Hi, I filed my tax return for 2024 and 2025 and the 2024 were late. I am an immigrant. I earned interest on a bank account in my home country but it was filed with a nil return do to fees and accounting fees. I did the FBAR delinquent filing. I have now realized that I need to declare the interest earned on my 2024 filing. I mailed it in. It has not been processed yet.
I am very scared now that I am going to be fined %50 of the account balance which would be a lot. Should I wait for the return to be processed? I did not use an accountant for my filing and I now know that I should have. Can I mail the correction before it is processed?
I would appreciate some feedback on how to make this right. I did not do the schedule B. I thought because I had a zero return in my county that it meant I had no income but I have been reading about it and I think that I was wrong. It all was not willful. I made a mistake.
HELP FBAR filed through delinquent but I did not report the income earned in a bank account because the interest was filed nil in my home country. I am a new immigrant.
byu/Negative-Oil-1016 intax
Posted by Negative-Oil-1016
2 Comments
Is your home country total account value more than USD 10,000?
First of all, the tax law:
– Yes, you must report (gross) interest earned.
– Investment expenses are no longer deductible.
– Investment interest expense is an itemized deduction, which means you can’t take it if you’re taking the standard deduction.
– FX gains must be reported.
– For FX losses, there’s some debate about whether you can take a loss. The legal citation is Section 988. It comes down to whether this would be a ‘personal transaction’ (not adjust income), or a investment transaction. I haven’t followed up, but I believe the IRS had said they would release some regulations to clear this up for individuals.
Now, your filing situation. My understanding is that you filed under delinquent FBAR (which requires that you reported all income, but failed to report some income.
– There’s no turning back. Your best bet is to amend with the additional income. It doesn’t seem like a lot. Yes, you’ll pay some tax, and you’ll pay interest and penalty on the tax.
– Your transcript will show penalties. This will not be a big deal in dollar terms, but when you apply for immigration benefits, this will show you were penalized by the IRS, and technically, a stickler of a USCIS officer could use that to deny immigration benefits.
– FBAR penalties, especially, willful penalties, are extremely rare. Yes, they happen. And there are scary cases in the news. But almost always there’s a decent amount of underpaid tax. And most of the cases that make the news are still from the ~2012-2018 insane enforcement phase. Take that for what you will – nobody can guarantee you won’t get penalized, but anybody who says “you’re roasted!!!” is uselessly scaremongering.