Questions about Joint Accounts and Future Mortgage

Hi all,

I have been living in the UK now for about six months and have recently gotten hired. My spouse (UK citizen) and I have talked about getting a joint savings account and possibly a joint checking account (we currently each have our own). When it comes to my filing taxes in the US each year - what happens with these accounts? If I do not exceed the threshold (I won't) will I be taxed on the full amount in each of these accounts? Just the interest? I'm not really sure how it works.

My second question concerns getting a mortgage with my spouse. We hope to have enough to put a deposit down on a house in a couple of years, and I'm wondering what the tax implications are if my name is on the mortgage in addition to my spouse's? I've read some frightening things about what could happen should I die (estate taxes and estate taxes a second time if/when my spouse dies) and am wondering if it would be best to have only my spouse's name on it?

Any advice would be extremely helpful, as it all seems really confusing.

Kind regards
Grace

Well first off, having a foreign bank account is not that bad. The items that are needed to declare foreign accounts, FBAR (AKA FINCEN) and FATCA (Form 8938), are fortunately just reporting documents. You are not taxed on the amounts in these forms, you simply have to let the IRS and Treasury know of their existence.

Also, you only need to report the account if you have more than the minimum threshold in the accounts. For and FBAR form the threshold is 10K and for FATCA the threshold is over 200K (depending on your filing status). If the total of your accounts does not exceed these thresholds, there is no need to report the accounts.

You will have to report any interest income on your 1040, but as these amounts are usually small, the difference is trivial.


As far as the mortgage is concerned, if your name is on the mortgage you will receive the same benefits you would if you purchased a home in the US (deduct interest, exclusion from capital gains, etc). As such, it may be beneficial to have your name on the mortgage. This article provides some good guidance on the matter:

http://www.crevelingandcreveling.com/blog-list/173-expat-americans-what-you-need-to-know-before-buying-a-home-overseas.html

I hope this helps!

Well first off, having a foreign bank account is not that bad. The items that are needed to declare foreign accounts, FBAR (AKA FINCEN) and FATCA (Form 8938), are fortunately just reporting documents. You are not taxed on the amounts in these forms, you simply have to let the IRS and Treasury know of their existence.

Also, you only need to report the account if you have more than the minimum threshold in the accounts. For and FBAR form the threshold is 10K and for FATCA the threshold is over 200K (depending on your filing status). If the total of your accounts does not exceed these thresholds, there is no need to report the accounts.

You will have to report any interest income on your 1040, but as these amounts are usually small, the difference is trivial.


As far as the mortgage is concerned, if your name is on the mortgage you will receive the same benefits you would if you purchased a home in the US (deduct interest, exclusion from capital gains, etc). As such, it may be beneficial to have your name on the mortgage. This article provides some good guidance on the matter:

http://www.crevelingandcreveling.com/blog-list/173-expat-americans-what-you-need-to-know-before-buying-a-home-overseas.html

I hope this helps!

The standard advice for Americans in the UK with non-US citizen spouses is always for the American in the marriage to own only a very small fraction of any main residence.

This is because the US can charge tax on any gain on the future sale of the residence and on any currency gain on repayment of a non-US dollar mortgage. Neither item is taxable in the UK so keeping the percentage owned by the US person spouse is usually best advice.

Mortgage interest deductions for UK residents are almost always not used because of the effect of the foreign tax credit.