US tax question; dealing with a different tax year
Mar 13th 2016, 6:45 pm
#1
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US tax question; dealing with a different tax year
Hello everyone. I'm guessing someone here will have done this, but I have to report interest earned for a cash ISA, and the interest period straddled the US tax years, and the period from when I went from non resident to resident. So my April statement tells me I've earned 20 quid for the uk tax year. For federal tax and the 8938 I have to fill, I've assumed I only report the interest accrued during the part of the us tax year when I became resident. Three quarters of the interest accrual period was when I was non resident, the year before. It's not a lot of money, but I don't won't to get it wrong seeing as I have to file an 8938 and report the interest there. Am I doing this right? 
This forum is really excellent for advice for those of us new to here and navigating the treacherous waters of taxation!
This forum is really excellent for advice for those of us new to here and navigating the treacherous waters of taxation!
Mar 14th 2016, 2:21 am
#2
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Re: US tax question; dealing with a different tax year
Hello everyone. I'm guessing someone here will have done this, but I have to report interest earned for a cash ISA, and the interest period straddled the US tax years, and the period from when I went from non resident to resident. So my April statement tells me I've earned 20 quid for the uk tax year. For federal tax and the 8938 I have to fill, I've assumed I only report the interest accrued during the part of the us tax year when I became resident. Three quarters of the interest accrual period was when I was non resident, the year before. It's not a lot of money, but I don't won't to get it wrong seeing as I have to file an 8938 and report the interest there. Am I doing this right? This forum is really excellent for advice for those of us new to here and navigating the treacherous waters of taxation!
This forum is really excellent for advice for those of us new to here and navigating the treacherous waters of taxation!
Mar 14th 2016, 8:32 am
#3
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Re: US tax question; dealing with a different tax year
Usually ISA interest is paid at the end of the fiscal year i thought, so 2015/2016 interest would be paid after 5 april 2016 and falls in US 2016 returns?
Probably got it all upside down - blame it on age and the heat.
Probably got it all upside down - blame it on age and the heat.
Mar 14th 2016, 4:31 pm
#4
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Re: US tax question; dealing with a different tax year
Assuming you are doing cash based accounting. Accrual based accounting is slightly different. Also it is possible to change your tax year with the IRS, but I think you can only do this once and if you are getting US income, I'm sure it's easier to deal with the few UK assets.
Mar 14th 2016, 4:46 pm
#5
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Re: US tax question; dealing with a different tax year
Assuming you are doing cash based accounting. Accrual based accounting is slightly different. Also it is possible to change your tax year with the IRS, but I think you can only do this once and if you are getting US income, I'm sure it's easier to deal with the few UK assets.
There is no way to run personal accounts on an accrual basis. Income cannot be directly matched to expenditures.
And while you can, in theory, change your tax year as an individual US taxpayer, someone who is worrying about how to tax 20UKP of interest in a UK cash ISA is not someone who will even want to know that is possible, let alone want to do it.
Mar 14th 2016, 5:43 pm
#6
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Re: US tax question; dealing with a different tax year
Eh? Now you're just confusing her. And possibly yourself.
There is no way to run personal accounts on an accrual basis. Income cannot be directly matched to expenditures.
And while you can, in theory, change your tax year as an individual US taxpayer, someone who is worrying about how to tax 20UKP of interest in a UK cash ISA is not someone who will even want to know that is possible, let alone want to do it.
There is no way to run personal accounts on an accrual basis. Income cannot be directly matched to expenditures.
And while you can, in theory, change your tax year as an individual US taxpayer, someone who is worrying about how to tax 20UKP of interest in a UK cash ISA is not someone who will even want to know that is possible, let alone want to do it.
Mar 14th 2016, 7:32 pm
#7
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Re: US tax question; dealing with a different tax year
While you're correct for the OP situation suggesting the use of an accrual method or altering tax years is not recommended, you may want to have a look at Form 1116, Part II, box (i). Then, inquire of an American citizen resident in France who files using FTC, and not FEIE, which box they tick. You may want to alter the above quote.
Mar 14th 2016, 7:40 pm
#8
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Re: US tax question; dealing with a different tax year
Thank you all. I have just learned about the term constructive receipt of earnings! So yes, looks like I should not carve anything up but just report it as and when received.
Thanks for saving me from that mistake.
Thanks for saving me from that mistake.
Mar 14th 2016, 9:42 pm
#9
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Re: US tax question; dealing with a different tax year
While you're correct for the OP situation suggesting the use of an accrual method or altering tax years is not recommended, you may want to have a look at Form 1116, Part II, box (i). Then, inquire of an American citizen resident in France who files using FTC, and not FEIE, which box they tick. You may want to alter the above quote.
