[yannack]

Hello,
I am a French/US dual citizen and only recently discovered I was supposed to be filing taxes... as many people on these forums apparently ...
I am trying to get through the Streamlined Foreign Offshore Procedure but honestly I am drowning. I located a tax advisor who could help, but he is asking for way more than I could ever afford to file taxes ($2,000), when I think all I should need is a little guidance to do it by myself...

Anyway, I have some questions about how to declare different things. I will definitely appreciate ANY help on these topics !

Regarding 2555, should I report earned salaries amounts gross ("brut") or "net imposable" ?

I am also "auto-entrepreneur" on the side, that is not my main activity though: are those amounts simply to add to the amounts from my salary on 2555 or do I need to treat this differently, and report it on 1040 directly, as "self-employed" ? I was initially planing on lumping salary+auto-entrepreneur into 2555 as the total of my wages, and not doing anything specific in 1040: is that OK ? I already am paying "charges" on it in France, of course, so, again, should I use gross amounts ?

Should I produce any kind of evidence : pay slips, etc ?

Regarding bank accounts, I understand the difference between 8938 and FBAR I think, but I am not sure how the earned interests on savings accounts and such make their way back into form 1040. Also, is there a minimal amount of earned interest I can safely ignore (we are not really talking about VERY little amounts here, 2% or so ...) ?

I know these questions must seem obvious but I am really new at this, and so if anyone out there can answer some or even all of my questions, it would go a long way in helping me stay sane !

Thanks a lot !

 

[Nononymous]

Well, before Bev chimes in with more specific and calming advice, my question is, what's the hurry? Do you have a US birthplace? If so, then yes you're probably going to be FATCA'd by your bank eventually, but take your time, relax, this doesn't need to happen yesterday. If you don't have a US birthplace and your bank doesn't know about your US citizenship, I'd do nothing.

 

[newthilde]

Hello,
I am a French/US dual citizen and only recently discovered I was supposed to be filing taxes... as many people on these forums apparently ...

Yes, American citizens (and other U.S. persons) are taxed on their worldwide income.

Regarding 2555, should I report earned salaries amounts gross ("brut") or "net imposable" ?

Gross amount

I am also "auto-entrepreneur" on the side, that is not my main activity though: are those amounts simply to add to the amounts from my salary on 2555 or do I need to treat this differently, and report it on 1040 directly, as "self-employed" ? I was initially planing on lumping salary+auto-entrepreneur into 2555 as the total of my wages, and not doing anything specific in 1040: is that OK ? I already am paying "charges" on it in France, of course, so, again, should I use gross amounts ?

On your 1040 the incomes are treated differently, so you should not lump them together. For the 2555, the way I understand it is that it depends whether your self-employment income is from your professional services or your capital. Only *earned* income is excludable. Thus, you have to have earned your self-employment income by providing services. I would put it on line 20 but others here may know better.

Should I produce any kind of evidence : pay slips, etc ?

you should have them; you don't need to mail them in unless you are audited (I have no idea how often that happens with people living abroad. That's a whole other question...

Regarding bank accounts, I understand the difference between 8938 and FBAR I think, but I am not sure how the earned interests on savings accounts and such make their way back into form 1040. Also, is there a minimal amount of earned interest I can safely ignore (we are not really talking about VERY little amounts here, 2% or so ...) ?

The amount (assets) you have in your bank and other financial accounts need to be reported for FBAR & FATCA. The interest is income and needs to be reported on your 1040 - and is NOT excludable because it is not earned income. If I recall correctly, there is a de minimis rule but I always report everything. If you pay tax on your interest income, you can claim the foreign tax credit for your U.S. taxes.

I know these questions must seem obvious but I am really new at this, and so if anyone out there can answer some or even all of my questions, it would go a long way in helping me stay sane !

Thanks a lot ![/QUOTE]

 

[BBCWatcher]

Echoing Nono a bit, start with FinCEN Form 114 since -- for a U.S. citizen residence in France, especially, who is very unlikely to owe any U.S. tax -- that's the priority form. Getting caught up on that form is also part of the Streamlined Program, so whether you enter that program or not, it's still the same Step 1.

Have you taken a look at that form yet?

 

[yannack]

Yes, you are probably right, but I should have mentioned: I am emigrating to the US in a couple of months, to work there, which is why I now need to get everything in order before arriving. Thus, the rush.

 

[BBCWatcher]

I still have the same answer. FinCEN Form 114 is step #1.

There is not actually any penalty (or rush) if (a) you genuinely owe zero U.S. tax and (b) you have not/never filed a U.S. tax form (IRS Form 1040, etc.) But FinCEN Form 114 is different: there is a published penalty for non-filing if you are required to file it. (Fortunately for FinCEN Form 114 we haven't seen any reports of penalties being levied if you file truthful late forms as long as you do that before the U.S. Treasury contacts you. To get caught up you file the 6 late forms -- though you can skip any/all years when you would not have been required to file because you didn't meet the filing threshold in that year.)

There is a rush if you are sponsoring someone for immigration to the United States -- rush in the sense you have to provide a couple years of tax filings as part of the sponsorship process to help him/her obtain a U.S. immigrant visa. But since you are a U.S. citizen, you can relocate to the United States tomorrow and don't need a visa (and I assume you aren't sponsoring someone else for a visa). The fact you haven't filed U.S. tax returns isn't actually an emergency or even an urgency. FinCEN Form 114, yes, I'd get that cleared up.

The vast majority of residents of France do not owe any U.S. tax. No tax, no penalty for non-filing. Isn't that nice? (Unlike the United Kingdom to pick an example -- even if you owe zero U.K. income tax, there is a penalty if you fail to file a U.K. tax return.)

Which is not to say you shouldn't take a look at your late tax filings, but no, there probably isn't a rush.

 

[Bevdeforges]

OK, basically agree with what you've been told so far. Now for a few specifics:

Regarding 2555, should I report earned salaries amounts gross ("brut") or "net imposable" ?

Gross - always. (Net imposable has no relevance to anything on the US side.)

I am also "auto-entrepreneur" on the side, that is not my main activity though: are those amounts simply to add to the amounts from my salary on 2555 or do I need to treat this differently, and report it on 1040 directly, as "self-employed" ? I was initially planing on lumping salary+auto-entrepreneur into 2555 as the total of my wages, and not doing anything specific in 1040: is that OK ? I already am paying "charges" on it in France, of course, so, again, should I use gross amounts ?

I'd just lump it together and be done with it.

Should I produce any kind of evidence : pay slips, etc ?

Nope - but if you're using tax prep software of any kind, don't try to fill in a "dummy" W2. There is a special form for reporting foreign earned income (if you're e-filing, so they use this "form" in the tax prep software programs too). The "form" is called an FEC. But if you're hand preparing the forms, just add together the amounts and put the total in for your "salary" income (line 7 on the 1040 - whatever line asks for your salary income on the 2555 variation you're using).

Regarding bank accounts, I understand the difference between 8938 and FBAR I think, but I am not sure how the earned interests on savings accounts and such make their way back into form 1040. Also, is there a minimal amount of earned interest I can safely ignore (we are not really talking about VERY little amounts here, 2% or so ...) ?

Officially speaking, you are supposed to report all interest income (including on your French "tax free" accounts). Since you are supposed to file a Schedule B to tick the box about foreign bank accounts, I usually just use the top part of the Schedule B to list the interest from each bank (I don't break it down by account within the bank, but do whichever you feel more confident doing.) Where you total it up, the Schedule B tells you to put the amount on line 8a of your form 1040. Admittedly, you don't have to itemize your interest income like this unless you have in total more than $1500 or so - but as long as you have to fill out the Schedule B in the first place, it might as well carry some useful information (and it makes a handy "worksheet" to add up your interest income).

Anyhow, first time through is the toughest. And if you're headed back to the US, next year's taxes will be a whole bunch easier.
Cheers,
Bev

 

[yannack]

Thanks to everyone for all of your answers, it really is great to have all this support here. I will take care of the FBARs tomorrow, I have been more focused on the tax side of things but it seems I had my priorities backwards.
I hope I can figure that out!
Thanks Bev a lot for the specific answers, you have been most useful : I had actually not even seen I was supposed to do the whole schedule B thing! I will redo everything accordingly...
Thanks again for all your help, I already feel (a little) more relaxed. Can't wait to be done with it!

 

[BBCWatcher]

Tax preparation software is your friend...after you take care of FinCEN Form 114.