UK Savings & Tax
#1
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Joined: Jun 2011
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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.
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.
#3
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.
Might want to speak with a tax CPA for a one off piece of advice, especially if large sums are involved.
#4
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Joined: Jun 2011
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Re: UK Savings & Tax
Thanks. Think I'll go have a sit down with H&R, just for piece of mind.
#7
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.
Might want to speak with a tax CPA for a one off piece of advice, especially if large sums are involved.
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.
#8
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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
#9
Re: UK Savings & Tax
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.
#11
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Re: UK Savings & Tax
Which it will be. I only have to declare interest since I've been here (end May 2011), right?
#13
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Joined: Apr 2011
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Posts: 1,117
Re: UK Savings & Tax
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".
#14
Re: UK Savings & Tax
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".
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".