kmorton1953

I know this is probably an old chestnut but....

My endownment policy has matured in the UK and I want to move it to the US, it is about 24,000 sterling. Are there any tax implications in just transferring this money to my US bank.

Thanks for your help!

Keith

Pulaski

There are no tax implications for just transferring the money to the USA if you are a USC or permanent resident. There may be if you are just a visa holder (H1, L1 etc.).

TRPardoe

There is a US tax liability because it is income. All income is subject to tax here, n'est pas ?

sibsie

Only tax on the money you make from it. If you put it in an interest bearing account in the US then the interest you make is taxable.

dunroving

I think that this is a really important post for anyone with finances in two countries. In the UK, an endowment is non-taxable, correct? So does/should the US disregard the non-taxable status if you choose to bring the money to the US (or not, as the case may be)? Same question applies to an ISA you may have paid into before leaving the UK.

I wasted $1500 on a financial consultant a couple of years ago. He kept pushing the Roth IRA on me - you know, the one that's paid with after-tax money, and is tax-exempt when you withdraw it during retirement? Naturally, I asked him, "What if I retire in the UK?" His response ("Oh, you shouldn't have to pay tax on it wherever you live") didn't inspire confidence (I didn't feel like he really knew). So, I asked him to show me the evidence. Of course, he never could.

The tax implications of being an expat are mind-boggling. And it seems that, unless you're talking about millions in investments, the cost of getting expert advice can be higher than the money it saves you!

Pulaski

There may be income tax in the US on the maturing endowment (but I don't know whether there is or not), but, assuming that it is taxable, if you are a USC or permanent resident the endowment would be taxable whether the proceeds are remitted to the USA or not.

The act of transferring the proceeds would not, ever, turn non-taxable funds into taxable income. :lecture:

sibsie

What he said.

kmorton1953

An earlier post said the tax implications of being an ex-pat are mind boggling - dead right. I'm really not looking forward to retirement and pension time! i.e. Stay in US and drag UK pension to US or retire to UK and do the reverse.

Something to consider: when we sold the house in the UK we got the money, and transferred it to US and then used to it to pay the deposit on the new house with no problems. We worked under the assumption that (at that time) you could make a one time profit on the sale of a house.

My big problem is what to do with the money, whether to just leave it in the UK and invest it somewhere, my financial advisor there didn't seem to keen on this for some reason because of not having residency status - or bring it over here and invest it and then pay taxes (of course) on the profits/interest.

Fun isn't it, not!
Keith

kmorton1953

Use this link...

http://www.irs.ustreas.gov/faqs/faq13-3.html

13.3 Aliens and U.S. Citizens Living Abroad: Foreign Income & Foreign Income Exclusion

What is foreign earned income? Is it income from a foreign source or income paid by a U.S. company while living abroad?

Earned income is pay for personal services performed, such as wages, salaries, or professional fees. Foreign earned income is income you receive for services you perform in a foreign country during a period when your tax home is in a foreign country and during which you meet either the bona fide residence test or the physical presence test. It does not matter whether earned income is paid by a U.S. employer or a foreign employer. Foreign earned income does not include the following amounts.

The previously excluded value of meals and lodging furnished for the convenience of your employer.
Pension or annuity payments including social security benefits.
Payments by the U.S. Government, or any U.S. government agency or instrumentality, to its employees.
Amounts included in your income because of your employer's contributions to a nonexempt employee trust or to a nonqualifying annuity contract.
Recaptured unallowable moving expenses
Payments received after the end of the tax year following the tax year in which you performed the services that earned the income.

dunroving

A confusing part is never knowing whether when they say "citizen or resident alien" they mean Green Card resident alien or resident alien for tax purposes. I've been a resident alien for tax purposes since 1996, but I'm not a Green Card resident alien (Am on H1B). Doh!

vsaumarez

I have a very similar problem. Now is a good time to change to the dollar if you are going to buy a house there, but not so good for other types of invesments.