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1040 - UK account interest?

1040 - UK account interest?

Old Dec 31st 2007, 4:45 pm
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Default 1040 - UK account interest?

Filing my 1040 will be a bit more complicated this year now that I have a foreign account (a sterling account in the Isle of Man.) I'm aware that I need to fill out Schedule B, with the interest amount, answer question 7, and enter the interest total on the 1040. Also, I'm aware of the requirement to file the US Treasury Form TD F 90-22.1 by June 30, 2008.
Here's my question - I've looked everywhere, but can't find any hint of an answer.. with foreign bank interest, how do you convert the amount to US dollars? Do you use a rate on the day you fill out the return, or do you have to find the actual rate on the day each month when the interest was credited, or what? I'm assuming that the bank in the Isle of Man isn't going to provide me with a 1099..?
Anyone have experience with this? Thanks!!

Robin
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Old Dec 31st 2007, 5:34 pm
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Default Re: 1040 - UK account interest?

When we have completed our returns, my wife also had to do so while living in the UK, we used the bank exchange rate on the day we completed the return.

Never had it questioned and my wife lived in the UK for 10 years.
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Old Dec 31st 2007, 6:03 pm
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Default Re: 1040 - UK account interest?

My OAP is paid into my US bank having been converted into dollars. I log the exchange rate for each payment (13) and average out for the year end. This worked out at $1.996 per Pound Sterling. That is the exchange rate I use for the interest accrued on my other accounts and pension paid into my UK Bank for the IRS. As per the previous reply no questions have been asked.
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Old Jan 1st 2008, 12:41 am
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Default Re: 1040 - UK account interest?

Originally Posted by robin1234 View Post
Filing my 1040 will be a bit more complicated this year now that I have a foreign account (a sterling account in the Isle of Man.) I'm aware that I need to fill out Schedule B, with the interest amount, answer question 7, and enter the interest total on the 1040. Also, I'm aware of the requirement to file the US Treasury Form TD F 90-22.1 by June 30, 2008.
Here's my question - I've looked everywhere, but can't find any hint of an answer.. with foreign bank interest, how do you convert the amount to US dollars? Do you use a rate on the day you fill out the return, or do you have to find the actual rate on the day each month when the interest was credited, or what? I'm assuming that the bank in the Isle of Man isn't going to provide me with a 1099..?
Anyone have experience with this? Thanks!!

Robin
The USA Embassy in London issues (FED really) an exchange rate for the year, we use to call them and get the rate. Sure you can now get it on their WEB site.
Reg.

http://london.usembassy.gov/irs/irsfaq.htm This shows 1996 -2006, guess 07 rate will appear manana.

Last edited by frrussre; Jan 1st 2008 at 12:44 am.
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Old Jan 1st 2008, 12:42 pm
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Default Re: 1040 - UK account interest?

Thanks, all, for very useful thoughts & information.
Living in the US, I'd never have thought of the US Embassy in the UK as a source of good tax info ... but that FAQ on the Embassy site is extremely useful for any taxpayer with foreign income.

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Old Jan 1st 2008, 2:30 pm
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Default Re: 1040 - UK account interest?

I can't find the IRS guidance on this at the moment, but I remember reading of two alternatives. One was to associate each transaction with the exchange rate prevailing on the day, and the other was to use an overall exchange rate for the year. If you want to do the latter, they suggested the "US Treasury Reporting Rates of Exchange" at http://www.fms.treas.gov/intn.html.
Once the 31 December 2007 rates are up, they would be the ones for the 2007 tax form.
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Old Feb 4th 2008, 8:55 pm
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Default Re: 1040 - UK account interest?

Hello - again, thanks for useful answers to my question posed a few weeks ago. I have a follow-up question, specifically about interest paid by a foreign bank.

As I said in my first post, I'm aware that I need to fill out Schedule B, with the interest amount, answer question 7, and enter the interest total on the 1040. Also, I'm aware of the requirement to file the US Treasury Form TD F 90-22.1 by June 30, 2008.

Is it necessary to submit any documentation confirming the interest paid by a foreign bank? All I have is the amount credited on the monthly statements from the bank, so I can add it up, convert to dollars, and enter it on the schedule B & carry it forward to the 1040. If it was an American bank I'd have a 1099 to submit, but with the bank in the Isle of Man, there is no equivalent.

Thanks!
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Old Feb 4th 2008, 9:29 pm
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Default Re: 1040 - UK account interest?

what foreign account?
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Old Feb 4th 2008, 10:26 pm
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Default Re: 1040 - UK account interest?

I have never worried about not having an equivalent to the 1099, and haven't run into any problems. Personally, I go through my statements, add up the interest for the tax year, print out a piece of paper with my calculations and keep it with the statements and my hard copy of the tax form. [I file electronically so the IRS aren't getting a hard copy of anything anyway though...]

P.S. I wouldn't worry too much about these things - so long as you aren't doing a Wesley Snipes and imagining that you don't have to pay tax, the consequences of getting something wrong won't be catastrophic!

Last edited by rew1000; Feb 4th 2008 at 10:30 pm.
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Old Feb 5th 2008, 12:49 pm
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Default Re: 1040 - UK account interest?

Originally Posted by Dan B View Post
what foreign account?
I'm sending you the account number & login details linked from a PM. You''l just need to enter your SS Number and credit card details and mother's maiden name to access the information
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Old Feb 5th 2008, 1:05 pm
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Default Re: 1040 - UK account interest?

Originally Posted by rew1000 View Post
I have never worried about not having an equivalent to the 1099, and haven't run into any problems. Personally, I go through my statements, add up the interest for the tax year, print out a piece of paper with my calculations and keep it with the statements and my hard copy of the tax form. [I file electronically so the IRS aren't getting a hard copy of anything anyway though...]

P.S. I wouldn't worry too much about these things - so long as you aren't doing a Wesley Snipes and imagining that you don't have to pay tax, the consequences of getting something wrong won't be catastrophic!
Thanks, this is just what I wanted to know. Your "P.S." is my major problem. I cannot get my usually reliable finacial advisors (spouse & MIL) to accept that I have to pay US tax on UK income. But, I assume it is a good policy to stay on the right side of the US Treasury Office of Foreign Assets Control...

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Old Feb 5th 2008, 5:25 pm
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Default Re: 1040 - UK account interest?

Originally Posted by Dan B View Post
what foreign account?
ha ha.. I think he missed it, but I forget stuff like that every now and again too!
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Old Feb 5th 2008, 6:46 pm
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Default Re: 1040 - UK account interest?

Historical sterling exchange rates here:

http://research.stlouisfed.org/fred2/data/EXUSUK.txt

- they are monthly averages rather than daily/weekly, but I don't think the IRS kicks up too much of a stink about what methiod you use, as long as you declare it and you aren't using an obviously exaggerated exchange rate.
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