If you’re an American living in France, working or retired, you need to know how your expat status affects your participation in the U.S. social security program, as well as your taxes for social security income. We ask the experts at Sanderling Expat Advisors to explain how it all works for Americans in France – whether working or not.
France and the U.S. have come to an agreement concerning how you pay tax on your pension. They have signed a Totalization Agreement that prevents employers or workers from paying into both country’s mandatory retirement systems at the same time. Plus, in some circumstances, you can add credits earned in one system to those earned in the other system for the purposes of receiving social security or pension benefits on retirement.
Key points re Social Security for Americans in France
Retiring to France from the US
If you earned social security benefits in the U.S. and are already retired, you will get your social security benefits just as you would have in the U.S. As a French resident, you will pay French taxes on most income. However, there is an exemption for certain retirement and pension programs – this includes your social security income. So, you will be reporting social security income to both governments. But it is taxable in the U.S.
While social security benefits follow you outside of the U.S., Medicare program benefits generally do not. Expats considering a return to the U.S. should file to declare their eligibility, thereby reserving the premium rate. Your health care in France should be covered through the healthcare system available to all.
Working in France for a US employer
If your U.S. employer has sent you to France for 5 years or less or you work for the U.S. government – you remain a U.S. worker for social security purposes. Your employer will forward the payroll taxes deducted from your paycheck to the U.S. Social Security Administration (or Federal employee program). All of those taxes will be credited to your benefit earnings record in the U.S.
Working in France for a non-US employer
In the situation where you were hired in France, or have a non-U.S. employer, you are a French worker for benefit purposes. Your paycheck will be deducted for French cotisations and credited to your record in France.
Self-employed in France
If you normally work in the US and you are working in France for 2 years or less, you will continue to be treated as a U.S. worker. This is the case for both social security taxes and benefits.
Worked in the US and France and now retiring in France
Let’s say you worked in the U.S., continued to work as an expat, and plan to retire in France. This is where things get really exciting. While the French pension system is not designed to make you wealthy, it can be a better deal than the U.S. social security system. Under current rules, if you work at least one year in the French system, your U.S. credits can later be credited to your French “account.”
When you do retire in France, the French government will calculate your benefit level based on French credits alone, compare that number to a prorated benefit based on U.S. and French credits, and pay you the larger amount.
If you would like advice on managing your finances in France as a US citizen, Sanderling Expat Advisors can help, contact them at: sanderlingexpat.com