As an US citizen you are required to report on your income tax return interest earned on foreign bank accounts. The interest income is reported in US dollars and is included on our income tax return. If you pay foreign income taxes on this interest income a foreign income tax credit maybe available to relieve double taxation.
Reporting requirement for foreign bank accounts is now a focus of increased IRS enforcement. All foreign bank accounts that exceed $10,000 in value at anytime during the year are required to be disclosed to the IRS. The IRS states each US person who has a financial interest in or signature or other authority over any foreign financial accounts, including banks, securities or other type of financial accounts in a foreign country must disclose the relationship.
The foreign bank account is reported each year using the “Foreign Bank and Financial Accounts” or “FBAR” electronic filing system of FinCen. The due date is June 30th of each year.