Go Back  British Expats > Living & Moving Abroad > USA
Reload this Page >

UK Savings & Tax

UK Savings & Tax

Old Aug 23rd 2012, 6:07 pm
  #1  
Account Closed
Thread Starter
 
Joined: Jun 2011
Posts: 0
scrubbedexpat027 is an unknown quantity at this point
Default UK Savings & Tax

Here's the deal. I moved here in May 2011 and filed my first US taxes in Jan 2012. It was the most straight forward return you could do, as I'm single, no kids, single income, no assets etc. ( and I filed online through H&R ). Job done.

However, I do have quite a large chunk of savings in a UK tax free ISA. Through my nievety ( I realize it's no excuse ), I thought that as this is tax free I wouldn't have to mention it, so I didn't. From the bits I'm managing to learn, this should be taxed and I should also file another form stating it's over $8K I believe.

I was relunctant to move it over to the US as I'd lose the 2.5% tax free but as I'm looking to buy a house early next year when my GC comes through, it would all be used on that anyway.

I know you can't give definitive tax advise here, but opinions? I'm wondering whether to move it all to my US account now, just take the hit, then just declare as regular US savings on my next return. Or would I have to try and contact the IRS now to explain?

My main concern ahead of losing the interest, is it affecting my GC application in any way.

- Derek.
scrubbedexpat027 is offline  
Old Aug 23rd 2012, 6:13 pm
  #2  
MODERATOR
 
Noorah101's Avatar
 
Joined: Apr 2003
Location: Phoenix, Arizona
Posts: 58,194
Noorah101 has a reputation beyond reputeNoorah101 has a reputation beyond reputeNoorah101 has a reputation beyond reputeNoorah101 has a reputation beyond reputeNoorah101 has a reputation beyond reputeNoorah101 has a reputation beyond reputeNoorah101 has a reputation beyond reputeNoorah101 has a reputation beyond reputeNoorah101 has a reputation beyond reputeNoorah101 has a reputation beyond reputeNoorah101 has a reputation beyond repute
Default Re: UK Savings & Tax

Originally Posted by dek View Post
My main concern ahead of losing the interest, is it affecting my GC application in any way.
This type of thing will not affect your green card process.

Rene
Noorah101 is offline  
Old Aug 23rd 2012, 6:30 pm
  #3  
 
lansbury's Avatar
 
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,541
lansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond reputelansbury has a reputation beyond repute
Default Re: UK Savings & Tax

I believe the correct way is to file an amended tax return for the 2011 tax year, showing the interest the ISA earned as part of your investment income for the year.

Might want to speak with a tax CPA for a one off piece of advice, especially if large sums are involved.
lansbury is offline  
Old Aug 23rd 2012, 6:34 pm
  #4  
Account Closed
Thread Starter
 
Joined: Jun 2011
Posts: 0
scrubbedexpat027 is an unknown quantity at this point
Default Re: UK Savings & Tax

Thanks. Think I'll go have a sit down with H&R, just for piece of mind.
scrubbedexpat027 is offline  
Old Aug 23rd 2012, 6:56 pm
  #5  
Bob
BE Site Lead
 
Bob's Avatar
 
Joined: Aug 2004
Location: MA, USA
Posts: 91,772
Bob has a reputation beyond reputeBob has a reputation beyond reputeBob has a reputation beyond reputeBob has a reputation beyond reputeBob has a reputation beyond reputeBob has a reputation beyond reputeBob has a reputation beyond reputeBob has a reputation beyond reputeBob has a reputation beyond reputeBob has a reputation beyond reputeBob has a reputation beyond repute
Default Re: UK Savings & Tax

Originally Posted by dek View Post
Thanks. Think I'll go have a sit down with H&R, just for piece of mind.
Talk to someone proper, not those muppets.
Bob is offline  
Old Aug 23rd 2012, 6:58 pm
  #6  
Account Closed
Thread Starter
 
Joined: Jun 2011
Posts: 0
scrubbedexpat027 is an unknown quantity at this point
Default Re: UK Savings & Tax

Suggestions?
scrubbedexpat027 is offline  
Old Aug 23rd 2012, 7:07 pm
  #7  
nun
BE Forum Addict
 
nun's Avatar
 
Joined: Aug 2004
Posts: 4,722
nun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond repute
Default Re: UK Savings & Tax

Originally Posted by lansbury View Post
I believe the correct way is to file an amended tax return for the 2011 tax year, showing the interest the ISA earned as part of your investment income for the year.

Might want to speak with a tax CPA for a one off piece of advice, especially if large sums are involved.
You need to file a 1040X and include interest and gains from your ISA....don't forget to amend your state tax return too. The complexity of dealing with the ISA will depend on it's type; is it a cash ISA or a stocks and shares ISA? If it's a cash ISA it's easy to deal with as it's treated as an interest bearing account. If it's a stocks and shares ISA it is a foreign grantor trust probably invested in passive foreign investment corporations (PFICs), ie UK unit trusts, and you will have to file the appropriate forms and do the mark-to-market calculations.

FYI you only need to specifically provide information on foreign accounts to the Treasury on the FBAR form if the total of your foreign accounts is greater than $10k at any time in the tax year.

UK ISAs have no tax advantages for US residents. You might be getting a good interest rate in the UK, which might make the ISA worth keeping, but you should look into US CDs and even ROTH IRAs if you are thinking of staying in the US for some time.

Last edited by nun; Aug 23rd 2012 at 7:14 pm.
nun is offline  
Old Aug 23rd 2012, 7:15 pm
  #8  
Account Closed
Thread Starter
 
Joined: Jun 2011
Posts: 0
scrubbedexpat027 is an unknown quantity at this point
Default Re: UK Savings & Tax

Thanks. It's a cash ISA. I'll get right on it and file the correct forms. Bloody taxes, I'm just looking for an easy life
scrubbedexpat027 is offline  
Old Aug 23rd 2012, 7:37 pm
  #9  
nun
BE Forum Addict
 
nun's Avatar
 
Joined: Aug 2004
Posts: 4,722
nun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond repute
Default Re: UK Savings & Tax

Originally Posted by dek View Post
Thanks. It's a cash ISA. I'll get right on it and file the correct forms. Bloody taxes, I'm just looking for an easy life
OK you are fine. You need to file a 1040X and include the interest from your ISA on a new Schedule B if your interest amount was over $1500. Your Adjusted Gross Income will increase by the amount of your ISA interest and you'll have to send the IRS a cheque for the tax due.
nun is offline  
Old Aug 23rd 2012, 7:54 pm
  #10  
 
Joined: Aug 2004
Location: Eugene, OR
Posts: 1,352
avanutria has a reputation beyond reputeavanutria has a reputation beyond reputeavanutria has a reputation beyond reputeavanutria has a reputation beyond reputeavanutria has a reputation beyond reputeavanutria has a reputation beyond reputeavanutria has a reputation beyond reputeavanutria has a reputation beyond reputeavanutria has a reputation beyond reputeavanutria has a reputation beyond reputeavanutria has a reputation beyond repute
Default Re: UK Savings & Tax

Originally Posted by nun View Post
OK you are fine. You need to file a 1040X and include the interest from your ISA on a new Schedule B if your interest amount was over $1500.
What if the interest is under $1500?
avanutria is offline  
Old Aug 23rd 2012, 7:57 pm
  #11  
Account Closed
Thread Starter
 
Joined: Jun 2011
Posts: 0
scrubbedexpat027 is an unknown quantity at this point
Default Re: UK Savings & Tax

Which it will be. I only have to declare interest since I've been here (end May 2011), right?
scrubbedexpat027 is offline  
Old Aug 23rd 2012, 8:14 pm
  #12  
nun
BE Forum Addict
 
nun's Avatar
 
Joined: Aug 2004
Posts: 4,722
nun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond repute
Default Re: UK Savings & Tax

Originally Posted by avanutria View Post
What if the interest is under $1500?
No need to file a Schedule B then, unless you also have ordinary dividends.
nun is offline  
Old Aug 23rd 2012, 8:53 pm
  #13  
BE Forum Addict
 
Joined: Apr 2011
Location: The Shire
Posts: 1,102
theOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond reputetheOAP has a reputation beyond repute
Default Re: UK Savings & Tax

Originally Posted by nun View Post
No need to file a Schedule B then, unless you also have ordinary dividends.
For once, we disagree (well aside from the fairness of WEP!).
Schedule B changed for 2011. There's now two parts to question 7a (do you have a foreign account and does it require an FBAR). Sneaky. You're probably OK if you don't file Sch. B and if you aren't required to file an FBAR, but as Lizzit would say, filing the Sch. B and answering the question makes the return "Iron Clad".
theOAP is offline  
Old Aug 23rd 2012, 9:40 pm
  #14  
nun
BE Forum Addict
 
nun's Avatar
 
Joined: Aug 2004
Posts: 4,722
nun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond reputenun has a reputation beyond repute
Default Re: UK Savings & Tax

Originally Posted by theOAP View Post
For once, we disagree (well aside from the fairness of WEP!).
Schedule B changed for 2011. There's now two parts to question 7a (do you have a foreign account and does it require an FBAR). Sneaky. You're probably OK if you don't file Sch. B and if you aren't required to file an FBAR, but as Lizzit would say, filing the Sch. B and answering the question makes the return "Iron Clad".
Yes I agree. As the OP didn't seem to need an FBAR and didn't seem to file a Schedule B the first time I went by the dollar limits on Schedule B......no harm in filing one with the 1040x though.
nun is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information -

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.