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Not applicable
posted Jun 4, 2019 5:19:14 PM

UK Lifetime ISA

I have a lifetime ISA in the UK. HMRC paid a bonus into it after I became resident in the USA in 2018. Is this taxable in the USA, and if so, where do I enter it on my US tax return?

0 3 594
3 Replies
Intuit Alumni
Jun 4, 2019 5:19:15 PM

It will be taxable on your US tax return.  I believe you should have a tax professional familiar with PFICs (passive foreign investment company) prepare your return(s).  TurboTax does not handle PFICs.  They are very complicated and can subject you to high penalties.

Please review what you can find on PFICs and the  Lifetime ISA.  A couple websites are listed below.

You do not want to take a distribution from your ISA while in the US. If a dividend is reinvested into your account, it is considered a PFIC and will need to be reported as such.  Also, you will probably have FBAR (Foreign Bank and Financial Accounts) and Form 8938 fiing requirements.

https://www.ft.com/content/00fb483c-92a1-11e5-bd82-c1fb87bef7af

https://thunfinancial.com/home/american-expat-financial-advice-research-articles/american-expat-pfic...
https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements

Not applicable
Jun 4, 2019 5:19:17 PM

The ISA is not an investment in this case, it is a regular savings account - does this still count as a PFIC?

Intuit Alumni
Jun 4, 2019 5:19:18 PM

I am not qualified to answer.  I suggest you contact a tax professional that is familiar with UK ISA reporting for the US.  I'm sorry that I am not able to assist you further.