Hi All,
Just starting the process of getting caught up with my US filing requirements triggered by a FATCA letter from my bank
after having lived several years in ignorant bliss.
I spoke to an accountant a few days ago who advised that it is very unlikely that there would be US tax payable unless there are 'significant amounts' in ISAs from which passive income is derived.
I am up the curve on my foreign tax credits, and intend on using these to offset my income.
What I am less clear on is how any offsetting works for say interest on a cash ISA.
As far as I can tell, that would be taxable in the US from the very first dollar, as I have no other passive category income tax credits. Also, the standard deduction and exemption seem to get applied pro-rata against all income (i.e. cant target it at the interest free UK ISA income).
What kind of treatment would the accountant have been referring to?
Any help is appreciated. Feel like I have a mountain to climb here.
