US citizens in France: US tax and banking problems

By 15 October 2021News

US citizens in France: US tax and banking problems. All American citizens must file a US tax return, no matter where they live or work. Read more on Americans Overseas

According to Connexion France: All American citizens must file a US tax return, no matter where they live or work

US citizens who live and work in France

There are only two countries in the world (Eritrea and the US) which operate a ‘citizenship based’ taxation system. 

This means that all US citizens are submitted to the same tax regime and must normally complete a tax return, regardless of whether they are resident in the world. 

FATCA

The US’ citizenship based tax system requires all Americans overseas to file a tax return if their income exceeds a certain threshold, even if it was all earnt overseas. The US government also requires citizens to disclose the details of foreign accounts, assets and pension contributions above a certain value, which can also be taxed. 

Foreign banks are also obliged to identify their American customers to the US tax authorities, and can face a penalty of up to 30% of their dealings with the US if they fail to do so. 

This means that some banks charge Americans more for basic services, even close their bank accounts, making it difficult for them to invest their savings and ensure their own financial security. 

Renouncing American citizenship

FATCA (Foreign Account Tax Compliance Act was made into law by the Obama administration following concern that wealthy Americans were avoiding paying tax by keeping their money in offshore accounts. It aims to increase transparency and accountability, but congresspeople have acknowledged that it makes life very difficult for many Americans living abroad. 

Currently, the only way of completely avoiding paying US income tax is to permanently renounce one’s American citizenship. 

So if you’re a US citizen, green card holder, or have an American French dual citizenship, and you have been living in France but you didn’t know you had to file a US tax return it is time to inform yourself about the US tax system and your obligations.

More information for US citizens in France

We, the founders of Americans Overseas, were born in the Netherlands and obtained our American nationality through our (American) mother.

When we heard about the US tax system for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fines or pick up other problems?), and panic (what should I do?). It is (unfortunately) true that there is an additional American tax levy. But there’s no information from local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.

That’s why we started this initiative to help people from all over the world by providing proper information about the US tax system to avoid unnecessary panic, and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your tax obligations.

Contact us for more information

 

Source: Connexion France