1116 and carryovers/passive tax

Hi all,

Due to changes the last year in the UK, you can now have up to the first £1000 of interest tax free. I have quite a good Lloyds bank that paid something like 5% interest on my current account therefore I received around $200 in non-taxed interest by treating this account as a savings and holding my savings there.

Now when I fill out my 1116's, for passive income (bank interest falls into this) I have $0 credit. Then for my general category income, although I have paid more than double my calculated US tax in UK tax, I can only apply a determined fraction (works out as about 0.997) to my line 44 (total tax) which leaves my applicable credit as ~$18 less than my actual calculated tax.

Obviously $18 is not a huge amount, but in principle and for the hassle, I was wondering if there is a way to reduce this or do this differently (apart from 2555 form). I filed using FTC's with 1116 last year, but avoided this as I paid tax on that interest. I have obviously accrued tax credits from last year as well.

I cannot figure out if I can use carryover from general category in 2015 and add $18 from this accrued tax credits but onto the passive form, so that I will cancel out the $18 I owe in total? Does this make sense?

Any thoughts/advice would be most helpful and welcome!

Thanks in advance,
J

Last year the income and 40% tax paid on it was presumably high tax kickout and therefore properly in the general limitation basket.

From 6 April 2016 this will not apply and therefore interest credited after that date will be passive basket income. If the rate of tax in the United States is higher than the zero percent UK rate, you may owe US tax on the income.

I cannot figure out if I can use carryover from general category in 2015 and add $18 from this accrued tax credits but onto the passive form, so that I will cancel out the $18 I owe in total? Does this make sense?

Carryover credits available from one basket (such as general) cannot be applied to any other basket (such as passive).

OK, thanks both.

looks as though I'll just have to pay the $18!

Thanks,
J