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I have an offer from my employer to move to New York. The move is "permanent" and as such I will become a resident alien within the US. I do not wish to transfer my entire savings over to the US as I intend to return to the UK in about 2 years depending on how things go.

I am wondering how will I be taxed on interest by the IRS in the USA on my savings within the UK? The UK government will automatically deduct tax from the interest earned and so I don't want to be taxed twice.

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There is such a thing as foreign tax credit that the IRS would take into account when you fill in your tax return over here. That said, I believe the exact treatment might depend on the exact visa you'll be sent over here with - chances are that they can't send you over as a permanent resident (aka green card) but either on an H1B or L1 transfer visa.

However, if you are a non-resident in the UK, which you will likely be if you're a resident in the US) you can apply for having the interest on your UK accounts paid gross (and rent on your house in the UK if you're renting that out) instead of having the automatic withholding kick in.

  • I believe the visa will be a H1B visa – nichromium Feb 16 '11 at 22:29
  • @nichromium - completely OT but I'd try to push for an L1 as that's (a) not subject to the H1B cap and can be extended. H1-B is a non-immigrant visa so there might be some implications re foreign tax. That said, you'll most likely still meet the non-resident requirements in the UK depending on when you leave in the tax year, with earlier being better. – Timo Geusch Feb 16 '11 at 22:45

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