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Discussion Starter · #1 ·
As U.S. citizens living full time in France...retired...not working in either the US or France...do they pay both income tax for the US and France ? Do we subtract the amount of taxes paid in France from the total owed to the US ?
 

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If you are resident in France, you need to file both your regular US tax return and a French tax declaration. It's not nearly as simple as subtracting what you pay in France from what you owe in the US, but thanks to the Franco-American tax treaty you should be able to escape being taxed twice on the same income.

The treaty specifies which types of income are taxable in which country. Very generally speaking, you pay tax to the country that the income is coming from. But that is a VERY general statement and there are tricks to making this happen between your two tax declarations.

Both the US and France expect you to declare your worldwide income. For the French declaration there is an additional form where you list and detail the source for all the various forms of income coming from outside France including pensions, interest from bank accounts and investments, dividends and any other income from non-French sources.

Each type of income has its own treatment in France - and is categorized on the last page of the special form by its treatment. Some income gets you a credit against your French taxes, other income is exempt from taxation in France, other other income is taxed by France after you subtract off any taxes withheld at the source.

For the US, assuming you are retired, you can credit French taxes paid against the US tax liability you run up. The tricky part is that you usually pay your French taxes about a year in arrears, so by the time you file your first US tax return from overseas, you won't know how much you'll owe in French taxes and so you may not have anything to credit against your US tax bill. In year 2, you pay your French taxes for year 1, and that becomes the credit you can use against your US taxes for year 2.
Cheers,
Bev
 

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Discussion Starter · #3 ·
Thanks that makes a lot of sense to me...I am used to preparing my own tax returns but may opt to use a French tax consultant for the first year and see how it's done :)
 

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The only real "tax consultant" in France is usually an "expert comptable" and I have no idea what they charge to do a simple tax declaration. The big difference is that you don't compute your own taxes in France - you simply put all your various amounts in the right boxes (the French do "boxes" rather than lines) and the tax inspector computes your taxes for you.

What you can do, however, is pay a visit to the local tax office and let them help you put the right numbers in the right boxes. I know of a number of folks who have done this and they say the tax officials are very helpful with the process. (Also doesn't cost!)
Cheers,
Bev
 

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At least in Paris, there are a number of firms that will prepare your US return and your French declaration. You can find adverts at AngloInfo. This costs around €1000 a year.
 

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At least in Paris, there are a number of firms that will prepare your US return and your French declaration. You can find adverts at AngloInfo. This costs around €1000 a year.
Hi,
If you are confident with preparing your US tax declaration, 1000€ is an exorbitant amount to pay for the average french declaration, for which you can get free advice here.
 

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Hi,
If you are confident with preparing your US tax declaration, 1000€ is an exorbitant amount to pay for the average french declaration, for which you can get free advice here.
That may be true, but that is not what I said €1000 might cover. I said it would cover, approximately, both US & French paperwork. And this is only approximate as it depends on how complicated your financial life is. In my experience, somewhat less than this covers my situation, which I would call somewhere above average in complication.

Moreover, if there is a significant amount of money at stake, paying for an experienced, independent view on how to handle your French tax liability, rather than relying on a fonctionnaire, could be money well spent.
 

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I have to say that 1000€ strikes me as pretty expensive for tax preparation, too. There are lists of tax accountants and tax attorneys on the US Consulate in Paris website - all allegedly bi-lingual and well versed in both US and French taxation. They aren't endorsed by the consulate, but they appear to have rather thriving practices among the expat population.
Cheers,
Bev
 

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Moreover, if there is a significant amount of money at stake, paying for an experienced, independent view on how to handle your French tax liability, rather than relying on a fonctionnaire, could be money well spent.
I'm not sure I agree with that. I would rather go to the horse's mouth - for free - than pay for "non-official" advice.

What liability to those paid financial advisers take on board?

hils
 

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One big factor to take into consideration is that for US taxes, the returns are basically a form of "self-assessment" - in that you fill in all the numbers, do the calculations and then work out for yourself how much tax you think you owe. There are also lots of options for how to treat various types of income, possible deductions and allowances, etc. etc.

French forms are considerably more straightforward - you put the numbers in the correct boxes, do little or no actual math and a few months later the local tax inspector tells you how much you owe. If you disagree with his findings, you can go have a nice talk with them to see if you can get an adjustment. (My husband has done this when a huge error was discovered on the bank's prepared interest statement.)

The key thing with the French forms is getting the right numbers in the right boxes.
Cheers,
Bev
 

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Discussion Starter · #11 ·
I have been preparing my US return for about 20 yrs now so really more concerned with the French one Thanks
 
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