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February 11, 2025
Question

Where do I enter interest income outside the USA?

  • February 11, 2025
  • 1 reply
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My small UK account paid interest in 2024. Where do I enter that amount in TurboTax?

    1 reply

    Employee
    February 11, 2025

    @JohnWhetsel , generally you would enter all earned  interest  just as if it was domestic sourced.   If you are on windows download , you just  tell TurboTax that you have interest income (  this is usually  under  category of  Interest and Dividend income, under personal income tab).  

    Some have been complaining that there is requirement for EIN  (  US Tax ID ) for the payor.    I have not been able to duplicate the issue.  Do not try to claim this as foreign sourced -- for the income purposes.  If Turbo absolutely will not behave then  try using an obviously dummy EIN   ( 12-3456789  -- no dashes during entry ).

     

    Now if you have paid taxes to the UK on this income then under  "Deductions and Credits" , select  foreign tax credit.  Enter the  foreign source income ( the gross interest earned in the UK ) and the taxes paid .  Then choose credit.  Usually you should be able to choose safe harbor  ( US$300 per filer on a return )  which will get you the  full  tax credit.  If the tax amount is above the safe harbor amount then you will have to fill out the form 1116.  Turbo will do the filling out based on your  inputs.   Under the double Tax mitigation clause of the US-UK tax treaty,  while  US will recognize the full amount of tax, the allowable  amount for the year will be the lesser of actual paid  amount  and  the US Tax on the same doubly taxed income -- the rest  can be carried  back or forward .

     

    Does this answer your query ?   Is there more I can do for you ?