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- Americans and Green Card Holders reside in France must file US Tax Returns and FBAR reports annually.
- Using the foreign income exclusion and house deductions you should be able to eliminate most, if not all, of your US tax liabilities.
- The US – France tax treaty will ensure that you will not pay double taxes.
- American must report their France bank accounts as well as any France financial assets interest to the IRS.
- All Americans residing in France have more obligation to other US Taxes such as Capital Gain/Loss, Social Security Taxes and possibly other miscellaneous taxes.
- While you reside in France please make sure to comply with the IRS and US Department of Treasury regulations to avoid all US Tax and FBAR related penalties.
- Filing your US Tax Returns and FBAR reporting on time and accurately will save you a lot of money in penalties and Tax Attorney’s Fees.
US Expat Tax Filing Concerns!!!
As a US Citizen or Green Card holder living, working and/or investing in France, you must comply with US Tax filing requirements including FATCA which took effect in 2010.
All US Citizens and Green Card Holders must file their annual tax return reporting their worldwide income on or before June 15th. However, the IRS does allow an extension to October 15th, if an extension request is filed no later than October 15th.
In addition, US Citizens or Green Card Holders are required to report their foreign bank accounts once a balance exceeds $10,000 on any giving day or an aggregate daily balance in case of multiple bank accounts within the calendar year.
Filing Expat US Tax Return
Many US expats consider not filing a US Tax return once they move outside the US. Unfortunately, they are making a major mistake. On the other hand, the majority of US Expats end up with ZERO tax liabilities because they have a foreign income exclusion that is adjusted annually for inflation ($103,900 for 2018, $105,900 for 2019, $107,600 for 2020, and $108,700 for 2021) in addition to housing expense deductions, and foreign paid tax credit (IRS form 1116).
Worldwide income includes but not limited to salaries, bank interest, dividends, rental income, stock trading, capital gain, foreign entity profit share, and any other income during the tax year that starts January 1st and ends December 31st.
US Expat’s minor children are not exempt from filing the annual US Tax Return if a child has any income generated under their name. The most common example is when parents divide their wealth with their children.
Foreign Tax Credit Form 1116
Most US Expats are not aware that if they have taxes deducted from their annual salaries and have paid income tax paid to the foreign country where they reside, work, and invest, their US Tax Liabilities will be reduced when they file their US Tax return for the same tax year. In addition, they will be able to use the unused foreign tax credit toward future tax liabilities.
The Foreign Account Tax Compliance Act that was enacted in 2010, to identify US expats who do not comply with the US Department of Treasury requirement to report their accounts and financial assets with the Foreign Financial Institution (FFI). US Expats are required to file the FBAR – FinCin 114 on or before October 15th of each year.
A US Expat who is a single filing taxpayer that has financial assets that exceed $300,000 during the year or $200,000 at the end of the year or a married US Expat who is filing jointly that has financial assets that exceed $600,000 during the year or $400,000 at the end of the year are required to file the FBAR and 8938 forms, reporting the highest balance of the year, account number, name, and address of the foreign financial institution as well as all owners information including for an account with a signature authority only (non-financial interests). For minor children with an account subject to FBAR, the parents or the child’s legal guardian will be responsible to report the FBAR and/or 8938 form.
US Expat allowed Deductions and Credits
As a US Expat reporting your annual worldwide income, you are allowed many deductions and credits including foreign tax credits that help reduce or eliminate your US tax liabilities.
US Expat Deductions that are allowed, such as:
Housing expenses including paid rent, repairs and maintenance, utilities, parking, mortgage interest, property taxes, Student Loan Interest, moving expenses, donations to US based charities, and US based retirement account contributions.
US Expat Credits, such as:
Child tax credit, Foreign Paid Tax Credit, Child, and Dependent Care Credit, and Education Credit.
US Expat Filing Status
US Expats tax filing status impacts the US tax filing requirements as well as the allowable deductions and credits. Filing single means that you are legally unmarried as of the last day of the tax year. This type of filing has the lowest deductions and the highest tax rates.
Other filing status such as:
Married Filing Jointly – you are legally married at the last day of the tax year and lived together more than half of the tax year.
Married Filing Separately – you are legally married as of the last day of the tax year and did not live together for more than half of the tax year.
Head of Household – Taxpayer who is not married and has dependents with a relationship such as son or daughter living with you for more than half of the year and for whom the taxpayer has paid for more than half of their expenses.
Qualified Widower – a taxpayer with a deceased spouse who died within the last 3 years.
As a US Expat, if you do not file your US Tax Return and/or FBAR, you will be subject to civil and criminal penalties.
As a US Expat who did not file US Tax Return and/or FBAR for several years or did not accurately file your taxes, Streamlined Procedures SLP by “Taxactions” is your solution!!
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