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The US tax deadline is approaching: The Local’s readers save 10% on this trusted software

Founding Father Benjamin Franklin was onto something when he wrote in 1789, ‘In this world, nothing is certain except death and taxes’. Well, one thing is for certain, the tax deadline of June 15th for US citizens abroad is fast approaching!

The US tax deadline is approaching: The Local's readers save 10% on this trusted software
Taxed by taxes? Nathalie Goldstein from MyExpatTaxes is here to answer your questions. Photo: Getty Images

The Internal Revenue Service does an extremely good job of making sure that Americans pay their taxes, including those living abroad.

Unlike some countries, the United States requires the vast majority of its citizens living abroad to file a tax return each year.

As complicated and time-consuming a process as completing a tax return can be normally, it can be even more complex and frustrating when foreign assets, property ownership and marital status enter the equation.

With the deadline for US citizens abroad approaching in mid-June, The Local asked Nathalie Goldstein, CEO of tax preparation software company MyExpatTaxes, some of the most common questions internationals have about their 2021 return.

Tax Basics

You will probably have filed a tax return before as a US citizen. However, you may be approaching your first tax deadline as a US citizen abroad. Here are a few things you need to know.

Who is obligated to file a US tax return?

“Americans and US Green Card holders whose income reaches the minimum income threshold regardless of where they live. This starts at $5 for those who are married to non US citizens and opt to file as Married Filing Separately.”

What are the likely consequences, should I miss filing a return?

“If you owe US taxes you will be charged penalties and interest on any unpaid amounts. Additionally the US could revoke your passport for failing to report your income if you owe more than $50,000 in unpaid taxes.”

Do I really get to file my tax return later than the April deadline as a US citizen living abroad? Do I need to request special permission for this extension?

“Yes. Anyone who is living outside the United States at the time of the tax deadline has until June 15th to file their tax return. You won’t need to request an extension but you will need to include a statement explaining why you qualify for the expat tax deadline. MyExpatTaxes automatically includes the statement when you file with us.

“However, if you will need to pay US taxes (which most Americans abroad won’t), you still need to pay by the April deadline.”

What are the types of documentation and records I should have ready when I start doing my taxes?

“You’ll need your income statements from the previous tax year (the one you are filing), as well as any deductions you plan to claim. You’ll also need your Social Security number, employer information, and your basic info such as birthdate and address.”

I am married to a non-US citizen. Do I file married – jointly or separately – or single?

“Most expats living in a foreign country will probably want to file as Married Filing Separately. Using this filing status keeps your spouse’s income out of the equation altogether.

“If you do file as Married Filing Separately, the minimum income threshold for filing a tax return is just $5. So make sure you file your return, even if you work just part-time or very minimally.”

How do I find the right exchange rates to use to convert my wages in my local currency to US dollars?

“The IRS posts the average annual exchange rates of several countries on their website. However, it’s not required to use these rates. If the rate is a publicly posted rate, simply select the rate which suits your specific situation the best.”

 

Overseas income and property

If you are living overseas as a US citizen, odds are that you earn a salary, or may even own property in your adopted country. This may have some impact on your tax return, depending on the nature of the income and property.

Am I supposed to pay any additional taxes to the US on my overseas income? What about retirement savings accounts and/or investment accounts where I currently live?

“Actually, it’s quite the opposite. You can use the Foreign Earned Income Exclusion (FEIE) or Foreign Tax Credit (FTC) to help you avoid paying any US taxes at all. The FEIE allows you to exclude around $100,000 of your foreign earned income (such as salary or self-employment income) from your tax return – meaning you won’t pay anything to the IRS for that income.

“Additionally, you may also get credit for any taxes paid to your resident country. This is why we say most Americans won’t pay US taxes – they just have to file! Of course if you don’t pay local taxes on passive income streams like investment accounts, then you might owe some tax to the US.”

Does owning property overseas have an impact on my US tax return? What should I know before buying, tax-wise?

“Owning property overseas is no different tax-wise than owning property in the US. When you rent or sell your property, you will need to report that income.

“For those selling property, if you qualify for it being your main home (you lived in and owned it for 2 of the last 5 years), you might be eligible to exclude up to $250,000 of the sale profit per taxpayer from your US tax return.”

Confused by what foreign income you need to declare on your US taxes? Receive a 10% discount at checkout with the discount code ‘TheLocal10’

Pandemic stimulus payments and taxes

Many US citizens were eligible for stimulus payments, released by the US government in response to the coronavirus pandemic that began in 2020. These may have some implications on the taxes you need to pay.

Will the pandemic and distribution of stimulus checks impact my tax return?

“There are a few ways the economic stimulus payments could affect your return:

  • If you didn’t file for the last few years, it’s not too late to claim your stimulus payments.
    – Assuming you owe less than the amount of the payments, you’ll receive any additional sum as a refund.
    – If you had a child in 2021 and get their SSN by October 15, 2022 (assuming you filed an extension), you can claim the latest $1,400 stimulus payment for them.
  • If you are a parent who received advanced child tax credit payments in 2021
    – If you, like me, use a US address when filing your taxes abroad, it’s possible you have received more in advance payments than you will qualify for. Since Americans abroad are only eligible for $1,400 per child (not the potential $3,600 that US residents can claim), if you received more than you were eligible for, you’ll need to pay this back when you file your taxes.
    – If you received the correct sum, or nothing at all, you will receive any remaining portion as a tax refund.”
No more taxing times – MyExpatTaxes makes filing easy. Photo: Getty Images

Reporting foreign accounts

US citizens are obliged under the law to declare assets in overseas accounts, over a set amount, in order to track funds and monitor and hinder tax avoidance. Come tax time, it’s important that you declare your accounts if they exceed the limit.

What is an FBAR and why is it necessary to file it?

“The FBAR or Report of Foreign Bank and Financial Accounts, is how the FinCEN (The Financial Crimes Enforcement Network) keeps tabs on US citizens who have money (and how much) in foreign accounts. Anyone who has more than $10,000 max combined in all their foreign financial accounts at any time throughout the tax year will need to file an FBAR.

“Things to note about the $10,000 limit: You need to add the sum of ALL of your foreign accounts. If the sum reached is over the limit, you need to file an FBAR.

“If your accounts are in a foreign currency, you’ll need to make sure you are converting the currency amounts to USD. MyExpatTaxes includes the FBAR for no additional charge – because we understand this is an essential form for expats like myself.”

Do joint accounts count towards the $10k combined total?

“Yes, you will need to include the entire sum of any account with your name on it or that you have signature authority over. For example, joint bank accounts, children’s accounts, and business accounts.”

When is the FBAR due? Do I need to request permission if I don’t send it in by the regular tax deadline in April?

“The FBAR is due April 15th. There is an automatic extension to October 15th. You don’t need to do anything to request the extension (except include a statement!)”

Do the FBAR and my income tax return need to be filed at the same time?

“It’s generally easiest to file them at the same time, but since your tax return is sent to the IRS and the FBAR is sent to FinCEN, you’re not required to complete them simultaneously.

“Again, this is where MyExpatTaxes can really help. Since your information is already in the software you just need to add the extra bits needed for the FBAR. We’ll send them both off to the right agencies for you!”

Seeking professional help

You can do your own taxes as a US citizen abroad, but there are some tools that can assist you.

What are the benefits of using a software program over using an accountant?

“I started MyExpatTaxes because of the frustration I felt with the accountant I used to help me with my expat taxes. At the time, there was no software offering a do-it-yourself solution that specifically addressed expat issues, such as the FBAR being automatically included or even the ability to e-file.

“Most tax software requires expats to print their return and mail it to Austin, Texas, which can be time consuming, costly, and hard to track. At MyExpatTaxes we can e-file 99% of tax returns, the majority of which are accepted by the IRS in a matter of hours, not days or weeks.

“Also, if you want to work with an accountant and have the speed and convenience of expat tax software, we offer both. You can opt to have a tax professional review your return at the end or have a video call with one immediately before you start. MyExpatTaxes offers you every filing experience you could want: do-it-all-yourself, do-some-of-it-yourself, or get-it-done-for-you.”

Take the stress out of filing your US tax return. Discover how MyExpatTaxes can make filing your return simple, no matter what your circumstances. Receive a 10% discount at checkout with code ‘TheLocal10’

Member comments

  1. For the first time I had to file my US return as an expat. I was very fortunate to find someone who is not only capable of preparing the US return, but also the French return as well. The returns were both filed on-time and were well prepared. The cost was in line with what I had paid when I lived in the US. There are good tax preparers out there and the cost can be reasonable — if you do your “homework” and provide clear information.

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PROPERTY

Why French homeowners face higher property taxes in 2023

As the 2022 deadline to pay property taxes in France approaches, homeowners will likely have to face higher property taxes in 2023.

Why French homeowners face higher property taxes in 2023

If you are a homeowner in France, you may want to consider putting some money aside as property taxes could increase significantly next year. 

The taxe foncière – a property ownership tax levied at local level – is a tax paid by all property owners in France. It is separate to the taxe d’habitation, which is paid by whoever occupies the property (whether they are an owner or a tenant) and applies to anyone who owns a building or land. The latter is being progressively phased out.

Why the possible increases?

A large reason property ownership taxes may increase in 2023 is due to the fact that property values are reevaluated each year in November according to inflation and other factors that have changed the value of the property such as home extensions or new swimming pools. 

In general, the rate of taxe foncière has increased in France in recent years is due to gradual scrapping of another property tax, taxe d’habitation that left local authorities short of cash.

Why did my bill go up for 2022 and what’s the deal for 2023?

For 2022, property tax payments are due on October 15th or 20th, depending on payment method. Many French homeowners were already met with an unpleasant surprise when they received their tax notices this year.

The revaluation to reflect inflation allowed for a 3.4 percent increase in 2022, which increased the property tax on all homeowners. Additionally, municipalities voted to increase local taxes. In Marseille, rates went up by 13.1 percent, for Tours it was 11.6 percent and Pau saw a rise of 10 percent. 

In 2023, these values could be even higher.

Theoretically, property values across France ought to be reevaluated to reflect skyrocketing inflation, which would lead to an increase of 7 percent (in comparison to the 3.4 percent rise that was seen in 2022). In June, the French Finance Minister Bruno Le Maire assured property-owners that this issue had been identified and that the government was considering capping the rate.

However, according to reporting by French daily Le Parisien, several senior officials have indicated that “no capped rate for the taxe foncière will be included in the finance bill to be presented in late September.”

READ MORE: Reader question: How can I challenge my French tax bill?

In effect, this means that the 2023 budget would allocate for an increase of property taxes by approximately 6.5 to 7 percent – a rise that would impact at least 30 million homeowners in France.

Various suggestions have been put forward aimed at keeping the taxe foncière bills down, such as capping increases to 3.5 percent or linking the the level of government assistance to local authorities to inflation (meaning local authorities would be less inclined to raise taxes).

Nevertheless, as of September 23rd, these solutions had not yet been put into place.

Second home owners to be harder hit

Second-home owners in France have to worry about the taxe d’habitation (residence tax) on top of the taxe foncière.

Even though the former is in the process of being phased out for most French residents – apart from the highest earners, those with second homes are still required to pay it.

And for many of those that do, the rates are going up.

In 2022, more towns have voted to increase it, while others gained the ability to add a surcharge for second-home owners, with French daily Le Parisien reporting that the taxe d’habitation “continues to soar.” 

Municipalities in zones tendues (areas with a housing shortage) have the ability to choose to increase taxe d’habitation by up to 60 percent for second home owners.

READ MORE: Tax hikes of up to 60% for French second home owners

From 2023, several new areas – including Nantes – will join the list of zones tendues, meaning they will be able to vote to increase taxes for second-home owners.

In 2022, large cities such as Bordeaux, Lyon, Biarritz, Arles and Saint-Jean-de-Luz saw their city councils vote to increase the tax at the maximum 60 percent.

How is taxe foncière calculated generally?

The formula is complicated, and it is calculated each year for you by your local authority (though under the auspices of a formula set by the French finance ministry). Basically, it has to do with the rentable value of your property divided by two and then multiplied by the tax level set by your local authority.

READ ALSO: Taxe foncière: What is the French property tax and do I have to pay it?

The local authority’s tax rate varies hugely from place to place, which is why two people with similar sized homes in different areas can end up with wildly different bills.

In fact to make it more complicated it’s actually three local authorities – the commune, the département and the région – which all set their own tax rates then divide up your tax to pay for local services.

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