U.S. TAX GUIDE IN FRANCE
How should Americans report French pensions on their US tax return?
Reporting French pensions on a US tax return depends on the type of pension. For regular government pensions, contributions are reported and taxed, creating a cost basis. When distributions are made, only the net amount (distribution minus cost basis) is taxed.
Are US taxes owed on French pension withdrawals?
The taxability of pension withdrawals in the US depends on the availability of foreign tax credits (FTCs) and tax treaties. FTCs can offset US tax liability, but without them, distributions might be taxed in the US.
How can Americans in France plan for tax-efficient pension withdrawals?
To plan efficiently, seek advice from a tax professional. One strategy involves filing US tax returns using the FTC method for at least ten years before retirement. This accumulates FTCs that can offset US tax liability on pension withdrawals.
Should Americans in France consider self-funded or self-managed pensions?
Self-managed pensions provide investment control but require filing foreign trust forms, adding costs. These plans can be beneficial for knowledgeable investors who can outperform standard pension funds and manage the additional costs. Otherwise, traditional pensions may be more advantageous.
