Pickle55

Hello,

I'm currently a US resident, and have been since feb. I hold two savings accounts back in the UK, which I'm just kinda sitting on.

I received a letter from one of my UK banks, asking to Confirm Where You Are a Resident for Tax Purposes. I'm not sure what the implications of filling this in will be! My bank accounts are registered to my sister's address in the UK. I've spoken to them and they didn't seem bothered by my move to the US. Is it normal to want to keep them open? Do you think I'll be able to keep them open? And what is all this tax business about anyway? What will happen if I tell them I'm now a US citizen? I've completed my P85 when leaving the UK, so thought that was the end to it! Ug to taxes and please help!

Jerseygirl

Welcome to BE.

As this thread is about banking I have moved it out of the Immigration forum and into the General US forum.

kodokan

I expect something about the account - address, money movements to the US - has triggered a need for the bank to check if you're a US person/ taxpayer, and they should therefore be including your account details in their FATCA compliance filing (where they report the existence of your account to the US authorities).

This is absolutely nothing to be alarmed about providing you are complying with US laws. Include any interest from the accounts on your US tax return; remember to gross up for UK tax if deducted at source. I believe any UK tax you've had deducted at source can be taken as a credit against any US taxes you'll owe (not sure on the complexities of this - I keep my UK money in non-interest bearing checking accounts so as not to worry about it).

You'll also need to declare the accounts for FBAR/ FATCA purposes if your total holdings across all foreign accounts go over $10k (for FBAR) at any point during the calendar year. There have been lots of threads in this, if you're not sure on the details.

mrken30

I don't think there should be any reason they will have a problem with having a US address. I had problem with Nationwide, but other BE members did not have a problem.

teejaydee

There has recently (from 6th April 2016) been a change in the way UK banks handle tax on bank account interest. Previously the bank would deduct tax from the interest it paid. Now, all interest is paid gross.

Martin Lewis: Be ready for quiet savings rules revolution - Edinburgh Evening News

My guess is that the bank wants to know where customers are tax resident because for anyone who is non-UK resident, it can notify the relevant country of gross income received in the UK. In your case, with this information, the USA can ensure you have reported the fact you received this interest and paid tax on it in the USA.

MidAtlantic

I had no problem keeping UK bank accounts and credit cards open, using my US address (including a Nationawide credit card).

UK banks are required under FATCA to identify any customers with US connections and determine if they should be reported under FATCA. That is why they are asking you.

Orangepants

Now that both FATCA and CRS (Common Reporting Standard) are live, all banks have to document where their customers are tax resident. You should send them a self certification and/or W9.

For FATCA if your accounts are over $10k, then your details with be shared with HMRC to transfer to the IRS and then apparently checked against your tax return that you are paying the tax on the interest. If you are under 10K, then they dont send this data.
For CRS which is the worldwide program, there is no threshold so they report any amount to the applicable country (the US is not part of CRS).

MidAtlantic

Where does your $10k figure come from?

I believe that under the agreement any accounts with less than $50,000 at the end of any calendar year does not have to be reviewed by the bank.

Orangepants

Sorry yes you are right, it is 50k for FATCA reporting on the banks side but 10k for self reporting for FBAR. I believe a lot of institutions are ignoring the $50k as the reporting threshold and just reporting all accounts irrespective of balance.

Jerseygirl

Plus...$10K is the total of all foreign accounts.

Rete

Are you a US Resident or a US Citizen? Perhaps you were a US Citizen who lived in the UK for a while? Either way, the terms do not mean the same.

Steve_

It's probably either for FATCA compliance or withholding compliance or both. Wasn't aware until I read the post above they'd scrapped income tax withholding in the UK on bank accounts.

I suppose theoretically the IRS could request the information from HMRC under the tax treaty but they won't unless you get a huge amount in interest every year.

The UK-US FATCA agreement requires the bank to report all financial accounts held by US persons to HMRC who then report that to the IRS.

Bear in mind "US person" can mean a great many things depending on which law you're talking about, for Securities Act purposes, Bank Act purposes, IRS purposes, INA purposes, FISA purposes, FATCA etc. there are different definitions but generally a natural person whose principal residence is in the US is a "US person". Even if you're illegally present.

Note an ISA is not a financial account as far as FATCA goes. Or at least the IRS aren't sure it is so they excluded it from the FATCA agreement.

Owen778

Please stop repeating this. It's still wrong.

ISAs are financial accounts for FATCA reporting. They are excluded from the requirements for reporting by financial institutions because they are considered low risk. They still count as financial accounts, and are still required to be reported on the FATCA form itself.