# US taxes on French accounts



## XavierFr86

Hi,

I am French and I am living in the US with my wife since January 2016.
This is my first year filing my tax return and I'm trying to understand what to report or not from my French accounts.
I've read a lot of resources online and I was surprised no to find any clear documentation online.
I guess it's because every case is different, but most of my accounts are "usual" tax-free accounts in France.


I will describe my understanding conclusions for my case.

More context:
- I'm a US Person, married filing jointly
- French accounts: Livret A, PEL, CEL, PEE, Assurance Vie
- Aggregate value of my French accounts: >$10,000 <$100,000


1/ FBAR
FBAR depends on the Department of Treasury.
The rule is:
- the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
- the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

Conclusion => I must report all my French accounts to FBAR


2/ IRS form 8938
The form 8939 was introduced by FATCA, to report foreign assets.

The reporting threshold rule applying to me is:

Married taxpayers filing a joint income tax return.
If you are married and you and your spouse file a joint income tax return, you satisfy the reporting threshold only if the total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.

Conclusion => I do not have to report my accounts to the IRS with my tax return on the form 8938


3/ IRS forms 1099
This is where things are the most unclear to me.
I understand the forms 1099 are a way to report any income.
For example, 1099-INT reports the interest income from a bank account.
They are usually produced and sent to you by your (US) bank.

But of course, French banks don't produce these forms.
Moreover, most of these accounts are tax-free accounts in France (Livret A, PEL, CEL, PEE)
AND they are explicitly declared as "Accounts Excluded from Financial Accounts" in the FACTA agreement treasury.gov/resource-center/tax-policy/treaties/Documents/BilateralAgreementUSFranceImplementFATCA.pdf pages 51 and 52

Conclusion =>
- I should report the interests from my "assurance vie" on a 1099-INT form
- I'm not sure what to do with the other accounts?


I would really appreciate your advice and opinions on my conclusion.

Thanks


----------



## Bevdeforges

The basic rule of thumb for US tax returns is that you usually have to report "everything." Like France, the US taxes based on worldwide income. But to answer your specific questions:

1. FBAR - yes, report them all, even the "tax free" accounts. OTOH, the FBAR is only a report, not a tax filing. You report the high balance in each account for the year, so there may be some double counting of amounts. Don't worry about this - many of us add a few thousand to the balances we report, after making a good faith estimate of the high balance for the year. There is no penalty for "over reporting."

2. Form 8938 - https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements for a handy reference on this. But it sounds as though you probably don't need to file one of these.

3. Banks outside the US don't produce 1099s (nor do French employers produce W-2s) - however you are still supposed to report the interest earned, even on "tax free" accounts. The Bilateral Agreement you cite applies only to the banks, not to individual taxpayers. Here's where your personal "discretion" comes in. Technically, you are supposed to report all bank interest and investment income - though the reporting requirements for the banks as stated in the Bilateral Agreement do not require the banks to turn over that information to the IRS so they have no real means of checking what you report.

If you're using tax preparation software, you may have to "swami up" a pseudo 1099 to get the income onto the correct lines of the tax return. But otherwise, they pretty much have to take your word for how much interest income you received. It's basically your call.

HOWEVER, you mention "Assurance Vie" accounts. Some tax preparers take the position that all assurance vie is a "foreign trust" type of account, which adds a bunch of forms to your tax return. Given the small amount of your account(s), you could probably just report it like it was a bank account, which means you would report the earnings on the contract as income in the current year and just forget about all the elaborate reporting. IF the IRS should take an interest in your filings for any reason then you have reported it in all "good faith" and will most likely not be subject to any penalties or fines. 

Welcome to the Wonderful World of US Taxation! But try to "keep it simple" if you can.
Cheers,
Bev


----------



## fredoreo

Hey Bev, I am a dual citizen living in the US and want to go through the Streamlined process to file past fbars and amended returns. All I would have to add to my amended returns (2013-2015) is the income from my "assurance vie" which generated $200 to $250 per year. In this scenario how would I go about reporting that income on the tax returns? As interest? Or should I report the cash surrender value on next year's return? (by the way the contract on the assurance vie expired several days ago and I am closing the account)


----------



## Bevdeforges

If you report the income from your assurance vie as interest, then the "cash value" has no relevance to your US return. You're treating it like a bank account - you put in $X and each year you report the interest earned. When you close the account, it's all your money - already has been taxed, so no need to report anything further.
Cheers,
Bev


----------



## XavierFr86

Thanks Bevdeforges for your answer, this confirms my thoughts on this.


I will treat my "assurance vie" as a bank account, I only have bonds and no stocks on it.


The "World of US Taxation" is quite complicated, but I learned a lot!


----------



## fredoreo

Thank you Bev. Appreciate your help!


----------



## muchomacias

Hello,

Bevdeforges, i did not plug a website but a source from a law website that i found on google, this site explain some things about the assurance vie and tax related content

I found many documentation on google about french assurance vie and those what is explain here is not what i read, so i can't copy/paste the entired website, how to have an exchange about that ?

In other terms, Assurance vie is treated as "PFIC" in usa, that mean you will be taxed as a "Passive Foreign Investment Companies" and use the form 8621

For my part i have 2 assurance "fonds euro garanti" and i do not understand how to deal with the IRS. I need accurate information, so i am here to learn and discuss

Thanks


----------



## Bevdeforges

It really depends to some extent on why you are subject to US taxes - i.e. whether you're a US citizen or a Green Card holder. But there is also the matter of how much you have in the assurance vie accounts and your level of "risk" when it comes to US taxation.

I know some people, for example, who are reporting their assurance vie like they were normal bank accounts - high balance on their FBAR and income earned on their US tax returns. And they've done this for several year with no repercussions from the IRS. 

Honestly, there is no absolutely definitive information. The main thing seems to be a "good faith" effort not to hide anything. US law (including tax law) is based on "intention" and "motivation" and you have to assess for yourself what you can live with in terms of reporting (or not).
Cheers,
Bev


----------



## muchomacias

For my part i will be on immigrant status with gc

There is 2 different assurance vie : "fonds en euro" and "unité de compte" (i have the first one)

If we can't get a definitive advice, even by IRS, how to accept to take a risk, it would be risk free in this case.

I'am not confortable with english terms and i don't understand everything about tax, so let me copy/paste some text and please give me your advice on it

What i read the most often is :

"Assurance Vie policies usually consist of mutual funds which are treated as Passive Foreign Investment Companies (PFICs) under U.S. tax law. As such, the Assurance Vie policies may be subject to the most draconian tax treatment under the 1291 fund (default PFIC) rules, especially because the QEF treatment is usually not available and MTM treatment may result in additional taxes (assuming that the French owner of the Assurance Vie policy timely made the election – usually, this is not the case)."

...

In addition to PFIC compliance, it is important to remember that Assurance Vie accounts are financial accounts subject to reporting on FinCEN Form 114 (commonly known as FBAR and formerly associated with Form TD F 90-22.1) and FATCA Form 8938.

PFIC Definition

IRC Section 1297(a) defines a PFIC to mean any foreign corporation if: “(1) 75 percent or more of the gross income of such corporation for the taxable year is passive income, or (2) the average percentage of assets (as determined in accordance with subsection (e)) held by such corporation during the taxable year which produce passive income or which are held for the production of passive income is at least 50 percent.” If a US person is required to report PFIC income, the Form 8621, “Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund” will need to be filed for each PFIC held.


----------



## bertrand

Hi everyone,

After reading this thread, I'm still struggling with French accounts reporting…

Context:

- Green Card holder
- Moved to the US in September 2017

French accounts:

- PEA
- Assurance Vie
- LEP
- Livret A
- LDDS
- Aggregate value of my French accounts <= EUR 10,000

All of my French accounts have been closed in November 2017 expect my checking account.

Questions:

- Do I have to report my French accounts to the IRS?
- If so, which form(s) do I need to fill out?

Your help will be SOOOO appreciated!!! Thanks!


----------



## Bevdeforges

Given that the aggregate value of your foreign/French accounts is less than $10,000 you're off the hook for reporting them. If you had more than $10,000 total in foreign accounts, you'd need to report them on this site: https://www.fincen.gov/report-foreign-bank-and-financial-accounts

The reporting of overseas financial accounts is a separate filing from your income tax filing - and it must be done online. 
Cheers,
Bev


----------



## bertrand

Thanks for your help Bev! Now it makes more sense.

But… after reviewing a second time my last year's bank statements, I noticed I had transferred from my checking account to my saving accounts a little bit over $10,000 (+/- $100 if you use today's rate exchange).

So I guess I'll have to fill out the FBAR??

Should I include all of my bank accounts in this form - even accounts that are closed? Or just my checking?


----------



## Bevdeforges

bertrand said:


> Thanks for your help Bev! Now it makes more sense.
> 
> But… after reviewing a second time my last year's bank statements, I noticed I had transferred from my checking account to my saving accounts a little bit over $10,000 (+/- $100 if you use today's rate exchange).
> 
> So I guess I'll have to fill out the FBAR??
> 
> Should I include all of my bank accounts in this form - even accounts that are closed? Or just my checking?


Under those circumstances, it sounds like you may want to consider reporting the accounts. The balance you report is supposed to be the high balance in the account for the year. And yes, you are supposed to report all accounts open at any point during the year. What I normally do is to make a good faith estimate of the high balance, and then add a few thousand $$ to that estimate. Theory is, there's no penalty for reporting a number that is too high - and anyhow, the number you report doesn't generate any tax of any sort.

If all your accounts were in the same bank, you may be able to report just the "master" account, with a single total high balance for the year. Depends on how your French bank reports your accounts to you. 

The "control" on all this are the FATCA reports the banks in France do on accounts held by "American persons" - which will include you if you have given your bank a US address. However, the reporting requirements for the banks are considerably different from what they ask for on your FBAR submission, so in practice it's not likely they would try to compare what you report vs. what the French banks report. 
Cheers,
Bev


----------

