icybluesmile

Hi all,

Looking for some advice/links to helpful websites.

I am a UKC who has been living in the US for nearly 2 years now. I am here on an E2 visa, but have my AOS interview next week, so could be a green card holder very soon. I married a USC 6 months ago.

Obviously, my plan is now to stay in the US permanently; this was not the case when I originally left the UK, so I left all my bank accounts in tact, and didn't really give much thought to them (not a good plan, I know!)

So now I'm starting to worry about whether I should even have these UK accounts, and what I need to do about them. I have a current account that I use to pay direct debits to the student loan company, a cash ISA with less than 1000GBP in it, and a savings bond that is holding money given to me by a relative - a larger amount than the ISA.

Questions:

1. I understand that all worldwide earnings must be declared when filing a tax return - now neither my cash ISA nor my bond earned any interest in tax yr 2011; they ONLY received interest (for the first time) in 2012 - so my plan is to declare that interest as earnings when I file 2012 taxes. Is this right?

2. Is my mum allowed to pay money into my cash ISA while I'm living here? You see she wants to save money for me, but not sure what the rules are on this.

3. Is there anything else I should be aware of about these accounts in the UK? I feel really worried that there's something I'm not doing that could land me in hot water further down the line.

Thank you.

BTJ

You cannot contribute to an ISA as a non-resident of the UK, though you can keep the ISA account. Have a look at FATCA and FBAR and see if you need to report these accounts to the IRS or Treasury. Any interest earned should be reported on the US tax return for the corresponding year.

I'm sure an expert will be along to correct any mistakes I've made shortly

Bob

Nothing really has changed, the concerns and issues are exactly the same as when you first moved here :/

icybluesmile

Ok - looks like I may need to submit the FBAR - anyone know whether a person on an E2 needs to? Will call the helpline to check if no one on here can confirm.

nun

Yes, you need to declare all your UK interest so it can be taxed in the US. However, you can take a tax credit for any UK tax withheld.

ISAs are limited to UK residents. The cash ISA is not the best investment for a US resident as it has no tax advantage. You would be better off having your mum give you the money and then you put it in a US ROTH IRA, that's if you meet the earned income requirements. A ROTH is tax free in the US and will also be tax free in the UK if you ever return.

If the sum of the accounts ever go above $10k you will have to file an FBAR. You should also watch out for FATCA which is similar to FBAR, but has higher a threshold.

nun

All US residents and citizens must file FBAR if the sum of their foreign accounts is $10k or more in the tax year.

icybluesmile

Ok - thanks. I am looking at the e file procedures now for the FBAR - but the website isn't working for me to submit a new password in the registration process.

I opened the bond and ISA April 2011 - If I file the FBAR now, is it considered late?

nun

Were your UK accounts worth more than $10k in 2011? If the answer is yes you should file an FBAR with the Treasury. The filing dead line for 2011 is June 30th 2012.

icybluesmile

Yes, they were worth more than 10K$

Am trying to file, but website won't work and helpline closed until tomorrow. Will try again in then.

Does anyone happen to know if I should have declared these accounts on my 2011 tax return? They didn't earn interest in 2011. And do you declare al interest, even if only 5 pence?

Moxie

Why don't you just print the form and mail it in? http://www.irs.gov/pub/irs-pdf/f90221.pdf

The form doesn't ask for your interest earned. You are only reporting to the US Treasury the maximaum value in your foreign accounts during each calendar year if you have over $10k. It's not about income tax. It's a disclosure of what you have outside the US.

2011 calendar year- report due June 2012
2010 calendar year- did you have more than $10K? -was due June 2011 but you can report it late.

Bob

Yes, probably.

icybluesmile

Thanks for all the advice.

I am now sure I need to send in the FBAR for 2010 and 2011. From what I've read, I could face a penalty for sending the 2010 one in late.

I'm now trying to find out if these accounts should have been declared on my tax returns - a tax accountant has done my returns both years, and I felt sure that on the organizer she gave me, it said if EARNINGS were over 10,000$ from outside US - but perhaps it didn't? Perhaps it's any interest at all? I've emailed her to find out.

nun

You need to include the interest from those accounts on your Schedule B and 1040. If there's no interest you don't have to put them on the 1040 at all.

The FBAR is actually not a tax form. It's an informational form you send to the Treasury.....not the IRS. You must file FBARs if the value of your foreign accounts is over $10k...the FBAR has nothing to do with earnings!

anro15

To clarify the FBAR process for personnel moving out halfway through the US tax year. Is it the maximum reached during the year (i.e. when in the UK) or the total at the end of the year (i.e. probably not over the threshold once all has been moved to the US on emigration).

Thanks

Bob

FBAR is at any point you have a balance over $10K abroad.