Form 8938: determine how much tax

[giumar]

Hi,
I have to file the form 8938, because I received interests on a foreign bank account. I already paid foreign taxes on that income. But I don't understand how do I find out how much do I have to pay to the U.S. for that income. The form 8938 does not help to determine that, and the Turbotax system does not seem to allow that calculation either, as it redirected me to an IRS page.

[GeoffreyG · Accepted solution]

Hi giumar:

Form 8938 is purely a disclosure form; it does not and is not meant to calculate your US income tax on any foreign financial holdings.  Any actual income you received through your foreign account (and any US tax on it) will be input separately when you report your income on Form 1040, Schedule B, Schedule D, etc.  In TurboTax, this will mean entering your foreign income into the Interest & Dividends section interview, for example.  That is where you US tax gets "calculated."  For additional details please keep reading below for much more information on this topic.

Form 8938 (Statement of Specified Foreign Financial Assets) is required to be filed with your United States income tax return if you are a U.S citizen, Resident Alien, or a Non-Resident Aliens that has an interest in specified foreign financial assets, and meets the reporting IRS reporting requirements.  In addition, there is another foreign account declaration required by the Treasury Department, unrelated to your tax return, and which is called FinCen Form 114.  TurboTax can help you fill out Form 8938; FinCen Form 114 (if you need to file one) needs to be completed out of TurboTax, and over the internet.  The following IRS webpage does a good job of explaining both requirements, the dollar amounts at which each is triggered, and so forth:

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

Now then, with respect to your original question, you will enter your foreign bank account income, in TurboTax, just as you would enter any domestic bank account income.  That is, tell the program that you have Interest Income (whether or not you receive a Form 1099-INT the interest is still taxable), and the software will help you fill out Form 1040, Schedule B, where personal interest income is generally reported.  You will also have the opportunity to tell the program about any foreign taxes you paid (in the 1099-B interview section), as you may be eligible for a foreign tax credit.

As to mechanically how to enter interest income in TurboTax online, whether or not you actually received a 1099-INT, do the following steps:

1. Open (continue) your return in TurboTax.
2. In the search box, search for 1099-INT (upper- or lower-case, with or without the dash) and then click the "Jump to" link in the search results.
3. Answer Yes when asked if you received any interest income.
   • If you land on the Interest Income Summary screen instead, click Add Interest Income.
4. On the next screen, you'll be given options to either import or manually type in your 1099-INT. Select the option you want and click Continue.

Once you do that, the foreign bank interest income will be added to your main Form 1040 taxable income calculation.  Form 8938 itself does not determine your tax, or directly calculate your income tax in any way; it is simply and informational disclosure document.  That may be where the source of confusion arises.

One final note is that you may additionally need to upgrade to a higher level version of TurboTax, in order to be able to complete Form 1040 Schedule B and Form 8938.

Thanks for asking this question, and good luck to you!

Regards

[prjoneswi]

I get the posted answer. I see that Turbotax doesn't seem to have online versions of the 8938 forms in any version of the software.  Is that correct?  If so, does that mean I have to print out all the forms and mail them to the IRS so that I include the printed 8938 forms as required?  Or is there some way to upload them to the digital turbotax form before sending it in?  I have never tried to do such a thing before!

Peter

[KurtL1]

Form 8938 is available in the online version. To access the form you would:

1. Enter form 8938 in the Search Magnifying Glass in the upper right hand corner of the screen.
2. Select Jump to form 8938.
3. Answer the questions on the screens.

[vipulku1947]

I am able to find the form 8938 section in turbotax online. It asks me to enter all teh information, which I am able to enter. I have 9 different accounts to report and am able to enter all of them.

However, after a brief interval, turbotax removes all the copies of the 8938 form. I am almost ready to file my taxes, but due to this, I am not able to file my taxes. It appears to be some bug in the turbo tax software and I am hoping that turbo tax can solve this bug, so that I can proceed with filing my tax returns.

I have already reported this issue to 2 different online turbotax live experts , but no help so far.

How do I get this resolved?

[KurtL1]

To enter the Foreign Interest Income you would:

1. First you would delete the Form 1099-Int in the software
2. Then enter the interest through other interest 

To delete a form off of your return you need to:

1. Select Tax Forms in the Black bar on the left side of the screen.
2. Select Tools from the drop down menu.
3. On the Tools Center Select Delete a form.
4. Locate the form on the list and select Delete.
5. You will be asked to confirm the deletion.

You would enter your Interest Income 

1. Enter interest income other in the Search Magnifying Glass in the upper right hand corner of the screen.
2. Select Go to 1099-Int in the Blue box.

This might clear up the Form 8938 since you now have interest income on the return. I cannot guarantee this will correct the missing 8938.