Joint UK current/savings accounts

My husband and I are thinking of opening joint current and savings accounts in the UK. He is a British citizen and I am a US citizen living in London. Would I have to pay taxes in the US on any interest we get paid on these accounts? I know that interest payments don't qualify as earned income and are not covered by the exemption, but would I be correct to assume I wouldn't have to pay US taxes since I have already been taxed in the UK?

Also, I have heard that there may be a US tax liability if I ever have more than USD 10,000 on any UK account in my name, whether single or joint. Is this correct?

Thanks,

Estela

The tax depends.  If you pay 40% in the UK and 35% in the US then there would be no US tax because of the credit.  If you pay 20% in the UK and 35% in the US you'll owe more to Uncle Sam.  It really depends on how the numbers work out.

You need to report foreign bank accounts to the US Treasury if the balances exceed $10,000 - this is separate from the tax payable.

If you put your money in the account and your husband withdraws the money this would be a completed gift to a non-resident alien for gift tax purposes, so you'd want to keep track if there are large transactions such as on buying/selling property, inheritances etc in case you need to report such gifts to the IRS.

Thanks for your quick reply! What is the annual exemption for gifts to a non resident alien? This article [nofollow] says it's $106,000, but it was written in 2001. I haven't been able to find information on the IRS site. Also, what if a joint account is closed - does that count as a gift too?

How does one report an account with more than $10,000 to the IRS?

How do other US-UK couples on this forum manage their finances? Do you keep your money in separate accounts or do you have joint accounts?

1) It's $125,000 for 2007.
2) Form TDF 90-22.1, available on the IRS website.

Can't answer your third q personally, as my husband and I are both the same citizen, domicile, and resident status.  But part of your answer lies in what you are comfortable with.  Some couples go ahead and have everything owned by one person to avoid the tax of one country or another.  Other couples are very uncomfortable not owning everything 50/50, even if it means they will have higher taxes.  Most couples I work with do something in between.