A quick note on reporting your foreign income

If you are an American residing in France it is quite likely that you are receiving income from a U.S. source. This could be social security payments, fees from U.S. clients, capital gains or dividends from your U.S. brokerage accounts, interest from your U.S. bank or withdrawals from your U.S. IRA or 401k. In short, there are all sorts of things that result in your having foreign income, or in French, “revenus de source étrangère.”

As a tax resident of France you do, absolutely, need to report every centime of this income. But you are not likely to pay tax on all of it. In fact, Americans in France get some pretty amazing breaks on their U.S.-sourced income. Some income, like retirement plan withdrawals, social security and even some capital gains will not be taxed in France at all. You will report them to French authorities and receive a full credit for the taxes that would have been owed had it not been for the US.-France tax treaty.

Other forms of U.S. income, like dividends, will receive a partial credit for the U.S. tax to be paid, considerably lowering the amount of taxes/social charges you will pay in France. But your U.S.-based income does figure into the calculation of your effective tax rate in France (taux effectif).

Regardless, you will get these issues of foreign-sourced income worked out with the French tax authorities by filling out the Form 2047 with help from the “Notice,” or instruction guide, that goes with it. This is the official form for reporting income that comes from outside of France. And for expats, it is generally the first thing to figure out as you begin your French taxes.

Start your tax process by ensuring that you can fill in the fields that apply on the 2047. Then move to the 2042 supplements that make sense in your situation. You will see these lined up as options in your online impots.gouv account (or in the PDF forms dropdown box if you are a first-time filer). The supplementary forms allow you specify, for instance, any credits or deductions you should be getting (2042 RICI), provide more details about your salaried or retirement income (2042 C), or break down your micro-entrepreneur, agricultural or other self-employment income (2042 C Pro), etc…

When you’ve sorted out which of the supplements apply to you, fill in your foreign-sourced income information again. That’s correct. You should view your 2042 supplements as summaries of each type of income your receive, with the U.S. and French sourced stuff added together.

As a grand finale, Form 2042 will allow you the opportunity to put all of the types of income and the deductions/credits together in a single, summary form. It offers appropriate boxes for the results of all those supplementary form efforts. Fortunately the 2042 “Notice” guides you through what information goes into what box.

Remember, too, that these forms are addressing both income taxes and social charges (referred to with the acronyms CSG, CRDS, and CASA). If you have U.S. income that is subject to social charges, you will use line 9 of Form 2047 and then line 8 on the 2042C.

While you are here, another quick form reminder: use Form 3916 to report every foreign-held account you had this year. That means investment accounts, bank accounts, money transfer accounts (i.e. Paypal and Wise) and even your credit card accounts.

All forms are available through your personal impots.gouv account. But if this is your first year of filing, you will be in paper format. Go to the same website and type the form numbers in the search bar for downloadable PDF’s.

And as always, leave a comment or call us with questions.