# American LLC taxes for a US person residing in France



## Dasskuhl (6 mo ago)

Hi,

I (french citizen, ex-J1 visaholder, not a green card holder) and my wife (american citizen with a VLS-TS) relocated to France in February 2022 after living for about 5 years in Colorado. My wife just got a job offer for an american company in the US via a recruiter. Since the job can be done remotely, my wife was considering working from Colorado at first (she had a family trip planned anyway) and then working from France. She will likely spend more than 183 days in France in 2022 so she's going to be a french fiscal resident. Now come the questions about taxes and legal aspects:

Is she going to become non-resident in the US? Will I still be a resident when I file in spring 2023?
The recruiter told her to create a single-member LLC and have her work as a contractor. Should we file her earnings in "revenus de source étrangère" in formulaire 2047 or does she have to create a company in France (a micro-entreprise for instance)?
How do we avoid double taxation? I called the french tax administration and they told me she has to claim a tax exemption under article 15 of the french-american fiscal treaty. Is that correct? Should she use form 1040 to claim the exemption? 
Thanks in advance,
Bastien


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## Bevdeforges (Nov 16, 2007)

OK, to answer your questions:


Dasskuhl said:


> Is she going to become non-resident in the US? Will I still be a resident when I file in spring 2023?
> The recruiter told her to create a single-member LLC and have her work as a contractor. Should we file her earnings in "revenus de source étrangère" in formulaire 2047 or does she have to create a company in France (a micro-entreprise for instance)?
> How do we avoid double taxation? I called the french tax administration and they told me she has to claim a tax exemption under article 15 of the french-american fiscal treaty. Is that correct? Should she use form 1040 to claim the exemption?


1. If she is a US citizen, she never becomes a non-resident for tax purposes as far as the IRS is concerned. Your status for the US depends on a number of things, notably where you are living while she is working in Colorado. If you remain in France, you are only "resident" for US tax purposes if she chooses to file her return as "married, filing jointly" and include all your worldwide income on the US forms. (Basically, not advised for a whole bunch of reasons.) 

Assuming she goes back to the US and works there for a few months before returning to France, she'll probably wind up filing as "married, filing separately" - which has its own series of considerations. But, read on.

2. How to handle this depends on a couple of factors. Once she is back in France and working remotely, she will have to set something up to properly register for French taxes and social insurances. There are a couple different ways to do this - the two main approaches being to either get the US employer to register as a French employer with no French presence (with URSSAF) or to create some sort of French business entity to bill her "earnings" and handle the taxes and social insurances. There is no particular reason to set up an LLC, but if she decides to go that way, then the LLC will have to register with URSSAF as a French employer with no French presence. A micro-entreprise is limited to a certain maximum revenue amount and if her "salary" exceeds that limit, she'd have to use a different sort of business entity - also she may have to charge VAT to the US employer, and they don't usually appreciate that.

Just be aware that if she creates a one person business entity to handle the taxes and cotisations, then she'll pay for everything herself, whereas normally an employer pays a portion of the employee's social insurance costs in a regular payroll situation. So net-net, she'll be receiving less pay for her work.

3. She should take a look at IRS Publication 54 for Overseas Taxpayers (on the IRS website). There is a Foreign Earned Income Exclusion for those US citizens working outside the US. She can "exclude" up to a bit over $100,000 of earned income (i.e. salary or wages) using form 2555. Or she can claim back a Foreign Tax Credit for taxes paid to France on her salary earned while she is physically present in France. But everything she earns is reported on a regular 1040 and just "explained" in detail on the additional forms.

For France, you report anything she earns while present in the US on form 2047 (as well as on the regular 2042 form) for proper treatment by the Fisc.


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## 255 (Sep 8, 2018)

@Dasskuhl -- As always, you received excellent information from @Bevdeforges.

I'd like to propose an alternative. First, single-member LLCs are somewhat problomatic for any kind of real liability protection and second they are treated as disregarded entities for taxation meaning your wife will need to file schedule C of IRS form 1040 for her US taxes. Here you will also have to get proof from the French government, that she is under the French social security sytem to be exempt from filing Schedule SE and paying U.S. FICA.

I'd consider forming a C Corp., perhaps in WY, to be the contractor for your wife's new employer (instead of her or the LLC.) WY corporations are cheap to form and have no income tax (assumming she is not working in WY. Colorado is one of the highest taxed states and a CO LLC would normally also necessitate filing taxes in CO. If your wife needs the income, the C Corp. could pay her in France via an employment company, a portage company or as @Bevdeforges already explained, a separately owned company. Alternatively, they could just pay her proposed new French company directly (perhaps thru a U.S. checking account, if necessary.) You have lots of options. There have been many similiar treads in the recent past. Cheers, 255


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## Dasskuhl (6 mo ago)

Thanks @Bevdeforges and @255, your answers helped. I've seen several similar threads but the specifics are always a bit different and, since this is all new to me, I think it helped writing down my own questions. 

In the end, she's going to start the job there under a W2 issued by the recruiting company. In the meanwhile, she's going to see if they would ride with her setting up a company in France that would directly bill them for the service she offers. I think this is the most straightforward way to do this but the recruiting company. I was thinking of using a Wise bank account to facilitate the $-€ change, do you guys know if there is a limitation on how much money she can transfer over a year? I think I read somewhere that transfers bigger than $10k have to be filed but I'm not sure whether that applies when using Wise...


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## Bevdeforges (Nov 16, 2007)

Any transfer of $10K or more requires a form be filed - though very often it's the bank or transfer agent that does the actual filing. They may ask the customer for information about the source of the funds and/or the purpose of the transfer. But that's it.

As far as a limit on transfer amounts in a given year, there is nothing that I'm aware of - and I transfer a fixed amount each month from my IRA over here to France as my IRA "pension." (And yes, I use Wise for that.) Just be aware that you probably shouldn't leave large sums of money in your Wise account for any length of time. Wise pays no interest - and for large amounts has been making a charge (due to "negative interest" rates in much of Europe).


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