Your Trading 212 ISA, worked out in US dollars.

Why your ISA needs US paperwork

The US taxes its citizens and green card holders on their income wherever they live (IRS Publication 54), and it has no exemption for an ISA. Most UK funds and ETFs, including the Vanguard and iShares funds many ISAs hold, are what the IRS calls PFICs: passive foreign investment companies.

Which funds need a Form 8621

• One for each PFIC you owned during the year, unless an exception covers it.
• No form for a fund with no gain and no excess distribution when all your PFIC stock was worth $25,000 or less on December 31 ($50,000 on a joint return).
• No form for a fund you bought that year or the year before and owned 30 days or less around the year, with no gain.
• A sale at a gain always needs one, and the gain is worked out in dollars: a fund that lost a little in pounds can still show a gain in dollars.

What a gain costs

A PFIC’s gain isn’t taxed like an ordinary capital gain. It’s spread evenly over every day you held the fund. This year’s part is ordinary income. Each earlier year’s part is taxed at that year’s top rate, 37% for 2018 to 2025, with IRS interest added.

The other forms people in the UK miss

• FBAR: if your foreign accounts together were over $10,000 at any time in the year. It’s FinCEN Form 114, filed online with FinCEN, never with your return. It’s due April 15, with an automatic extension to October 15.
• Form 8938: living abroad, when your foreign assets are over $200,000 on December 31 or $300,000 at any time ($400,000 and $600,000 married filing jointly), if you meet the tax home and presence abroad tests.
• June 15: if on April 15 you live outside the US and your main place of business or post of duty is outside it too, you have until June 15 to file and pay. Interest still runs from April 15.