U.S. EXPAT TAX GUIDE – FRANCE
How do you report capital gains on stocks and shares for US taxes?
US citizens or green card holders living in France must report profits from stocks and shares on their US tax returns. This includes investments in French, US, or other international companies.
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What are the tax rates for short-term and long-term capital gains?
- Short-term capital gains: Investments held for less than a year are taxed at your ordinary income tax rates, which range from 10% to 37%.
- Long-term capital gains: Investments held for more than a year benefit from lower tax rates of 0%, 15%, or 20%, depending on your taxable income and filing status.
Can French taxes paid on gains reduce your US tax liability?
Yes, French taxes paid on capital gains can be used as a credit against your US tax liability through the Foreign Tax Credit. This helps avoid double taxation on the same income, which is a crucial benefit for US expatriates.
How do tax-advantaged French accounts impact US taxes?
If you invest in tax-advantaged accounts in France, the US will tax the full amount of gains because it does not recognize the foreign tax-advantaged status. This can lead to unexpected tax liabilities for American investors.
What are the challenges with foreign mutual funds or ETFs for US citizens?
Investing in foreign mutual funds or ETFs can be problematic due to Passive Foreign Investment Company (PFIC) rules. These investments often incur high tax rates and complex reporting requirements. Gains can be heavily taxed, regardless of dividend distributions, making it important for US expats to be cautious with non-US funds.
How are company shares received as compensation taxed?
Shares received as part of compensation are considered a taxable event in the US. The value at the time of exercise sets the cost basis. When these shares are sold, any profit over the cost basis is subject to capital gains tax, which may be offset by French taxes paid.
What steps should you take if you plan to sell shares?
If you are planning to sell shares or hold stock options, consult a tax professional beforehand. This will help you understand the potential tax implications and prepare estimated tax calculations. Proper planning ensures you have the necessary funds for tax payments and avoid financial surprises.
Why partner with a specialist Expat accountant?
Living outside of the US can make your tax filing requirements complicated. To ensure you pay the minimum amount of taxes, it’s critical to work with an accountant who understands every aspect and avenue for reducing your tax liability. We have a dedicated team of tax accountants who work exclusively with US expats earning and investing in France. Partnering with a specialist expat accountant can help you navigate complex tax regulations and optimize your tax situation.
