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Do I have to report foreign funds to the IRS?

by Loella Haskew, CPA

I have a foreign bank account and have paid income taxes on its interest. Now I need to close it and deposit funds in my U.S. bank account. Do I have to report the transferred funds to the IRS and pay taxes?

You only need to report and pay taxes on income. The treatment of the principal is the same whether you have the account in a foreign or United States bank. Removal of principal is a non-taxable event.

If you have funds in a foreign bank, however, you are supposed to file a Form TD F 90-22-1 with the Treasury Department if your combined overseas balance exceeds $10,000 on an annual basis.

Loella Haskew is a Walnut Creek, Calif., CPA with the firm of Buckley Patchen Riemann & Hall. You can reach her at (925) 937-2727(925) 937-2727.

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In accordance with IRS Circular 230, the information on this website is not intended or written to be used, and cannot be used as or considered a "covered opinion" or other written tax advice and should not be relied upon for the purpose of avoiding tax-related penalties under the Internal Revenue Code; promoting, marketing, or recommending to another party any transaction or tax-related matter(s) addressed herein; for IRS audit, tax dispute or other purposes.