**Disclosure: This is NOT an official or endorsed source from the IRS or any American Tax association. All of the information below is based on my own experience and knowledge, and is simply a way to give advice to expats in France.
Please check out my friend Jennie’s extensive tax explanation for France-based American citizens.
I also use this Facebook Page for American Expats to stay up to date on this kind of information.
The United States of America is a country which taxes its citizens based on citizenship instead of residency (also known as citizen-based taxation). This means that the United States requires all its citizens to always file and to sometimes pay taxes on foreign income.
The Foreign Account Tax Compliance Act, or FATCA, was signed into law back in 2010, but is only now coming into full effect as of 2014. Although this law was originally written and passed in order to bust American citizens stashing hundreds of thousands of millions of dollars in overseas bank accounts in order to avoid taxation, it affects all American citizens living and working abroad, including TAPIF assistants and English lecteurs. Fortunately, most assistants/lecteurs in this situation will not be negatively affected by the law due to the extremely low salaries paid to us, but it still makes things a bit complicated when filing taxes.
When signing up for a bank account in France, you will be required to fill out a W-9 form, which basically gives the IRS knowledge and potential access to your overseas accounts. If you at any point during the year have more than $10,000 (dollars, not euros) in your overseas account, you are required to claim and perhaps pay the accrued interest tax as well as fill out an FBAR form (again, for the vast majority of assistants and lecteurs, this is not a problem).
When filing your US taxes, you need to check Yes on line 7A of Schedule B (asking if you have an overseas account), and you will need to include the amount of interest earned on all domestic and foreign bank accounts on line 1 (I earned less than $1 of interest last year).
2016 The Affordable Care Act (Obamacare) Filing Requirements/Regulations:
As of 2015, American citizens now must prove/declare that they have health insurance (via Form 8965 on your tax return) or else pay a tax penalty.
In order to be completely exempt from this new penalty, American citizens must be out of the United States 330 days per calendar year. Therefore, most TAPIF assistants and first time lecteurs/lectrices do not qualify for this exemption. If you do qualify, you must file form 8965: Health Coverage Exemptions. Simply check letter C “Exemption Type” as well as the “Full Year” box in Part III. If you do not qualify, you will need to fill out both Forms 8965 and 8962. You can use Exemption Type C for the months you were in France (and covered under the sécu– October-December or Jan-April depending on the tax year). There is also a 3-month grace period for health care coverage, so you can also tick Exemption Type B for up to three months of exemption if you didn’t have health insurance (as needed). Finally, on Form 8962, you will need to answer No to Question 10 in Part II and figure out your monthly premium tax credit.
If you need proof of coverage, I suggest you go to your sécu provider (MGEN or CPAM) and ask for an Attestation des Droits (and perhaps a translation– or translate it yourself) to prove your coverage, and send that back to the IRS with your returns (as needed).
**Please remember that this is all new information and 2016 (on the 2015 tax returns) is the first time the US Government is enforcing this law, so I will update this section as I learn/discover more about it. I was still under 26 until March 2016 and was covered under my parents. In 2015 I was also out of the USA for more than 330 days and therefore exempt from this new law.**
American Income Taxes- Form 1040 (for more information, inquire with the IRS):
Americans begin filing taxes in January and have to pay by April 15th of every year. As an American living overseas, you are granted an automatic three-month filing extension (and you can get a longer extension until October 15th if you apply for it and/or communicate with your accountant). However, regardless of your filing extension, if you owe any money to the IRS, you will still be required to pay by April 15th.
It is actually rather easy to claim your foreign assistant income on your US income taxes. In late January, you should receive a form from the French government called the “DECLARATION FISCALE DES TRAITEMENTS ET SALAIRE PERCUS AU COURS DE L’ANNEE 20–,” stating the amount of money you made for the previous year (for first time assistants, Oct.-Dec. and for first time lecteurs, Sept.-Dec. For renewing assistants Jan-April and Oct-Dec and for renewing lecteurs Jan.-Dec.) This form is an equivalent of a W2 and can be used as provided proof in the US. If you do not receive this form, you may also use your December pay stub, which should give you the same amount. I usually just use the “montant imposable de l’année” when declaring the income.
Then, you convert your French income from euros to dollars using the exchange rate (I use XE Currency.) Next, add the sum to line 21 (other income; specify “foreign income” on the line to the left) of Form 1040. Usually this is enough for assistants/lecteurs.
Foreign Tax Credit Form (Form 1116)
According to US law, if your gross income is more than $10,000 for the year, you have to both file and probably pay federal taxes, even on your foreign income. The United States and France do have an agreement stating that American citizens living in France cannot be double-taxed on income tax under $97,600, so basically, whatever you pay in income taxes in France can be deducted from what you would owe to the IRS in the United States. But, assistants (and first-time lecteurs) do not actually make enough money to pay taxes in France, so that exception does not apply (and you will therefore be taxed in the US on your foreign assistant income).
If a lecteur has worked overtime AND has over a year’s worth of French salary, they may have to pay taxes in France, so they MAY qualify for this agreement in the case that they owe taxes to the IRS. In the case that one DOES qualify, you can fill out the Foreign Tax Credit form (Form 1116).
Foreign Income Earned Exclusion (Form 2555)
There is also a residency-based exemptions for US citizens– if you have lived outside the US for at least 330/365 days within a 12 month period, as well as made less than $97,600 during one calendar year, you qualify for the Foreign Income Earned Exclusion, (Form 2555). Usually, one-time assistants or lecteurs do not qualify for this because of the length of the contract and visa, but renewing assistants or lecteurs may qualify. (As a new lectrice in 2014 I did not qualify because I came home for three months in the summer, invalidating the residency required by staying and working for 87 days in Wisconsin. However, I did qualify in 2015, because I renewed for my second year and did not return home for more than 35 days. This means that I had to file my income taxes and use this form, but not pay anything to the US government.)
According to Jennie in regards to the Foreign Income Earned Exclusion :
“[After filling out Form 2555EZ,] then write your foreign income on line 7 of Form 1040 (add it to any other income you may also need to put on line 7) and again on line 21, but in parentheses. […] When you get to line 44, you need to use the Foreign Earned Income Tax Worksheet to figure out the amount rather than simply looking up the tax rate for your taxable income on line 43. Basically you will be looking up two tax rates: the sum of taxable income from line 43 + foreign income and foreign income alone. Then you subtract the rate for foreign income from the rate of the sum of taxable income + foreign income to find the correct tax amount to write on line 44 of Form 1040.”
Isn’t being a US citizen who lives overseas so much fun!?
In France, taxes are paid in a lump sum at the end of the fiscal year, so nothing except health insurance is taken out of your monthly paychecks. Assistants do not make enough money to have to pay taxes; a one-time lecteur/lectrice (ie: working half of 20– and half of 20– will not make enough to have to pay taxes; finally a person who does the first half of the year as an assistant and the second half as a lecteur/lectrice will also not make enough to have to pay taxes. A fully renewed second time lecteur/lectrice will most likely have to pay taxes. So, even if it’s not required for you to file/declare your French taxes, if you would like to stay in France long-term and benefit from things like CAF, it is a good idea to file. (FYI, I did not file for 2013 but I did file for 2014 in France for the first time).
In order to file French taxes, you must physically go to the Hôtel des Impôts in your town usually towards the end of April– if it is your first time filing in France, you must fill out the paper version declaring your wages from the previous year (October through December for assistants and September-December for lecteurs, or both if you renewed/changed jobs) using the provided “DECLARATION FISCALE DES TRAITEMENTS ET SALAIRE PERCUS AU COURS DE L’ANNEE 20–” form. (Thankfully, after the first year of filing French income taxes via paper, you will get a pre-filled form each year after that, and have the option of filing online. Such a time saver!)
If you are a renewing assistant/lecteur/lectrice, you can fill out the prime pour l’emploi box on the tax form, which is basically a tax refund for people who have worked full time but haven’t made enough money. (Usually it is paid out in July or August, so make sure you include your RIB when turning in your form! I got 900€ back in 2015!) Use this link to determine how much you should declare in regards to hours. Finally, you will have to turn in a copy of your lease in order to validate the taxe d’habitation, which is usually billed in October and paid in November. It can be paid online and even with a smart phone! But to be frank, the French tax form is one of the simplest forms to fill out in all of France.
**Please keep in mind that I am by no means an expert on taxes, and have learned as I went along. If you have any other questions regarding taxes, I will do my best to answer them.