ISAs as a US Resident
Jan 15th 2015, 5:15 pm
#16
Lost in BE Cyberspace
Joined: Jun 2011
Location: Los Angeles
Posts: 6,159
Jan 15th 2015, 5:25 pm
#17
BE Forum Addict
Joined: Aug 2004
Posts: 4,754
Re: ISAs as a US Resident
If there are no PFIC issues with the TDW ISA just leave it alone and pay the US tax on any dividend. Make sure you file the appropriate US informational forms. IMHO foreign trust forms aren't required, but some people will say that they should be filed. Do your own research on that or pay for advice.
Jan 15th 2015, 8:56 pm
#18
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: ISAs as a US Resident
Form 8891 is no longer required.
IRS Simplifies Procedures for Favorable Tax Treatment on Canadian Retirement Plans and Annual Reporting Requirements
IRS Simplifies Procedures for Favorable Tax Treatment on Canadian Retirement Plans and Annual Reporting Requirements
It's going to make it rather difficult for States that don't recognize tax treaties (like California) to enforce their silly rule then, because now there would be no evidence, because there's no form. The IRS can see CRA RRSP reports on US resident taxpayers by virtue of the tax treaty, but States can't.
Jan 15th 2015, 9:04 pm
#19
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: ISAs as a US Resident
The more relevant question is, what do you put down on schedule B to question 8? Because you could use 8891 in lieu of a 3520, but now it doesn't exist. Hmm.... yes they've updated the instructions for 3520 as well to say it doesn't have to be filed for RRSPs or RRIFs.
Woohoo!
Jan 15th 2015, 9:14 pm
#20
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: ISAs as a US Resident
If there are no PFIC issues with the TDW ISA just leave it alone and pay the US tax on any dividend. Make sure you file the appropriate US informational forms. IMHO foreign trust forms aren't required, but some people will say that they should be filed. Do your own research on that or pay for advice.
You can report any interest or whatever on your 1040, but the income I assume has to be reported on schedule B, which mentions the 3520.
It all goes back to whether the IRS consider the "wrapper" as a trust.
Jan 16th 2015, 12:20 pm
#21
BE Forum Addict
Joined: Aug 2004
Posts: 4,754
Re: ISAs as a US Resident
Well it would be 3520-A to report the trust, and imo that's virtually impossible to fill out without assistance from the FFI. So as ISAs are for UK tax residents only, the only legal way of doing it is to close the account. Obviously they might just not notice for 3 years and HMRC may not care for 3 years but then again, maybe they will.
You can report any interest or whatever on your 1040, but the income I assume has to be reported on schedule B, which mentions the 3520.
It all goes back to whether the IRS consider the "wrapper" as a trust.
You can report any interest or whatever on your 1040, but the income I assume has to be reported on schedule B, which mentions the 3520.
It all goes back to whether the IRS consider the "wrapper" as a trust.
https://www.gov.uk/individual-saving...-abroad-or-die
As far as the ISA being a foreign trust requiring 3250-A etc, I think it's obvious that it isn't because the account owner can close it at any time.
So if there are no PFIC issues there's no problem in just holding tight, paying the US tax and filing FBAR and 8938 if needed.
There's no need to make US tax more complicated than required.
