Taxes on income not earned in France

[jena]

We are moving to France this August. We have long stay visas and will not be working in France. We will still have some income and benefits for work done in the USA. This income will all be paid in US dollars and deposited in an American bank account. From time to time we may exchange some of the money in this account to Euros and deposit it in our French account. How will our income be handled by France for tax purposes?

[Bevdeforges]

If you are considered a resident in France, all your worldwide income is taxable in France. Of course, as a US citizen, all your worldwide income is also reportable and taxable in the US, too, though there are a number of treaty provisions that should help you avoid most double taxation.

Where your salary is paid to you or in what currency is irrelevant, both to the French and to the Americans. What counts for the French is your residency status. What counts for the Americans is your citizenship.

Your salary income will probably be excludable for US taxes under the Overseas Earned Income Exclusion (form 2555), provided that you actually do the work for which you are being paid in France, and that you meet the physical presence or residence requirements for the exclusion. And assuming you do meet the requirements for the exclusion, you'll meet the French requirements for "residence" which means you'll have to file forms and pay taxes there.

Has your employer offered you any form of tax preparation assistance? That would really help, as English language assistance for French tax forms can be difficult (and expensive) to find once in France.
Cheers,
Bev

[giantpanda]

Hi!

Practically, admitting you come in France in September.

You will have latest 30.5.2009 to declare your world income ( and taxes paid elsewhere ) for the period:
September till 31.12.2008.

In France you do not register at the Tax Office for Income tax.The registration is done in as much as you make a 1st income tax declaration ( yes, you have to volunteer it, but if you do not do it you could liable to extra 10% and a Euro 750 fine ).

You will have to fetch ( Centre des Impôts, not the Trésorie ), the forms, which are hardly available before end of April 2009. Forms 2042/2047/3196 - at least - for you.

If you want to have look at the forms before you can download this year's forms (enter 2008) here- there will in in next year's no main changes.

http://www.impots.gouv.fr/portal/dgi....jsp.1_A&_DAV=

Yours,

giantpanda


NB.If you " work " over internet, that is considered as working in France, and has to respect rules.

[jena]

Many thanks. I will start working my way through the forms now. My French is decent and (I hope) by next April it will be much improved. I had heard that there was a $90K exclusion of income for overseas work on our US tax forms. I am assuming this is gross not net. Well, just one more piece of the adventure I suppose.

So far, moving to France, without a French employer or a trust fund, has been a challenge, but not impossible. So far the biggest hurdle was renting an apartment. It is invaluable to have French friends and to be willing and not embarassed to NOT know and ask the questions.

Thanks again. jena

[Bevdeforges]

Originally Posted by jena

I had heard that there was a $90K exclusion of income for overseas work on our US tax forms. I am assuming this is gross not net. Well, just one more piece of the adventure I suppose.

There is an exclusion (of roughly $90K - the number changes year to year) but you have to file to claim the exclusion. Basically, you declare the income earned overseas and then you apply the exclusion. Definitely part of the "joys" of expatriation for us 'Merricans.

If you want to read up on that, go to the IRS website and download the instructions for form 2555.
Cheers,
Bev