Scotsman In Texas

So I (perhaps foolishly) alerted NS&I that I was living in the US by trying to change my address:

"I am writing to you about Premium Bonds held by residents of the USA. I am sorry but we cannot record a USA address.

United States Lottery laws prohibit the sale and management of Premium Bonds while you are living in the USA. Even if you gave us a receiving address outside the USA, it would not be a solution because we still need your signature for a prize win.

I am sorry but in the circumstances you will need to cash in the Bonds."

I know this has been discussed before but I didn't come across any final resolution. Furthermore, this is a very oddly worded letter. It's does not say it is illegal to own the premium bonds. And I am not sure why the signature would be problematic. I spend a lot of time at my address in the UK (although US resident).

I recall reading that sending things through the US postal mail is the issue. Wondering if anyone had got to the bottom of this? I obviously don't want to do anything illegal, but not certain where the illegality lies.

Cheers.

Pulaski

So long as you disclose them, if necessary, and pay tax on any winnings the US, the US really doesn't care.

I still have a handful, well three handfuls actually, that are registered at my mother's address. I have no experience of declaring winnings.

Scotsman In Texas

I do win £25 and £50 now and again. But I have never had to sign anything - they end up in my UK bank account. Perhaps the signature they are referring to is for a big prize?

Perhaps the best idea here is to change my address back to the UK address.

Pulaski

They're a "foreign security not held on an exchange" for the purposes of the IRS form 8938, if you need to file one. Otherwise, just make sure you declare and pay tax on any winnings, which I would (will ) declare under foreign interest on securities. If you have a access to a UK address, use that to register the bonds.

teejaydee

This issue is covered on the following web page:

https://en.wikipedia.org/wiki/Talk:Premium_Bond

Scotsman In Texas

Thanks. Yes, I will include them on my 8938. Looking at IRS comparison of 8938 and FBAR, I am wondering if they would be classed as "Foreign stock or securities not held in a financial account" or "Foreign stock or securities held in a financial account at a foreign financial institution". The first is not reportable on the FBAR but the other is.

teejaydee

Yes, any prize over £5,000:

"For prizes of £5,000 and over, we’ll send you a claim form before paying out or reinvesting the prize. And if you’re lucky enough to scoop a jackpot, our representative ‘Agent Million’ will visit you in person."

Owen778

I would honestly advise just selling them. It's not like Premium Bonds give a great return. The mean return has just dropped from 1.35% to 1.25%, but even given that, most people get nothing. I sold my small collection a couple of years ago.

There's a load of analysis here:
Premium Bonds: are they worth it? - MoneySavingExpert

Bear in mind that analysis is for the UK. There are a few differences:
- Premium Bonds are not tax free in the US, but then neither are ISAs, that they principally compare to there
- They also compare to the best savings accounts, and the interest rates are slightly lower in the US than the UK
Overall, though, the analysis will not change that much between the two, plus you have a US tax reporting burden.

Pulaski

When I checked the IRS rules I thought both were reportable.

Scotsman In Texas

Yes I agree. NS&I calls it "Your account' so best to include on the FBAR as well.

Asg123

Even if one holds the maximum, it's only like one pound per week going into a fair lottery with a large prize, the bulk of the money is like in a savings account with the interest paid in the form of small prizes. And one has to pay US tax. not really worth it.

robin1234

I won a prize a couple of years ago, I waited till we bought a flat in England last year to update my address with NS&I. Then they sent me the cheque in the mail to my English address. I think I could have had the prize automatically reinvested in premium bonds.

I declared the prize as interest on my US tax return, also declared the premium bond holdings in my 8938 and FBAR. I just called it "NS&I", didn't mention the word "premium bonds".

malch

I agree. They could cause more hassle than they're worth. I was advised to sell my Premium Bonds when I moved from the UK to the USA albeit some years ago -- legal issues with lottery regulations.

Pulaski

Honestly, the IRS has bigger worries than your premium bonds even if you have several thousand pounds worth, as long, if course, as you disclose them and pay tax on any winnings interest.

Personally I doubt the IRS would care even if you had the maximum £50k's worth; unfortunately I don't.

MidAtlantic

The issue is not with the IRS but NS&Is refusal to mail anything about premium bonds through the US Postal Service, for the reasons given in the Wikipedia reference in #5 above.