Tax Season!
Believe it or not, it is now time to prepare for your 2024 US tax return and French Déclaration. Don’t panic — you have plenty of time before the due dates, but it helps to get a few things straight in advance:
You have an automatic extension for your US return until June 15th, but you still want to pay any estimated taxes owed by April 15th. And you probably want to file for the later extension in October. This will give you time to see your French Déclaration bill (avis) in the summer before your final US filing.
If you already have an online tax account in France at impots.gouv (https://www.impots.gouv.fr/accueil) your pre-filled Déclaration should appear there on April 10th. If you all of your income is from French sources (French salary, French business owner, French pension, French investments and accounts), you probably only need to review and hit submit. The information from URSSAF, your banks and brokerage houses and your employer will all have been transmitted directly.
More than a few of you DO have sources of income outside of France. If you have foreign investment accounts, foreign pensions, foreign earnings, foreign business interests or foreign interest-bearing accounts, the French tax office will be unable to access this information without your help. Start now on the effort to gather up all the information on foreign earnings. And be sure to note the date you received these amounts. You will need to convert to euros for your French taxes. This is generally done using the Bank of France daily conversion rate on that day, but there is an “averaged” method if you are receiving a significant number of regular payments.
Now that you have an idea what the total income for 2024 might be, try out the French government’s tax simulator on https://www.impots.gouv.fr/accueil. This will give you the taxes likely owed in France. Of course, this will not include taxes owed in the US or in other countries.
Have your account information handy. Chances are that you will need to be reporting any foreign bank, investment or other financial accounts along with your French Déclaration (search impots.gouv to find form 3916). So if you have not already done so, create a master list of any such accounts that were open in your name any time during the tax year along with the name and address of the financial institution, the account number, any other account owners, the dates on which the account was open (and closed, if applicable) and the type of account you are reporting (i.e. savings, checking, retirement…). You will need more details if you own certain foreign insurance products.
Have your French account information handy, too. If you are required to file a US return, the US will have you report your non-US accounts in a similar fashion.
Look for the right US software or accountant. If you are filing as an expat, look for tax filing software specifically made for expats and check with your tax preparer to make sure she or he is comfortable with expat returns.
Be aware of US “foreign” business reporting. If you own all or a significant part of a business outside the US, you may have additional forms to file in the US. In France, a sole proprietor (Entrepreneur Individuel) is exempt, but just about anyone else is not. Check with your US accountant to make sure you are doing the necessary filing.
Put champagne in the frigo. US expats around the world bear an extra paperwork burden every spring. Be ready to reward yourself for a job well done when the due dates roll around this year.