Tax on seperate accounts

Planning on taking my wife off of my US taxes for the 2021 return. I will likely still have to do FBAR and FATCA again. Planning on putting a good sized chunk of money into another account. If it is in both names, will I declare 50% of interest for this next tax year as you do on the Self Assessment?

Planning on taking my wife off of my US taxes for the 2021 return. I will likely still have to do FBAR and FATCA again. Planning on putting a good sized chunk of money into another account. If it is in both names, will I declare 50% of interest for this next tax year as you do on the Self Assessment?

Yes.

I agree that It is a good idea to have it in both names to maximize the tax free allowance on interest.

Yes.

I agree that It is a good idea to have it in both names to maximize the tax free allowance on interest.

You are going to have to claify that one. I will meet the 1K interest in the UK whether this account is in both names or just hers. I was just asking about my hopefully NOT having to declare (100% money) it on US taxes. I was hoping for whatever the UK account got in interest I would only have to declare 50%.

You are going to have to claify that one. I will meet the 1K interest in the UK whether this account is in both names or just hers. I was just asking about my hopefully NOT having to declare (100% money) it on US taxes. I was hoping for whatever the UK account got in interest I would only have to declare 50%.

If you have a joint savings account in the UK then you only have to declare half of the interest on your IRS return since you will be filing married filing separately.

If you have interest greater than £1k then  it is better in a joint account because each person has a tax free allowance of £1k. For example, if you have £3k in interest and it is your name only you will pay UK tax on £2k but if it is a joint account you will only pay tax on £1k

If you have a joint savings account in the UK then you only have to declare half of the interest on your IRS return since you will be filing married filing separately.

If you have interest greater than £1k then  it is better in a joint account because each person has a tax free allowance of £1k. For example, if you have £3k in interest and it is your name only you will pay UK tax on £2k but if it is a joint account you will only pay tax on £1k

For clarification, would he not pay tax on £500 of the interest in the joint account?  (I'm following along for understanding, even though my husband and I keep everything strictly separate.)

For clarification, would he not pay tax on £500 of the interest in the joint account?  (I'm following along for understanding, even though my husband and I keep everything strictly separate.)

Yes, he will pay tax on £500, and she will pay tax on £500 as well.  In other words, as a couple, they will only pay tax on £1,000 instead of £2,000 if it was just held in one of their names.

The same approach will work if they held funds in a US or UK taxable investment account.  When you sell shares you usually generate a capital gain which is taxable in the UK if you are resident in the UK.  However, each person has a tax free allowance of £12,500 for capital gains, so if funds were held in a joint account then you have a combined allowance of £25,000 free from taxation on capital gains.

Each person also has a £2,000 tax free dividends allowance so if a couple has dividend income it is also beneficial to own joint accounts, or divide the dividend producing funds equally between them to maximize the tax free allowance.

I might as well just leave things in joint names then. Even though I was planning on taking my wife off of my US taxes this year, is there actually any real advantages to doing so? I was thinking taking my wife off would make doing the taxes a little simpler. My US income has fallen to less than $16,000 for my pension plus a bit of interest here. But this next year my wife is going to start taking in some pension money and I didn't want to have to mess around with paying US taxes on that and then claiming back later etc etc. Just trying to keep things simple.......

I might as well just leave things in joint names then. Even though I was planning on taking my wife off of my US taxes this year, is there actually any real advantages to doing so? I was thinking taking my wife off would make doing the taxes a little simpler. My US income has fallen to less than $16,000 for my pension plus a bit of interest here. But this next year my wife is going to start taking in some pension money and I didn't want to have to mess around with paying US taxes on that and then claiming back later etc etc. Just trying to keep things simple.......

Sounds like you will be well below the $24k allowance for married filing jointly even you declare her small pension. Did you know that her UK State Pension (OAP) is not taxable in the US and does not even have to be declared on a US tax return?

Sounds like you will be well below the $24k allowance for married filing jointly even you declare her small pension. Did you know that her UK State Pension (OAP) is not taxable in the US and does not even have to be declared on a US tax return?

Nope, did not know that one. But with my wife getting a personal pension amount starting this next year, we will going over the $24k allowance, although not by a lot.

My wife is only going to be 62 this Spring, so the State Pension doesn't happen until she is a bit over 66. We are going to start drawing down the pension she started from her divorce settlement 20 years ago. She put it into a fund that was very safe but still has grown from around £22,000 to almost £70,000. We were planning on pulling about £7k out and take £500 a month out until it drops to zero. In the next couple of years she will also take a couple of small pensions that should bring in around £2,000 a year.

At some point I was probably going to make another effort at getting my US pension sent directly to our UK bank. Tried it once and something got buggered up and it didn't happen and I haven't bothered to try since. So far I've kept transferring the money every month and leaving a little bit just in case I needed to pay for something in the US. But after last years losing effort at using TurboTax and just doing it by hand, I don't think I will be needing the US bank (TurboTax was the only thing I was buying from that bank account).

Trying to keep things simple.....isn't always very simple.

My wife’s SS is being paid directly into our UK bank account which is nice, so gurd your loins and give it another go. SS is also only taxed in the UK but because it is reported to the IRS via a 1099 or similar you have to show it on the return and negate it out with “Other income”.

I’ve heard folks here praise TaxAct for doing their taxes from the UK, and it does not need a US cc with US bank account to purchase apparently so you make consider that.

How to pay for taxact using a UK card.

Yes I use my UK Amex card as follows to pay for TaxAct each year.:

You can pay with a UK credit card without a US mailing address by using what is called a 'white address'  - use only the first line of your UK credit card billing address and for the rest of the address use the TaxAct, city, state & zip code - and voila, the payment goes through!

https://talk.uk-yankee.com/index.php?topic=99880.0

My wife’s SS is being paid directly into our UK bank account which is nice, so gurd your loins and give it another go. SS is also only taxed in the UK but because it is reported to the IRS via a 1099 or similar you have to show it on the return and negate it out with “Other income”.

I’ve heard folks here praise TaxAct for doing their taxes from the UK, and it does not need a US cc with US bank account to purchase apparently so you make consider that.

I was able to get my SS sent directly here, it was just 5+ years ago I tried to get my pension sent as well....the numbers just made the pension people unhappy and they buggered it up. It was likely something fixable.....I just need to try again.

Not sure how Smitch figured that out....but I might give it a try. Although as I've said before...doing the tax by hand last year wasn't all that bad. Although....I did something wrong because they took out a bunch of money I had thought I was getting back with only a "tax taken for past missed taxes"...or something like that. My phone plan doesn't allow for US phone calls so I never followed up on WHY/WHAT I had done wrong.