Wise now offering to pay interest on Accounts

So an email from Wise landed in my Inbox yesterday and they are now trying to tempt me with the potential of earning interest on my US$ Wise account:

Here's the brief blurb:

Introducing Interest for UK
Boost your GBP, Euro or US dollars balances by holding your money in an interest-earning fund. Your money is held in assets 100% backed by the government. Today, no UK bank offers a current account that pays central bank interest rates and provides a 100% government guarantee. Capital at risk

Following the links, the funds can be invested (for US Dollar accounts) In BlackRock ICS US Treasury Fund
A sub-fund of Institutional Cash Series plc.

I appreciate that they state Capital is at risk, but as they're invested in US T-Bills, that is minimal and it falls in a Risk Category 1 - so probably as safe as it can be and better than keeping it under the mattress!

My question is this - does my UK/USC status complicate matters and will it have tax filing implications with the IRS?

Thoughts/advice greatly appreciated.

I got that email as well.  I never keep enough money in Wise for it to be tempting to me.

As to tax consequences it would, I expect, be treated like any other bank interest, taxable by both countries if you are a USC living overseas, or just by the USA if you live there.

If the interest is from the GB account then it simply gets put down on the IRS return as another 1099-INT as I do with my other GB bank account interest.

I can't see what other tax complications there could be since both the USD and GBP accounts have the appropriate US or US routing/sort code numbers as well personal account numbers.

Thanks @durhamlad

My question here is that I don't think it's bank interest as such, because it's invested in a Blackrock fund - hence the "Capital at risk" blurb.

As it's invested in US Treasuries, I don't think it has PFIC implications - but I'm not 100% sure.

3.7^% interest at minimal/negligible risk is a reasonable return. UK GBP pays 3.11%

I thought I'd test out the Wise link and see where it took me  - having confirmed my citizenship, I got the following message:

Sorry, you can’t use Assets yet
We can’t offer Assets to United States citizens or tax residents — or people who pay tax in multiple countries.

But we’re working on changing this. And we’ll let you know when we’re done.

So back to 0% interest   

Thanks @durhamlad

My question here is that I don't think it's bank interest as such, because it's invested in a Blackrock fund - hence the "Capital at risk" blurb.

As it's invested in US Treasuries, I don't think it has PFIC implications - but I'm not 100% sure.

3.7^% interest at minimal/negligible risk is a reasonable return. UK GBP pays 3.11%

When you buy bonds your capital is at risk because the value of the bond could fall but I believe the  dividends paid out count as regular income although they may be reported on a 1099-DIV rather than 1099-INT.

I report the payments from my  NS&I bonds as interest on my IRS return. May or may not be correct, thinking about it now, but the tax is identical.

I thought I'd test out the Wise link and see where it took me  - having confirmed my citizenship, I got the following message:

Sorry, you can’t use Assets yet
We can’t offer Assets to United States citizens or tax residents — or people who pay tax in multiple countries.

But we’re working on changing this. And we’ll let you know when we’re done.

So back to 0% interest   

They are probably working to become compliant with FATCA.

When you buy bonds your capital is at risk because the value of the bond could fall but I believe the  dividends paid out count as regular income although they may be reported on a 1099-DIV rather than 1099-INT.

I report the payments from my  NS&I bonds as interest on my IRS return. May or may not be correct, thinking about it now, but the tax is identical.

I report any NS&I Bonds as interest too. You're just receiving a fixed rate of income for a period of time. I note as securities on FinCen 114 though, as technically you're loaning the U.K. Government money. Premium Bonds the same too, just regular interest/secuities.

I report any NS&I Bonds as interest too. You're just receiving a fixed rate of income for a period of time. I note as securities on FinCen 114 though, as technically you're loaning the U.K. Government money. Premium Bonds the same too, just regular interest/secuities.

Ditto.

So an email from Wise landed in my Inbox yesterday and they are now trying to tempt me with the potential of earning interest on my US$ Wise account:

Here's the brief blurb:

Introducing Interest for UK
Boost your GBP, Euro or US dollars balances by holding your money in an interest-earning fund. Your money is held in assets 100% backed by the government. Today, no UK bank offers a current account that pays central bank interest rates and provides a 100% government guarantee. Capital at risk

Following the links, the funds can be invested (for US Dollar accounts) In BlackRock ICS US Treasury Fund
A sub-fund of Institutional Cash Series plc.

I appreciate that they state Capital is at risk, but as they're invested in US T-Bills, that is minimal and it falls in a Risk Category 1 - so probably as safe as it can be and better than keeping it under the mattress!

My question is this - does my UK/USC status complicate matters and will it have tax filing implications with the IRS?

Thoughts/advice greatly appreciated.

From the incredibly brief description, I suspect this is either onshore US and not invested in an HMRC reporting fund or - alternatively - offshore somewhere (possibly onshore in the UK) and would be a PFIC.

I did look into this one - it's a clear PFIC, definitely avoid. In the fine print, they even say US citizens/tax residents aren't eligible for it, and I've heard from other people that they specifically ask that if you try to sign up.

I did look into this one - it's a clear PFIC, definitely avoid. In the fine print, they even say US citizens/tax residents aren't eligible for it, and I've heard from other people that they specifically ask that if you try to sign up.

Thanks for that. I’ll let DD know to avoid it.