Hi I had opened an NRE a/c in India in 2008 on which I had earned interest Rs.4000/-, I was unaware of the new requirement & failed to report interest income. Do I have to amend the tax return for 2008? According to the new law, REPORT OF FOREIGN BANK AND FINANCIAL ACCOUNTS form TD F 90-22.1 needs to be filed. In 2009, I had earned interest of Rs 3,500/- in June 09 & Rs 3,500 in Dec 09. Do I have to use the exchange rate as of 31st Dec 09 or the date on which I received the interest & should I report the interest on Schedule B?

I would suggest that you take the average exchange rate for the year and use that rate to determine the dollar amount of interest income earned. This amount comes to roughly between $120-$160. As such, it should not make a material difference to your tax return.

But, the law is very strict regarding the reporting of this foreign account and the reporting of this related interest income. It is best to include this interest income on your 2009 tax return and avoid potential penalties and huge fines for non reporting of this interest income.

I am not sure of the interest income received in 2008, and I think you best leave that decision to your CPA who is better acquainted with your financial situation. But, I would strongly suggest it is best to comply with the new law and file Form TD F 90-22.1 and declare both your deposits in the foreign bank account along with the interest income earned from that account!

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