oversea bank question and bonus questions

[Helen123]

Hi 

I have a few questions. I come from UK and just move to US for work. My husband lives in the UK. I need to go back to UK very often to visit him. 

1. I have a few UK bank accounts with around 20k GBP. I know I need to report the max value of the year  on 8939 form and Fbar next year. Do I need to pay some tax for my oversea account? From online, I see some website mentions that all the money should be transfered to USD. People may own some tax because of the change of the currency?  I will only use the money when I am in UK or may transfer some to my husband for the living and pay UK tax of the last year. I think it will be ridiculous if I need to pay tax because I have money in UK bank.

2. My job is to trade stocks for my company. Personally, I only receive the wage and bonus. Does it belong to net investment income tax? I think it is not because personally, I do not trade stocks to earn money. I work for the company and I trade stocks for the company. 

3. Does the tax of bonus and wage the same? Are they all treated as ordinary income or they are different? I see the withholding tax of them are different

4. I assume based on my current situation I should use the deluxe turbotax? 

5. There is one mortage with the name of both myself and my husband. It is paid by my husband with his account independly. I assume it means it has nothing to do with me even it is within my name on it. I do not need to report anything about this mortage, right?

Sorry for lots of questions.

Helen

[Critter-3]

1. I have a few UK bank accounts with around 20k GBP. I know I need to report the max value of the year  on 8939 form and Fbar next year. Do I need to pay some tax for my oversea account? From online, I see some website mentions that all the money should be transfered to USD. People may own some tax because of the change of the currency?  I will only use the money when I am in UK or may transfer some to my husband for the living and pay UK tax of the last year. I think it will be ridiculous if I need to pay tax because I have money in UK bank.    The 8939 form and Fbar are informational returns only ... no tax is paid on these filings.  However any income earned on those accounts (like interest) is reported on the form1040 where your total worldwide income is reported.  

2. My job is to trade stocks for my company. Personally, I only  receive the wage and bonus. Does it belong to net investment income tax? I think it is not because personally, I do not trade stocks to earn money. I work for the company and I trade stocks for the company.  Wages are NOT reported for the NIT.

3. Does the tax of bonus and wage the same? Are they all treated as ordinary income or they are different? I see the withholding tax of them are different   It is all ordinary income on an income tax return and is treated the same way.  The reason bonuses have more withholding on them is something you can ask the employer to explain. 

4. I assume based on my current situation I should use the deluxe turbotax?  Yes, the deluxe will work well unless you have a personal stock broker account where you get interest/dividends or sell stock personally.

5. There is one mortage with the name of both myself and my husband. It is paid by my husband with his account independly. I assume it means it has nothing to do with me even it is within my name on it. I do not need to report anything about this mortage, right?  The mortgage interest can be deducted on the Sch A if you don't use the standard deduction ... and if you are filing separately then you both must itemize if one person itemizes  or you both must use the standard deduction.  

[pk]

@Helen123 ,  let me try answering your questions one by one 

1. first and foremost and assuming that you are here on work visa ( H1-B, L or similar ), till you pass the Substantial Presence Test ( 183 days counting all the days present in 2023, 1/3 rd of the days present  in 2022 and 1/6 th days present in 2021 ), you are considered a Non-Resident Alien AND TAXED only on your US sourced income.  There are some "goods & Bads" associated with being a Non-Resident:

       (a) you file on form 1040-NR  ( not supported by TurboTax -- use tax professional or SprinTax or similar service )

       (b) your filing status is generally -- assuming you do not maintain a home for your dependent children/ person-- Married Filing Separate -- this is like being single

       ( c)  you also cannot use standard deduction and must use itemized deduction

       (d) there is also some mechanics of filing that is not pleasant

       (e)  your passive income is taxed on flat 30% rate  -- so you may want to avoid this type of income

       (f) but on the good side you are NOT taxed on your world income  , just US income

2.  Yous US income is taxed as ordinary income -- including any bonus received  for work done in the tax year  --------  I need to look up US-UK tax treaty on this assuming you are in private employment .

3 & 4 included in above answers ( at least implied )

5. Mortgage deduction is valid ONLY when paid by the tax payer and probably best left alone for 2023.

6. Any earnings from your back accounts should be declared  by your husband and taxed by the UK--- HM Inland Revenue

My assumption here is that you are here  temporarily and have no plans to settle  down  on this side of the "pond"

Is there more I can do for  you?    If your questions are not of general interest you are welcome to PM me and I will answer these best I can .

Where in England (?) are you from and which state are you in ( US State  tax laws vary greatly, even residency requirements )

pk

[Helen123]

Many thanks.

1. So for 1, I only need to report 8938 and Fbar (just report and no tax pay) and pay UK bank interests. There are no extra tax because of the change of the currency of GBPUSD while I hold GBP in the UK bank or I spend or transfer pound in the UK, right?

2. for 5, I am in US. So, I am the only one to pay US tax and I do not want to take my husband into this complicated US tax system. Yeah, the standard one is the best for me. My point is because I do not pay any UK mortage, I assume I cannot report it as well. 

Helen

[Helen123]

Many thanks, Champ. Actually I came here at the end of last year and have submitted the tax return for 2022. I am told I cannot use turbotax for 2022 because I was non-US person. I am asking about the tax for 2023 as 'US person'. Because I only have H1B visa, I cannot close my UK bank account. There are a lot of uncertainties.  So, I think the answers may be not suitable for me.

[pk]

@Helen123  if you have met the Substantial Presence Test, you are a US Person ( citizen/ Green Card / Resident for Tax Purposes) and therefore you are taxed on your world income.  You file form 1040 and TurboTax is eminently qualified to help you prepare the return.  My personal pref. is to use  Windows download/CD version of Home & Business --- this allows you to see the forms  as they are  being filled, enter direct data  into work sheets and all the data remains on your computer for future use/ modifications.

Pardon me for assuming that you had just come into the country.  You are for US tax purposes a US PERSON.

Is there more i can help you with  ?

[Helen123]

Sorry, this is not my question. Did you agree the answer I mentioned for this:

 So for  my question 1, I only need to report 8938 and Fbar (just report and no tax pay) and pay UK bank interests. There are no extra tax because of the change of the currency of GBPUSD while I hold GBP in the UK bank or I spend or transfer pound to my husband in the UK, right?

For question 5, I am the only need to fill the US tax. Because all the mortage are paid by my husband independly, I have nothing related to my UK mortage even it is in the name of both of us. I do not need to declare anything related to the mortage ,right?

Thanks,

Helen

[pk]

@Helen123 , pardon my error.  However, if you look through the thread with the responses , i am reasonable certain that we have generally answered  your questions ( as  understood/ articulated). It is also very true that we think we have sufficiently answered the question, , we may still be missing the nuances / exact situation of the question -- for this I beg your pardon.

. As to your specific  questions above / last  post --

1. for the FBAR /FATCA question, you as a signatory  but not operating the GB account, FBAR is definitely valid ( FinCen form 114 -- only on-line   at www.Fincen.gov  ),  FATCA form 8938  if . and  only if . you meet the threshold --- see this page -->   

Summary of FATCA Reporting for U.S. Taxpayers | Internal Revenue Service (irs.gov)

2. Mortgage interest deduction --- since you do not pay the mortgage and you are filing Married Filing Sep, you cannot claim this deduction ( if and only if you itemize ).  However , if you choose to buy a house  here in the USA and pay the mortgage  the obviously you would be entitled to claim that interest and property tax deductions.

I have no issue with your other comments  so far.

Hope this puts to bed  your  this series of questions/doubts -- yes ?

Is there more one of us can do for you ?

pk

[Helen123]

cool, thx