21 and the statement "Interest paid by foreign bank". The credit I entered on lines 47 and 54. All generated by TurboTax.

I assume that you use a tax software program and do not attempt to understand the copmplexity of tax forms...

As to the advice about the Treasury annual filing of Form TD-F 90.22, it is excellent advice. A few years ago a tax attorney told me that not filing this form would not rile the Treasury if one has an account with only $10 in it. But anything over that number, and unreported annually, would generate some stiff fines if caught. The only "good news" about this filing requirement is that the due date for filing is a lot later than April 15th. I believe it is some time in June each year. So you still have time for that. Actually, TurboTax will pring this form for you if you indicate that you have a foreign bank account.

Foreign taxes paid on interest, dividends and any other unearned income is deductible on your US tax return. In fact, if your foreign taxes are under $600 you can elect to claim them in full without filing form 1116. If your foreign taxes were over $600 you must file Form 1116. Don't try it without tax software.

I believe that post #2 was referring to the Foreign Earned Income Exlusion.

Form TDF 90-22.1 is used to report foreign bank accounts. It's filed separately from your income tax return and is due on June 30 each year. My recommendation is that if you have nothing to hide, you have no reason not to file the return.

How do you know how much tax the Thai bank paid to the Thai government?

Do you ask the bank for a printed statement as the passbook interest is net after taxes?

I am using TaxAct because this year I am filing electronically. But I want to completely understand the numbers that are being crunched.

Not urgent, I filed for an extension and am getting a refund.

Btw-June 30th is the deadline for the Treasury form re foreign bank accounts. Required if at anytime during 2009 you had 10K or more in foreign bank accounts.

I mailed in that form last year. Anyone know if this can be handled electronically?

Edited April 15, 201016 yr by farangguy