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Topic: Need help due to having foreign interest in the US for first time  (Read 1087 times)

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I have lived and worked in the UK since 2003.

In 2018 I went home for a few months while my Dad was ill and worked there (only a few weeks).

I also inherited and sold my mothers house but the capital gains was minimal.

The money from the house sale is in an interest bearing account.

I have not spent any of it or spent the interest.

I am filing US taxes but this time wont use Taxes for Expats like I always did because the tax situation is more complex than my normal.

Do I face tax on the US interest when I file my self assessment or do I just pay tax on it in the US?

Can anyone recommend a good accountant to help file this UK return as I want to go with an expert.

Thanks


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Re: Need help due to having foreign interest in the US for first time
« Reply #1 on: August 15, 2019, 09:07:47 AM »
The UK has the primary right to charge tax on any interest you receive.  Should you owe UK tax on the interest the US would give credit for that UK tax on a "treaty resourced" category Form 1116.

If the estate sold the house and distributed you cash this is not reportable in the UK. If you sold the house after the estate distributed the asset there could be a UK reportable capital gain or loss.


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Re: Need help due to having foreign interest in the US for first time
« Reply #2 on: August 22, 2019, 12:27:52 PM »
I thought that I would expand on the comments made by Guya -with which I agree- about the taxation of the US interest.

My analysis is-
•   Article 11 of the double tax treaty deals with interest income. If it applied, it would give exclusive taxing rights to the state of the residence of the recipient, which in this case is the UK.
•   Moggy32 is a US citizen, and therefore the savings clause of the treaty in Article 1(4) applies, entitling the US to tax moggy32. The exceptions listed in Article 1(5) do not include Article 11. The interest has a US source and the US has the right to tax it.
•   Article 24(6) deals with relief from double taxation. Article 24(6)(b) says that the UK is to give credit for US tax on US source income, but only to the extent that the US may impose tax on someone who is a UK resident but not on a US citizen. Under Article 11, as above, the US would not impose any tax. Therefore, the UK does not need to give any credit for US tax on the US interest.


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