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I use Turbotax to prepare my taxes in the United States. When declaring foreign financial account, Turbotax asks:

What does Turbotax mean by "This account did not have income, deductions, or credits associated with it in [year]"?

What does it mean for a financial account to have an income, deductions, or credits?

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The question is asking: in your Form 1040, was there no income (interest, dividends, royalties, other income, gains), deductions, or credits that specifically pertain to this foreign financial account?

For example, for your foreign investment account that made $500 in dividends last year, you would have reported this interest as income on Line 2b Taxable Interest of Form 1040. You would then leave this box unchecked. For your foreign bank account that made $0 in interest, you would check this box.

More details: this screen in TurboTax is helping you fill out Form 8938, Statement of Foreign Financial Assets. Part III of this form asks you to aggregate all the income, deductions, and credits that pertain to all the foreign financial assets you're declaring on this form. Part V of the form asks you to provide further details on each foreign financial account. One of the lines in Part V is the checkbox you highlighted, Box 3d, which is labelled "No tax item reported in Part III with respect to this asset".

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  • Are gifts "income"? eg if parents sold their home and split money between siblings
    – user313032
    Apr 16, 2022 at 2:14
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    @user313032 Gifts are not income. You report gifts on your gift tax return, Form 709, not on your income tax return, Form 1040. (If you're specifically asking about the question in the screenshot above, then the gift itself isn't a foreign financial asset reportable on Form 8938, but if you deposit the gift into e.g. a foreign bank account, the foreign bank account may be a reportable foreign financial asset.)
    – user106227
    Apr 17, 2022 at 4:21
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    An example to clarify the parenthesis: you receive a gift from your parents of $200k and deposit $100k of this gift in a foreign bank account and the other $100k in a US bank account. The foreign bank account earns $2k in interest; the US bank account earns $1k in interest. On Form 1040 line 2b, you will report interest income of $3k. You will file Form 8938 to report the ending value of the foreign bank account ($102k); it asks you to "point to" where you've reported the income attributable to this foreign bank account on your Form 1040, which is $2k on line 2b.
    – user106227
    Apr 17, 2022 at 4:32
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    In my example, notice that the value of the gift, $200k, is not relevant; only the year-end value of the foreign bank account, $102k, is.
    – user106227
    Apr 17, 2022 at 4:33

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