# How to treat savings account interest on 1116



## oneyeopen (Mar 12, 2013)

Hi,

I've been looking all over this site and the net for an answer to what I thought was a simple question. I need to report some small interest made on a couple savings accounts held in Canada which total around $100 on the 1116. I need to know if I can just classify this as general category income and just lump it in with my wages. The instructions are not very clear as to whether this is still considered passive income since there is no tax withheld on this income, it just gets added into my income on my Canadian return and I pay income tax on it in Canada. There is a paragraph in the 1116 instructions that talks about Financial Services Income which can be treated as general category income but I'm not sure if this is referring to interest made on a simple bank savings account or something entirely different.

It seems ridiculous to me that I would have to fill out another 1116 just for $100 in interest and calculate ratios on my deductions of 0.9994 on my general category income 1116 and 0.0001 on my passive income 1116 to come to 0 taxes owing anyway. All the examples I've seen show dividend interest where they got a 1099-INT and had tax withheld or something along those lines.

Can I just lump this in as general category income and be done with it or do I have to fill out another passive income 1116 and waste more of my life?

Thanks


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## Auld Yin (Mar 10, 2009)

oneyeopen said:


> Hi,
> 
> I've been looking all over this site and the net for an answer to what I thought was a simple question. I need to report some small interest made on a couple savings accounts held in Canada which total around $100 on the 1116. I need to know if I can just classify this as general category income and just lump it in with my wages. The instructions are not very clear as to whether this is still considered passive income since there is no tax withheld on this income, it just gets added into my income on my Canadian return and I pay income tax on it in Canada. There is a paragraph in the 1116 instructions that talks about Financial Services Income which can be treated as general category income but I'm not sure if this is referring to interest made on a simple bank savings account or something entirely different.
> 
> ...


There's a line on Income Page of T1 called Interest and Other ncome. It shoulld go there.


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## oneyeopen (Mar 12, 2013)

Sorry, I should have been more clear, I'm talking about the Foreign Tax Credit Form 1116 for US taxes not the T1 for Canadian taxes.

Thanks


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## Camerish (May 24, 2012)

I just use Schedule B to report foreign interest income. I use 2555EZ for the Foreign Earned Income Exclusion since I am eligible (make less than $94k or whatever it is) so not sure if it would be treated differently using 1116 method.


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## oneyeopen (Mar 12, 2013)

Thanks but because I'm exceeding the FEIE amount I have to file the 1116 as well to offset my US tax. On the 1116 you are supposed to separate your general income from your passive income but it's not clear if I need to go to this extreme because the amount of interest I'm dealing with is so small, it doesn't make sense that I would have to file 2 1116s in my case. Hopefully someone else has run into this and will know. I can see you needing to do this if your getting dividend interest or significant amounts of interest where tax was withheld but simple savings account interest of a small amount like this I would think just falls under general income.


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## Camerish (May 24, 2012)

Wish I could be of more help. Maybe you can get lucky searching older posts - that's worked a bit more me regarding tax issues.


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## oneyeopen (Mar 12, 2013)

Still stuck on this one, I still can't find an example of this. In Pub 54 it shows an example of $1000 in interest and it's reported on a second 1116 for passive income. I'm not sure how the tax was determined on that amount. How would I back calculate the tax on interest on $100 if it gets lumped into my adjusted gross income on my Canadian tax form? Any help would be sincerely appreciated.


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## oneyeopen (Mar 12, 2013)

Sorry meant to say pub 514 not 54.


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