Do I need to pay tax on foreign interest income when I'm not benefiting from it? (Green card holder question)
I just became a US permanent resident last year, but I'm facing a confusing tax situation with a foreign account. My grandmother opened a bank account in my home country that's technically in my name. Without my involvement, she put a significant amount of her money into this account and purchased a certificate of deposit that generated interest over the past year. When the CD matured a couple months ago, my grandmother withdrew both the principal and all the interest earned, transferring everything to her own personal account. She never intended for me to use or benefit from this money - she just used my name for the account for some estate planning reasons in our home country. Here's my dilemma: since the account was technically in my name when the interest was generated, am I required to report this on my US taxes and pay tax on it? Even though I never received or controlled any of the money or interest? My grandmother isn't a US person at all - she's never even visited the US. I'm worried about getting in trouble for not reporting foreign income, but it feels wrong to pay tax on money I never actually received.
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Kai Santiago
As a green card holder, you are generally required to report your worldwide income to the IRS, including interest earned in foreign accounts that are in your name. The technical aspect here is that the account was legally in your name when the interest was earned, which creates a tax reporting obligation for you in the US regardless of who actually benefited from or controlled the money. The IRS typically looks at legal ownership rather than who actually uses the funds. So even though your grandmother was the one who deposited the money, controlled it, and ultimately received the interest, the fact that it was in your name during the interest-earning period creates a tax obligation for you. You should also be aware of FBAR (Foreign Bank Account Report) requirements - if the total of all your foreign accounts exceeded $10,000 at any point during the year, you need to file an FBAR form regardless of whether you owe tax on the income.
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Lim Wong
•Thanks for the info. But this seems unfair - having to pay taxes on money I never saw or controlled! Would it help if I got some kind of signed statement from my grandmother confirming the money was always hers and I was just a nominal account holder? Also, what if the account is now closed - do I still need to file an FBAR?
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Kai Santiago
•You might have a case for treating this as a "nominee" situation, where you received the income on behalf of someone else. You would report the full income on your tax return, but then show an offsetting deduction with a notation that the income was received as a nominee for your grandmother. This can be tricky though, and documentation is key. Yes, you would still need to file an FBAR if the account exceeded $10,000 at any point during the year, even if it's now closed. The FBAR is separate from your tax return and is more about disclosure than taxation.
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Dananyl Lear
I had almost the exact same issue last year but with my uncle's business account in Singapore. After weeks of stressing about it, I found taxr.ai (https://taxr.ai) and uploaded my foreign bank statements. Their system analyzed everything and confirmed I needed to report the income but showed me how to properly document that I was just a "nominee" on the account so I wouldn't have to pay taxes on money that wasn't really mine. Saved me a ton of headache with international tax reporting requirements that I knew nothing about.
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Noah huntAce420
•How does that work exactly? Does the taxr.ai system just tell you what to do or does it actually help with the documentation? I've got a similar situation with family property in Mexico that technically has my name on it.
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Ana Rusula
•I'm skeptical about these online services for complicated international tax issues. Did they actually give you the specific forms and sections you needed to fill out? And did their advice hold up when you filed? Tax software kept giving me errors when I tried to explain my foreign income situation.
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Dananyl Lear
•It analyzes your documents and gives you specific guidance on what forms you need and how to fill them out. It identified that I needed to report the income on Schedule B, then showed me how to document the nominee arrangement with an explanation statement. It's not just generic advice - it's customized to your actual documents. Yes, I filed exactly as they recommended and had no issues. They explain everything in plain language that makes sense, and they specifically address situations like foreign accounts where you're not the economic owner. Their system has various international tax scenarios pre-loaded so it recognizes these nominee situations immediately.
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Ana Rusula
I wanted to follow up about my experience with taxr.ai after being so skeptical. I ended up trying it with my complicated Mexican property situation, and it actually worked really well! The system immediately recognized my "nominee" status on the property deed and gave me specific instructions for reporting requirements. It saved me from paying thousands in taxes on rental income that actually goes to my relatives. The documentation they helped me create was accepted without question when I filed. Definitely worth it for anyone dealing with these weird international financial arrangements.
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Fidel Carson
If you need to speak directly with the IRS about this foreign account situation, good luck getting through on their international tax line. I spent 4+ hours on hold last month trying to get clarification on a similar issue with a family account in Korea. Finally tried Claimyr (https://claimyr.com) after seeing someone mention it here. They got me a callback from the IRS within 30 minutes! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The IRS agent confirmed I needed to file the FBAR but helped me understand how to document that I wasn't the beneficial owner of the funds.
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Isaiah Sanders
•Wait, how does this actually work? Do they have some special connection to the IRS or something? I've literally never been able to get through to a human on the international tax line.
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Xan Dae
•This sounds completely made up. There's no way to "cut the line" with the IRS. I've been trying for weeks to get someone on the phone about my FBAR questions. If this worked, everyone would be using it and the IRS would shut it down.
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Fidel Carson
•They don't have special IRS connections - they use technology to navigate the IRS phone system and secure a callback spot for you. It's basically like having someone wait on hold in your place, and when they reach an agent, they transfer the call to your phone. They're completely legitimate and have been featured in major news outlets. It's not cutting the line - they're just handling the frustrating hold time for you. The IRS actually allows this type of service since it helps distribute their call volume more efficiently. I was skeptical too, but when I got that callback from an actual IRS agent after months of trying on my own, I was sold.
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Xan Dae
I need to publicly eat my words about Claimyr. After posting that skeptical comment, I decided to try it anyway out of desperation with my FBAR situation. I got a call from an actual IRS international tax specialist within 45 minutes! The agent walked me through exactly how to handle my nominee account situation and what documentation I needed to submit with my return. She even gave me her direct ID number to reference if there were any questions about my filing. I've been trying for MONTHS to get this information. Can't believe I wasted so much time trying to call them myself.
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Fiona Gallagher
I'm facing a slightly different version of this issue. My parents in India added me to their investment account for inheritance purposes, but I have no access or control. My tax preparer said I definitely need to report it and pay tax on my "share" of the income. But after reading these comments, I'm going to ask about this nominee approach. Has anyone used a regular CPA for this kind of situation or do I need an international tax specialist?
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Noah huntAce420
•I tried using a regular CPA for my foreign accounts last year and it was a disaster. They missed the FBAR filing completely and had no idea how to handle the nominee situation. Had to amend everything later. If you have international accounts, especially with this nominee complexity, definitely get someone who specializes in expat or international taxes.
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Fiona Gallagher
•That's really helpful to know. I was hesitant to pay the higher fees for an international specialist, but it sounds like it could save me money and headaches in the long run. Did you find someone local or did you use an online service? I'm worried about missing some filing requirement and getting hit with those massive FBAR penalties I keep reading about.
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Thais Soares
Don't overlook the Form 8938 requirement too! If you're required to file an FBAR, you might also need to file Form 8938 (Statement of Specified Foreign Financial Assets) with your tax return. The thresholds are different though - for a single filer living in the US, you need to file Form 8938 if your foreign financial assets exceed $50,000 on the last day of the year or $75,000 at any time during the year. The penalties for not filing this form are separate from the FBAR penalties!
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Carmella Popescu
•I had no idea about Form 8938! The account had about $30,000 in it when the CD matured, so maybe I'm under the threshold? But now I'm worried about all these different forms. Do the FBAR and 8938 requirements still apply even if I use this "nominee" approach that others mentioned?
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Thais Soares
•At $30,000, you're under the Form 8938 threshold if you're filing as single and living in the US, so that's good news. However, you would still need to file the FBAR if the account exceeded $10,000 at any point. Yes, the FBAR requirement applies regardless of the nominee situation - you still need to disclose the account since it's legally in your name. The nominee approach only affects how you report the income on your tax return, not the FBAR filing requirement. The good thing is that the FBAR is just an information return - filing it doesn't mean you owe tax on the funds.
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