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May 22, 2025
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How is fixed deposit interest from india for 5 years taxed in usa? Is it after the maturity or each year end? If account is closed prematurely it accrues a penalty .

  • May 22, 2025
  • 1 reply
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If reported annually and closed prematurely the interest amount might be less than what have already reported in taxes in usa . How to recover the loss in that case.
Best answer by Opus 17

Per  US law, the interest on foreign accounts is taxable when it accrues.

 

If you withdraw early and pay a penalty, that is an adjustment on your US tax return.  See here for how the adjustment is made if you have a 1099-INT from a US bank.  The adjustment is similar with an account that does not issue a 1099-INT, but would require a couple extra steps to enter it. 

https://ttlc.intuit.com/community/retirement/discussion/how-do-i-declare-an-early-withdrawal-penalty-on-a-certificate-of-deposit/00/2920290

 

1 reply

Opus 17Answer
May 23, 2025

Per  US law, the interest on foreign accounts is taxable when it accrues.

 

If you withdraw early and pay a penalty, that is an adjustment on your US tax return.  See here for how the adjustment is made if you have a 1099-INT from a US bank.  The adjustment is similar with an account that does not issue a 1099-INT, but would require a couple extra steps to enter it. 

https://ttlc.intuit.com/community/retirement/discussion/how-do-i-declare-an-early-withdrawal-penalty-on-a-certificate-of-deposit/00/2920290