Filing French Taxes for 2018
AARO held its second annual French Tax Seminar on April 2. Tim Ramier, chair of the Tax Committee, welcomed the audience with some announcements of upcoming events and Pierre Taponier, a Franco-American lawyer and colleague of Tim, presented. The room was full and half the crowd was made up of first-time filers as French residents.
Although PUMa, universal health care for all, is not an income tax issue, Taponier anticipated questions about it before going on to income tax. Health care in France is a right and an obligation for everyone who lives and works in France. People who work in France contribute to the health care system by deductions from their pay, if they are salaried, or by direct payment to URSSAF if they are self-employed. For those without French income, a tax, or contribution, is levied on their worldwide income. Clarified during the Q&A, this tax was 8% on income above €10000 and is going down to 6.5% on income above €20000. For questions about PUMa, AARO's "health insurance" chair, is working with Lucien Flament, on righting the wrongs in the system. Both Tim and Pierre said they do not handle PUMa cases and recommend them to Maître Flament, who has just won the first case.
Residence is determined not just by the length of stay, but also if France is where the main residence is, most of the income, where children are in school. All residents in France must report their worldwide income to France. As citizens of the United States or Greencard holders, we must also report our worldwide income to the United States. There is a tax treaty to prevent double taxation. Citizens of the United States residing in France receive a tax credit equivalent to the French tax on their U.S. income. As clarified during the Q&A, the total income is used to determine the tax rate so the total tax paid to France may be higher than if the U.S. income were not declared, at all, but that is not double taxation.
The dates have not been published, yet. However, the past is a good indication. The new forms should be available before the end of April and the impots.gouv.fr site should open for filing by the end of April. All paper forms are generally due in mid-May, e-filing deadlines are staggered according to which department you reside in. Paris area departments are usually in the last group with a deadline at the end of the first week in June. There are no extensions.
The new forms had not come out, as of April 2. (editor's note: checking the impots.gouv.fr site, they say that all declarations must be done online this year, even for new filers, who can claim their fiscal identity number either at the local tax center or via the website by clicking "Contact" du site impots.gouv.fr > "Vous êtes un particulier" (you are an individual) > "Votre demande concerne l'accès à votre espace particulier" (you are requesting access to your private space on the site" > "Je n'ai pas de numéro fiscal" (I do not have a fiscal number).
"Si vous ne disposez pas d'un numéro fiscal, vous pouvez en solliciter l'attribution auprès de votre centre des finances publiques (service des impôts des particuliers) au guichet ou à partir d'un formulaire disponible à la rubrique "Contact" du site impots.gouv.fr > "Vous êtes un particulier" > "Votre demande concerne l'accès à votre espace particulier" > "Je n'ai pas de numéro fiscal".
"Une fois votre espace créé, vous pourrez accéder au service de la déclaration en ligne."
You can download the 2017 forms to see more clearly what you are doing and they were shown during the presentation. During Q&A, it was pointed out to check the boxes for the forms you need at the beginning. If you think you have finished filing and did not see all the forms, then go back to make sure you checked the right boxes. Also, when checking the type of income and type of tax credit for form 2047, make sure you check the boxes for "ouvrant droit à un crédit d'imôt égal au montant de l'impôt français" for your U.S. income.
Form 2042 is the main information form. It contains your name, date and place of birth, and address. Income tax in France is established per household and there are currently only three filing statuses: married, single, or PACSed (civil union). There is a page for family make-up, bank account information (obligatory -- you must have a bank account; the fisc operates by bank transfer.)
This form will contain all the income information on pages 3 and 4, much like the U.S. 1040, schedule 1 compiles the income information from all the other schedules. Foreign income is included in section 8, and the 8TK box is the one that gets you the proper tax credit, so make sure that what you declare on form 2047 in box 8TK is carried back to this form.
Foreign bank accounts, box 8UU, must be declared, as well.
Form 2047 is for foreign income. Sections 1 through 5 on the form for the different types of income: salary and or pension (section 1), interest, dividends, ... (section 2), capital gains (section 3) and how they are to be treated: taxable in France, taxable at the source with a tax credit for tax paid, or with a tax credit equal to the French tax ("OUVRANT DROIT À UN CRÉDIT D’IMPÔT ÉGAL À L’IMPÔT FRANÇAIS (MONTANT BRUT)" Be very careful to choose the latter. Section 6 is where you recap your U.S. source income for box 8TK. Section 9 is for social contributions but our U.S. income is exempt from that so do NOT enter it, there.
2044, the real estate income form for rental income, was not discussed.
3916 is the form for each foreign (non-French) account. It is the French equivalent to the U.S. FBAR requirement, with some exceptions: a separate form for each account and you do not indicate the amount in the account.
The "Année Blanche"
In 2018, residents in France paid taxes on 2017 income. In 2019, they are paying taxes on 2019 income. What happens to 2018 income?
Reporting will not change. 2018 income will be reported as in all other years. There will be an exceptional tax credit, this time only, for recurrent, non-exceptional income, such as salaries. Exceptional income, such as bonuses, will be taxed. U.S. income will be treated as it usually is, with the tax credit equivalent to French tax.