lansbury

I'm guessing from that comment you have never been audited.

theOAP

You have no Sec988 gain until you transfer the funds back to the US. You do report any "interest" made on the funds on deposit during the year on 1040. You report the balance on 31 Dec. using the Treasury rate on FBAR and 8938.

theOAP

You may think you've made a loss, but that loss does not exist for IRS purposes. You cannot use that loss on a Sec988 transfer to offset any other gain. Heads, the IRS wins; tails, the IRS wins.

theOAP

+1

Ms Moore

Based on this response () as long as I have no intention of transferring it back to USA, i won't pay additional US taxes.

thank you for taking the time, I did briefly look at Sec988, but it was a bit over my head - However the section specifically for personal transactions does seem to agree with your answer. So I will go with that.

Relating to HMRC - apologies as I have already asked this question in my original post. Transferring such a large amount to my UK account, will the currency exchange transaction result in UK taxes being owed? I am not resident in the UK, and my small UK income is way less than the personal allowance, so I don't currently file a self assessment.

Thanks again your time in responding.

Pulaski

See post #2, above.

Disenchanted

I found this article which helps explain, and it looks like a currency gain is taxed when you convert it back, so my presumption that the IRS will tax you appears to be incorrect. Of course, that might change at any moment in time depending on what little extra rule is burried in the next Patriot Act/Returning Heroes Act that Obama or the next President signs.

https://www.quora.com/Foreign-curren...xed-by-the-IRS


So now the US Dept of Treasury is forcing the expense of providing docs only required by them on the rest of the banking world.
So arrogant. Maybe those banks will start charging for those 1099-INT's too.

durham_lad

I believe it is the IRS that requires this, the Treasury only wants the highest balances reported and are not interested in the taxable interest that the IRS is after.

It will actually make things a little easier for many like myself who have to create 1099-INT's for UK banks that we get interest from. The banks are going to have to do something similar for UK only customers now that they won't be doing PAYE and customers who receive a total of more than 1,000 GBP interest from all their accounts are expected to do a self assessment (from what I heard on MoneyBox the other week)

Disenchanted

Does the IRS not belong to the Department of the Treasury???

I thought I read somewhere that no UK tax will be due on the first £1000 of interest in order to promote people saving more money?

durham_lad

You are correct, the IRS is a part of the Treasury, it is just two different places that one must report to, income to the IRS, and bank accounts' totals to the Treasury. (Actually the Financial Criminal Enforcement Network, FINCEN, these days)

As I say above banks will pay ALL interest gross and it is the taxpayer's responsibility to keep track of this and pay tax on any interest if the total is over £1000. One may have several bank accounts paying interest and if the total is above £1000 then the taxes have to be filed. Not a problem for most in this low interest environment.

Pulaski

That's really not possible. Buying foreign (non-US) currency is no different from buying land, shares, gold bullion or anh other asset. Buying the asset has no tax consequence, other than to establish the acquisition cost of the asset. The taxable gain crystallizes when you sell the asset. .... So merely acquiring foreign currency can't crystallize a gain.