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My wife has an e-ISA in the UK, from her time living there. It is a savings ISA, not a shares ISA. It is earning very low interest. For ease, I'd like to transfer the money to our USA accounts so that (1) I can consolidate our savings, and (2) invest it with the rest of our portfolio (US-based).

Since the ISA are her savings, when I transfer it to the USA, will I have to pay any taxes or get any odd questions from the IRS? The amount is $50,000, but again, it's all from UK savings so I'm hoping/assuming I can transfer it in, declare it is savings, and pay no taxes.

I know that any interest/earnings after it hits the US will be taxable. My question, for the one-time $50,000 transfer (ISA savings to USA account), will I owe any US/IRS taxes? If so, I may just keep it in the UK.

Thanks!

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  • Has the account and any interest earned already been reported to the IRS under FBAR requirements each year?
    – DJohnM
    Sep 6, 2015 at 16:29
  • You'll need to understand what tax agreements exist between the US and the UK to make sure you make the optimal choice.
    – Eric
    Sep 6, 2015 at 18:30
  • Yes, the account is fully declared/up-to-date in my annual FBAR reporting requirements.
    – T. N.
    Sep 9, 2015 at 16:53

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I know that any interest/earnings after it hits the US will be taxable.

NO, and this can land you in a lot of troubles! Any interest/earnings is taxable in the US, if your wife is a US tax resident, regardless of where the money is.

It should have been reported on FBAR, and maybe on form 8398, and willful omission of these accounts on these forms can cost you thousands of dollars in penalties. Especially if you also hadn't reported the actual income.

The amount is $50,000, but again, it's all from UK savings so I'm hoping/assuming I can transfer it in, declare it is savings, and pay no taxes.

If you have properly declared the money on FBAR/Form 8938 and paid the taxes on the interest earned, then you should be able to transfer it as you wish. If you didn't report the amounts, the IRS may start asking questions when they see the transfer and it may trigger an audit of your prior years (FBAR and form 8938 both have 6 years statute of limitations, and if the IRS claims that you fraudulently under-reported the income - that opens your whole tax returns for as back as that income was not reported).

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  • To clarify, my overseas savings have been declared annually on the required FBAR forms, so the overseas savings is not unknown to IRS. I realize that any earnings are taxable. I was just curious if moving $50k into the States would raise any other tax/fees that I may not be aware of. I didn't want to accidentally transfer all $50k, just to find out I have to pay some "foreign transfer" fee/tax that would take a chunk out of it.
    – T. N.
    Sep 9, 2015 at 16:52
  • From my read of the above, I am free to transfer my savings to the States tax free. Any earnings on the savings (in the UK or later in the US) are taxable, but the savings/balance is not.
    – T. N.
    Sep 9, 2015 at 16:52
  • @T.N. yes, to the best of my knowledge, there's no tax in the US on owning money (wealth tax), only on income.
    – littleadv
    Sep 9, 2015 at 19:13

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