There are an estimated 102,000 Americans living in France.
Living in France is an incredible experience for a variety of reasons – the history, the culture, the cuisine, wine and cheese, and the wonderful countryside to name but a few. As an American expatriate living in France though, what exactly do you need to know regarding filing US expat (and French) taxes?
The good news is if you are already paying income tax in France, there are various exclusions and exemptions available to prevent you paying tax on the same income to the IRS too.
US taxes – what you need to know
If you earn more than US$10,000 (or $400 for self-employed individuals), you must file form 1040. While taxes are still due by April 15th, expats get an automatic filing extension until June 15th, which can be extended still further online until October 15th.
If you have foreign assets with a value of over US$200,000 (per person), excluding your home if it is owned in your own name, you must also file form 8938 and declare them.
“France now has a higher tax burden than any other country in the euro zone apart from Belgium.”
- The Economist Magazine.
If you had more than US$10,000 in total in one or more foreign bank accounts at any time during the tax year, you are also required to file FinCEN form 114, otherwise known as an FBAR (Foreign Bank Account Report).
The US and French governments share taxpayer info, while French banks pass on US account holders' account info to the IRS, so it's not worth hiding or being 'economical' with the truth on your return. The penalties for tax evasion for expats are harsh to say the least.
If you're a US citizen, green card holder, or US/French dual citizen and you have been living in France but you didn't know you had to file a US tax return, don't worry: there's a program called the IRS Streamlined Procedure that allows you to get up to date with your filing without facing any penalties. It's better not to put it off though, as the IRS might find you first.
French tax returns are due by mid May. The exact date is confirmed early each year. The French equivalent of the IRS is called the Direction Générale des Finances Publiques, and the French tax return form is called form 2042. Taxes can be paid in monthly instalments, by 15th month, starting in February.
French income tax rates are relatively high compared to in the US, so for many people it will make sense to claim the Foreign Tax Credit. French income tax rates range from 0% to 45%, however there's an additional 3% or 4% surcharge on higher earners.
Alongside income tax, there are taxes on owning property (Taxe Foncière), living in a property, whether you rent or own it (Taxe d'Habitation), and owning a TV or device for watching TV, such as a DVD player or computer (Redevance Audiovisuelle). Lastly, there is an annual wealth tax for anyone with French assets worth over 800,000 Euros.
We strongly recommend that if you have any doubts or questions about your tax filing situation as a US expat living in France that you contact a US expat tax specialist.