US Income Tax on UK Premium Bond Winnings?
 

Does anybody know whether as an LPR am I liable for US income tax on UK Premium Bond winnings? I don't intend to repatriate any of the funds, but I guess that makes no difference at all if I am liable.

Nettie

Re: US Income Tax on UK Premium Bond Winnings?
 

Sorry, I'm not of any help, but that's an interesting question. I've often wondered the same about endowment policies - which are tax-free if you live in the UK when they mature. If you live in the US, does the US "honor" the tax-free status of a UK endowment policy? Don't mean to hijack your thread but it seems like a related question.

Re: US Income Tax on UK Premium Bond Winnings?
 

If you are declaring and paying taxes to the IRS then you will be liable for taxation, that is how I understand it. I cannot give an answer on the Endowment question.

Re: US Income Tax on UK Premium Bond Winnings?
 

Q) Who is going to tell the IRS that you won??

A) Nobody.

Tell 'em nowt, pay them less.

-

Re: US Income Tax on UK Premium Bond Winnings?
 

I think, if you declare it- it will probably come under gambling earnings, which means you'll get clobbered for up to 60% tax (like lottery wins).
Keeping the money in UK- you only have to declare bank accounts with balances of 10,000 or over (at least that's what it used to be). Banks in the UK now have to inform the IRS of account holders interest earnings etc...banks offshore, eg Jersey, don't.....

I don't know about Endowment policies- but one of mine (tax free in UK) matured a few years back and I just banked the cheque in Jersey. I figured Uncle Sam made so much out of us during the 8 years we waited for our green cards (and got flipping creamed taxwise), he owed us one LOL.

Re: US Income Tax on UK Premium Bond Winnings?
 

I win 9/10 months out of every 12 months for the last 10 years...
they just automatically invest it into more bonds....

Usually just 50 or 100 GBP though ..never had a big win yet...

Re: US Income Tax on UK Premium Bond Winnings?
 

For what it's worth - My tax advisors investigated this question as I had sold some ISAs in the year I moved over - they decided that the Tax Treaty could be interpreted either way (i.e. it's not clear). Technically the treaty is apparently supposed to mean that you are not in a worse position by being taxed in both countries than you would have been if you were taxed in one. So (in their opinion) tax exempt vehicles in the UK should not be subject to tax in the US.

They advised I didn't have to pay tax on the gains made by the ISAs but they were not 100% certain of this - however I also had losses that could be set against the gains even if I did have to declare them so they didn't feel it was a risk for me to interpret things this way - their advice may have been different if I had not had the fall back.

This was from one of the big corporate tax companies paid for as part of my relocation - we're on our own next year :eek:

Re: US Income Tax on UK Premium Bond Winnings?
 

Bloody 'ell. I've had some for 30+ years and the buggers have never come up!

Re: US Income Tax on UK Premium Bond Winnings?
 

Ernie told me that I had to sell my quota of premium bonds when I moved to the US as they were not allowed under the US postal rules to send lottery winning by US mail.?? I suppose I could have re-invested.

I never really had any decent winnings so I wasn't that bothered.

Re: US Income Tax on UK Premium Bond Winnings?
 

One of the many reasons you keep a current account and an address in your previous country...

Re: US Income Tax on UK Premium Bond Winnings?
 

I saw a while ago that you're not allowed to hold them in the US, but I assumed it was a tax thing - never thought of USPS not allowing it.

We'd just left ours with my Mums UK address on cos it was easier, and she pops the winnings in the bank when they arrive - running about 4% return at the moment...slightly less than the bank, but theres always the chance of the big one.....