If you have concerns about the Internal Revenue Service (IRS) finding your bank account, you should know that the agency has several ways of discovering it. The information that you and your bank report to the IRS on a regular basis provide clues that will help the agency find your bank account.
International Bank Accounts
The IRS requires all taxpayers who have bank accounts outside of the United States to report them on a Form TD F 90-22.1 in any year the aggregate balances of all foreign accounts exceed $10,000. This requirement is separate from your tax return, and you can face hefty penalties that change each year if you are required to file this form and do not. If you ever filed this form with the IRS, the agency already knows where to locate your bank accounts. However, since the accounts are in a foreign country, it’s not as easy for the IRS to levy taxes on these types of bank accounts.
Schedule B Forms
In tax years that you earn more than $1,500 of interest from a bank account, the IRS requires you to fill out a Schedule B form and attach it to your return. The significance of filling out a Schedule B is that you must report the name of each bank that makes an interest payment to you during the year rather than just providing the amount on the income section of your 1040. Whenever you provide the name of a bank on the schedule, you make it easier for the IRS to find out where you hold savings, checking or other interest-bearing investment accounts.
If you earn $1,500 or less of interest income during the year, your bank still has an obligation to send the IRS a Form 1099-INT, which reports your total interest earnings for the year. This form by itself allows the IRS to locate your bank account, since it includes your personal information as well as information about the bank.
Although paper checks are becoming a thing of the past, if you ever make an income tax payment to the IRS with one, you’ve given the agency every piece of information it needs to locate your bank account. Paper checks will include a routing number, which tells the IRS which bank your account is with, and your account number. These two pieces of information are all that anyone needs to locate a bank account. If you make an electronic payment to the IRS, the agency can capture the same information on its computer systems.