Savings Account Reaching $10,000

Hi all,

My wife and I have separate ISA accounts (Help to Buy ISAs) and my wife's is at £7,300 which is $9,070.

So she's close to reaching $10k. What do we need to do once this amount is reached? Do you wait to declare it in your taxes? Do you declare immediately? Do you get taxed on it?

I know nothing about it, any help would be appreciated

The USC should do some research... ISA's are considered passive foreign income by the US government. Once they reach $10,000 they also need to be reported on the FBAR form.

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If she has any other foreign (non-US) accounts, she may already have triggered the threshold for Fbar.

She has her current account which I imagine would have triggered it recently.

What do we need to do?

We have a company do her taxes for her so we're kind of unattached to the tax filing system.

She has her current account which I imagine would have triggered it recently.

What do we need to do?

We have a company do her taxes for her so we're kind of unattached to the tax filing system.

https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

What is the deal with it? Does she get taxed on the amount or anything?

The ISA will no doubt be earning interest if it is a cash ISA so regardless of the total amount the interest should be reported every year on her US tax return. If it is a stocks and shares ISA that also should be reported on each years tax return as a PFIC.

Once the total of her accounts exceeds $10k then she needs to file an FBAR report to a different department of the Treasury

The ISA will no doubt be earning interest if it is a cash ISA so regardless of the total amount the interest should be reported every year on her US tax return. If it is a stocks and shares ISA that also should be reported on each years tax return as a PFIC.

Once the total of her accounts exceeds $10k then she needs to file an FBAR report to a different department of the Treasury

I mean she earns about £12 per month on it. I think this has not been declared on her taxes but taxesforexpats does her taxes for her so I am not sure. What do we do if it has indeed not been declared??

Does she submit the FBAR separately to her taxes? What is the reason for declaring this? I bloody hate the American government and their involvement in foreign money & taxes

I mean she earns about £12 per month on it. I think this has not been declared on her taxes but taxesforexpats does her taxes for her so I am not sure. What do we do if it has indeed not been declared??

Does she submit the FBAR separately to her taxes? What is the reason for declaring this? I bloody hate the American government and their involvement in foreign money & taxes

A good accountant should be *asking* her if she has any assets.  And advising her *against* an ISA as a US citizen.

But the onus is on her to declare it.

Has her accountant also had her take the tax credit for your child which is up to $1300/a year?

Has her accountant also had her take the tax credit for your child which is up to $1300/a year?

YES! I'm freaking out

Seriously, the visa stuff and now all this. It's just too much.

Unless I am mistaken and have made a grave error for the last three years, a cash ISA is treated just like any savings in the US.  It's a stocks-and-shares ISA that US expats should avoid because they are treated as a PFIC.

She should report the interest in her return, but it is treated like normal interest income in the US.

Also, if she reaches a combined threshold of $10,000 (this is adding up her ISA and her current account, and any other assets she is signatory on, such as joint accounts with you, if there are any) at any point in a calendar year, even for a minute, she must also report all of her foreign assets by filing FBAR the following year.  For example, if on March 12, 2018, she reached a total $10,000 in her UK accounts, by October of 2019 she must file FBAR for 2018, even if her balance went below $10,000 on March 13, 2018.  For subsequent years, any time she has had at least $10,000 in foreign assets, she must file again in the following year.

If she's only going to hit $10,000 for the first time in the next few weeks, she has until next October to file her first FBAR.  It's really easy and straightforward to do.  It's just annoying that we have to do it.

YES! I'm freaking out

That’s GOOD!

I mean she earns about £12 per month on it. I think this has not been declared on her taxes but taxesforexpats does her taxes for her so I am not sure. What do we do if it has indeed not been declared??

Does she submit the FBAR separately to her taxes? What is the reason for declaring this? I bloody hate the American government and their involvement in foreign money & taxes

Presumably you have a copy of the tax return that was submitted. The interest on the ISA should be reported in the same place as US bank interest. My wife also has a cash ISA along with another UK bank savings account and the interest from these accounts simply get reported as bank interest.

As for the FBAR report it is a totally separate process and is done online the year following the one where the $10k limit is exceeded. No tax implication for this report but the fines are high for non compliance. I would simply complete one now for 2018 if that was the year she exceeded the limit or in 2020 for year 2019. It is easy to do online, just go to the website and follow the instructions.

https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html