For Americans who are expats in France (or anywhere), tax reporting requirements are something you don’t leave behind when you move to a new country. U.S filing requirements go with you – wherever you go. And not just that, there are additional tax reporting requirements known as FATCA and FBAR. We asked Douglas Soons and Amy Witherbee, the experts at Sanderling Expat Advisors who specialise in helping Americans in France to deal with their finance and taxation requirements to explain more…
What is the FATCA
FATCA means Foreign Account Tax Compliance Act. To summarise it’s an IRS requirement that you give notice of any financial assets you hold outside of the U.S. You’ll need to complete a form Form 8938 and submit it when you file your regular income tax return. This only applies to individuals, and you must file if you are living abroad and all of your foreign-held assets combined total more than $200k on the last day of the tax year OR more than $300k at any time during the year. If you’re filing jointly as a married couple that amount changes $400k and $600k. It also affects those living in the US with assets abroad.
What is the FBAR
FBAR means Foreign Bank and Financial Accounts. Yes, at first glance it can seem similar to the FATCA – but it’s not. This one is about money laundering, or rather the prevention of money laundering. And, even if you don’t meet the asset thresholds for the FBAR, you might be required to file an FBAR. Unlike the FBAR, you don’t file it with your tax return but file through a different system – BSA-E Filing system. Technically it must be filed by April, but the government gives everyone an automatic extension to October 15th. Once that is done, you file your U.S. returns, taking a credit for your French taxes by taking advantage of the other IRS automatic extension, this one for U.S. expats filing their regular U.S. returns.
If you’re already reporting everything on a FATCA consolidated reporting, you do not need to file an FBAR notice, too. If you’re not filing through the FACTA notice, and you had more than $10k at any time during the year combined across foreign accounts (including PayPal), or your listed as a signatory on someone else’s account, you need to file an FBAR. This applies not just to individuals but to corporations etc.
You’ll need to deal with foreign exchange rates, file on time, and keep on top of those filing requirements in order to avoid issues.
French tax for US expats in France
We haven’t even mentioned filing your French tax returns yet – but yes, that needs to be done too. Even if you receive income from the US – for instance fees, dividends, that too needs to be reported – in France. You won’t pay tax on all of it as the US and France have a double taxation treaty in place, and in fact you may even find that there are ways to mitigate tax.
If you’d like guidance and help with any aspect of finance and tax as Americans in France, whether filing for American taxes, French taxes, or both – feel free to get in touch with Sanderling Expat Advisors at: sanderlingexpat.com
