J.JsOH

I was well up to speed too before we came back but since we arrived back other things had taken up prime thinking space. My recommendation to everyone is to stay on top of this stuff even when back here and keep in the loop or use a professional to prep US and UK tax.

For HMRC we have phoned them each year, discussed our situations and asked their instructions whether to self-assess or not.
J.J used HMRC's online self assess and the software took care of the complicated calculations around interest, dividends and foreign tax credit.

For USA filing, I would remind USC's that while there is tax exclusion for foreign earned income (to a certain limit), this income must still be reported in full on the form 1040. Also remember to make estimated payments through the year if you expect to have to pay any tax to IRS.

J.JsOH

I believe I got to the bottom of USC being forbidden to hold Post Office ISA's.

Follow up conversations with PO (via their contact online) led to them saying that I could hold the ISA as a UKC (dual USC) resident in UK.

But........
Post Office ISA'a are not administered by the PO, not by the Bank of Ireland that provides banking services through PO, but by yet another party, a mutual organisation called Family Investments. It is Family Investments that have declined to participate in USA IRS FATCA legislation and thus will not (currently) provide products such as Post Office ISA to 'US persons'.

My letters to Post Office and to my MP are on their way. Although I doubt the letters will do much good, if I don't say something they won't know about the effects of USA legislation.

dunroving

Good for you - even though it may not help you, it's important to shine a light on these things.

J.JsOH

ISA is tax free in UK, which is to what I was referring but omitted to be explicit.
Indeed, as you say, I've been reporting all UK interest (Gross, Net or UK tax-advantaged) on my US tax report. It has not presented a problem.
I am staying completely away from UK based purchase of stocks in any form right now, being content for now that the proportion of my savings that are stock invested are doing well enough in US while my cash proportion earns more interest in UK than it would in US.
My financial plan is in motion and evolving.

nun

I have a similar plan for when I return to the UK. I'll just have cash in the UK and keep stuff invested in the US to avoid PFIC. Do you invest in individual stocks or US mutual funds.....if the latter they should be HMRC reporting funds to avoid capital gains being taxed as ordinary income and to keep your UK capital gains tax allowance. I've been looking into how to deal with US dividends and capital gains for US and UK tax purposes and it gets a little complicated with the 15% notional US tax on dividends and the resourcing of US income to the UK.

J.JsOH

Nun,
We got US investments out of anything that was not individual stock and bond, avoiding even the complication of supposedly HMRC reporting funds.

We split our non-401k/IRA investments between individual stocks and bonds, seeking income rather than growth since we knew retirement was close. Dividends are automatically re-invested into issuing stock until we say stop. Bond interest is paid to cash and I transfer it to UK. We chose a broad range of conservative large company stable stocks. One has since let us down and we sold recently but in the economic climate are quite satisfied.
We set this up with our broker before we left with our overseas situation in mind.
The broker cannot make further purchases for us while we are resident overseas, only sell. When we sell for whatever reason we will move the cash to UK (unless interest rates in US improve over UK in which case our Credit Union will allow us to buy CD from overseas).
IRA were left in the funds we held satisfactorily for long periods before we moved. We chose not to roll all to Roth IRA because of projection the on-the-spot-tax would have been more than eventual gains.
401k is with ex-employer, in funds. We are permitted to log into our accounts from UK and move between funds.
We kept a Credit Union check & savings account (and check book, Credit and ATM card) and prior to moving back we set up the transfer authority for our broker to put cash in the bank and for us to direct debit from the bank to FX company.
We report our Divs and Interest on Fed tax filing per the 1099 statement as always. Plus UK interest income. I've not yet had to face Capital Gains reporting, that will come at end of this year.
TurboTax and Tax Act did not work with Foreign Earned Income Exclusion so I had to resort to long-hand on paper for my 1040.

We don't have a great deal of $$ but chose to preserve it as best we could in US investments with a known broker rather than turn it all to UK cash and then lose money and time finding UK broker and UK sourced stocks. I'm glad we did it this way because I've not had the added pressure of locating a new investment home on top of all the other hassles of being back.

All above assumes we remain dual UKC-USC.
We put a lot of thought and research into the financial situation of moving back and was glad we did it in advance of the move.

nun

That's almost exactly what I plan to do.....except I'm going to put my taxable investments into Vanguard ETFs that are HMRC reporting funds. I'm also going to emphasize dividend stocks in there.

I'll consolidate my various retirement funds into IRAs with a single provider to reduce paperwork. I'm going to keep my existing US bank account and link it to my IRA and taxable ETFs and use that to make transfers to the UK or to an FX company and then to the UK if it's cheaper. I'll just keep cash and maybe a ladder of savings bonds in the UK, if the interest rates stay better than in the US.

FYI there are a couple of wrinkles to US dividend reporting as a US citizen in the UK. You have to pay the IRS 15% tax and then use that as a UK tax credit. You have to read Article 10 and 24 carefully to get it right. There is an example and explanation on p 104 of the link below

http://www.treasury.gov/resource-cen...ts/teus-uk.pdf

I think for interest you have to pay the UK the full tax and then use that as a FTC on your US taxes. The same goes for 401k/IRAs, but you have to remember to account for any US tax withholding on your US taxes, ie use the UK tax as a FTC to cover your US taxes and they apply the withholding to either cover any remaining US tax or to get it refunded. As a UK resident the UK has the primary taxing authority over your money.

sir_eccles

Posted without further comment: http://www.bbc.co.uk/news/business-20907359

kimilseung

I have just read three accounts and I am still no wiser to how they were considered within jurisdiction. Did the use of http://www.swissprivatebank.com/ do it? They were offering to do consultations in peoples homes.

theOAP

They were prosecuted as a result of an indictment charging 'conspiracy to defraud the United States'. Jurisdiction may have resulted from:
"WEGELIN had no branches outside Switzerland, but it directly accessed the U.S. banking system through a correspondent account that it held at UBS AG ("UBS") in Stamford, Connecticut (the "Stamford Correspondent Account")."
(From the indictment)

Does the defendant even need to be within the jurisdiction of the US when the charge is 'conspiracy to defraud the US'? Does the US/Swiss treaty provide for extradition resulting from criminal acts against the US? Upper class rendition (Airbus A380 instead of small jet)? One for the more knowledgable members. Anyway, Wegelin are no more as a result of however it happened.

Actual indictment can be found here:
http://www.justice.gov/tax/2012/Wege...indictment.PDF

Added: If you scroll down to page 57, the list of 'overt acts' took place on US soil.

windsong

I read the first link. After reading the article at the link within it, I was devastated!!!!

Lorac05

Why were you devestated?

windsong

I read the link within the link! Dreadful!

Lorac05

So did I and I can't grasp why you are so upset? Would you like to elaborate?

dunroving

Something to do with US citizens who want to renounce their US citizenship because of tax issues being required to pay a hefty tax bill in order to renounce their citizenship?

I guess that could affect some of our dual USC/UKC's here on BE? Sounds like some of them would happily pay to sever ties with the US - though this seems a bit heavy-handed.

I'm still mad about the Windfall Elimination Provision - I hardly feel like I am in for a windfall when I retire.