UK Mini Cash ISA & US Tax

[slurm 0]

I moved over to the US on a K-1 visa in February (Green Card since July) but I left some savings in a Mini Cash ISA back home.

I was wondering if this was the right thing to do, i.e. will this be liable to US tax when I have to file a return next year? If it's a problem and I do have to close it (and I won't be going back to the UK for a while to be able to) will I then get taxed on sending over the money to the US now I'm a legal resident?

If anyone has an experiences (or advice) I'd really appreciate hearing about them.

Thanks

[Rubycon 0]

I don't think you have to declare off-shore income, as the US presumes that you're paying taxes on it to the country it is in. So, if your money stays in your ISA in the UK, it is not liable for US tax (if it was a normal savings account, it would be liable for UK tax).

Not sure what the situation is if you bring the money over here, but I would guess that it is still not taxed (unless it is a very large amount). Of course, you are still liable for tax on any interest it earns while in a savings account in the US.

Keep in mind that you can't deposit anything into your ISA once you become a UK overseas resident - so if you move the money over to the US, you will be losing a good rate of tax free interest. And with the exhange rate as it is now, it beats many of the savings rates available in the US.

Of course, the only way to be sure is to contact the IRS - I am not a lawyer and blah blah blah but I did look into it as I have a Cash ISA and I'm moving to the US next week!!

Edited August 23, 2007 by Rubycon

[Lansbury 19]

When completing US tax return you have to declare your worldwide income.

There is a reciprocal tax agreement between UK and US so in general if you pay tax in one country you don't pay tax on that money in the other. You have to show the UK tax paid on your US tax return. Providing you have shown on your US tax return the income earned by your ISA since your arrival in the US no problems with tax moving it over.

I did see a post either on this board or British Expats which said the US doesn't recognise the tax incentives the UK gives on ISAs and so taxes them heavily here. No idea if this is correct but if you have a lot of money involved it could be worth getting some advice from a tax accountant to cover your back.