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The short answer
Interest earned in a Nigerian account is taxable on your US return if you are a US citizen or resident, reported gross in dollars before the 10% Nigerian withholding. If you have a Nigerian account at all, you must also file Schedule B and answer "Yes" to the foreign account question in Part III, even when your interest is small and even if you do not need an FBAR.
Nigerian interest is US income
US citizens and residents report worldwide income, and interest from a Nigerian savings account, fixed deposit, domiciliary account or treasury bill is part of it. Nigerian banks do not issue Form 1099-INT, so nothing reaches the IRS automatically from them; you build the figure yourself from statements.
What Nigeria takes first
Since January 2026, Nigerian banks deduct 10% withholding tax on interest, and BusinessDay reported in February 2026 that it is treated as a final tax for individual savers. BusinessDay also reported that from 1 January 2026 banks deduct 10% on interest on foreign-currency deposits, aligning with the Nigeria Tax Act 2025. For short-term government and corporate securities such as treasury bills, the 10% treatment and the continuing exemption for FGN bond interest are covered in withholding tax on interest in Nigeria.
Schedule B: two separate triggers
The 2025 Schedule B instructions (reviewed April 2026) require the schedule if either applies:
- you had more than US$1,500 of taxable interest or ordinary dividends; or
- you had a financial interest in, or signature authority over, a financial account in a foreign country.
The second trigger catches most Nigerians in the US. A dormant GTBank savings account with ₦20,000 in it still requires Schedule B.
Part III, line by line
- Line 7a, first question
- Check "Yes" if at any time in the year you had a financial interest in or signature authority over an account located outside the US, even if you are not required to file an FBAR.
- Line 7a, second question
- Check "Yes" if you must file FinCEN Form 114 (FBAR), which applies when your foreign accounts together exceeded US$10,000 at any time in the year.
- Line 7b
- If you must file an FBAR, write the country: Nigeria.
- Line 8
- Foreign trusts only: distributions received, or being a grantor or transferor.
An account is foreign if it is physically located outside the US. The FBAR itself is filed electronically with FinCEN, not attached to your return; see FBAR for Nigerian bank accounts.
Reporting the interest
List the interest on Schedule B Part I, line 1, naming the payer (for example, the bank) and the dollar amount. Use the gross interest, before the 10% withholding. Convert at the rate for the date the interest was credited, or a consistent documented method; the IRS has no official naira rate. See which naira rate to use.
Worked example
Example only. The interest rate and exchange rate are invented. Emeka in Baltimore has a ₦4,000,000 one-year fixed deposit at an example 20% a year.
| Item | Naira | US$ at example ₦1,500 |
|---|---|---|
| Gross interest | 800,000 | 533.33 |
| 10% withholding | 80,000 | 53.33 |
| Net credited | 720,000 | 480.00 |
| Reported on Schedule B line 1 | 533.33 | |
| Foreign tax for the credit | 53.33 |
Check: 10% of 800,000 is 80,000; 800,000 − 80,000 = 720,000; 800,000 ÷ 1,500 = 533.33. His interest is below US$1,500, but he still files Schedule B because of the foreign account, and his balance of ₦4,800,000 (about US$3,200 at the example rate) is below the FBAR line unless his other foreign accounts push the total above US$10,000.
Claiming the Nigerian withholding
Nigerian withholding on interest is a tax on income, so it can count for the US foreign tax credit, limited to the US tax on the foreign income. The IRS lets some taxpayers skip Form 1116 when all their foreign income is passive, total foreign tax is US$300 or less (US$600 joint), and the income is shown on a payee statement such as a Form 1099-INT. A Nigerian bank statement is not a 1099, so ask your preparer whether that election fits your case; otherwise use Form 1116 (foreign tax credit for Nigerian tax).
Common mistakes
- Reporting the net interest after the 10% deduction, instead of the gross, and then also claiming the deducted tax as a credit.
- Leaving out a small or dormant Nigerian account because it earns almost nothing; the Schedule B question is about the account, not the interest.
- Answering "No" on line 7a because you think an FBAR is not required; the first question must be "Yes" whenever you have a foreign account.
- Converting a whole year of interest at the December rate when it was credited monthly through the year.
- Forgetting accounts you can sign on for a parent, which count as signature authority.
Where Pryme fits
Pryme's naira Savings Boxes show their rates in the app, and any interest earned is reportable like other Nigerian interest. Keep each year's statement; a verifiable statement through VerifyDoc.ai gives your preparer the gross figures in one place.
Questions people ask
Do I report interest from my Nigerian bank to the IRS?
Yes, if you are a US citizen or resident. Report the gross interest in dollars on Schedule B, before the Nigerian 10% withholding.
My Nigerian interest is tiny. Do I still need Schedule B?
Yes, if you have a foreign account. Schedule B is required for anyone with a financial interest in or signature authority over a foreign account, regardless of the amount of interest.
What do I answer on Schedule B line 7a?
"Yes" to the first question if you had any foreign account, and "Yes" to the second only if your foreign accounts together exceeded US$10,000 at any time, which means an FBAR is due.
Can I claim the 10% Nigerian withholding on interest?
Generally it can count toward the foreign tax credit, limited to the US tax on that income, usually through Form 1116.
Sources
- IRS: Instructions for Schedule B (Form 1040), 2025 (reviewed 30 Apr 2026) · accessed Oct 2026
- BusinessDay: Why was withholding tax deducted from savings interest (21 Feb 2026) · accessed Oct 2026
- BusinessDay: Banks will deduct 10% withholding tax on foreign currency interest (1 Jan 2026) · accessed Oct 2026
- IRS: Foreign currency and currency exchange rates (reviewed 22 May 2026) · accessed Oct 2026
- IRS: Foreign tax credit, how to figure the credit (reviewed 9 Jul 2026) · accessed Oct 2026
- IRS: Report of Foreign Bank and Financial Accounts (FBAR) (reviewed 30 Jul 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.