# french pension



## 167juliar (Feb 23, 2015)

Turbo tax says French Governtment pensions need not be declared on US 1040s as they are covered in the treaties and only taxed by French Gov't. Does this mean that if my other revenue is under the 3000$ for Married filing separately I don't even need to file?


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## Bevdeforges (Nov 16, 2007)

Sounds like it. I can vouch for the fact that French government pensions are taxable only by the French per the treaty. I see that in TaxAct, you have the option to indicate the amount of your French (i.e. foreign) pension and then indicate what amount is taxable (which would be 0) - and then they simply put 0 on the line for pensions.

If all you've got is miscellaneous interest income (or something similar), I'd say you're good not to bother filing. 
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

However, aren't the filing thresholds income-based, not necessarily whether the income is taxable?


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## BBCWatcher (Dec 28, 2012)

Answering my own question, the filing thresholds are set according to gross income. The IRS then defines "gross income" as "all income you receive in the form of money, goods, property, and services that is not exempt from tax. For purposes of determining whether you must file a return, gross income includes any income that you can exclude as foreign earned income or as a foreign housing amount."

So there you go. It would appear that income that's _fully_ treaty-shielded would not count as part of "gross income" and thus would not contribute to one's filing threshold. The word "fully" is very important here. It would also include the self-employment income/tax, for example. You are still allowed to file even if you don't meet the filing threshold, and sometimes that's a very good idea (to claim refundable tax credits, in particular). Filing also starts the clock on certain enforcement limitations.

That said, if you decide not to file, just keep good personal financial records (as always) that support your determination.


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## 167juliar (Feb 23, 2015)

hey thanks!


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## Bevdeforges (Nov 16, 2007)

BBCWatcher said:


> Answering my own question, the filing thresholds are set according to gross income. The IRS then defines "gross income" as "all income you receive in the form of money, goods, property, and services that is not exempt from tax. For purposes of determining whether you must file a return, gross income includes any income that you can exclude as foreign earned income or as a foreign housing amount."
> .


You may want to cast a glance at Publication 525 http://www.irs.gov/pub/irs-pdf/p525.pdf which offers considerable guidance about what sorts of income are or are not considered taxable (and in several cases they specifically state that some types of income should NOT be included in income on your return).
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

Not comprehensive enough to address this particular question, it would appear. Unless you've spotted something I haven't?


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## Bevdeforges (Nov 16, 2007)

Just offered pub 525 as a general guide. As with most things in the tax code and instructions, you have to "interpret" for yourself.

However, in the matter of French pensions, I'm going by what one of the staff in the Paris IRS office told a friend of mine. The only income she had was a French pension and she was told she did NOT have to file at all. When she said she'd maybe file anyhow, just to be sure, he advised her NOT to file a "frivolous" return. 

Yeah, I know under audit I couldn't rely on this, but for those of us in the lower income brackets, I suspect it suffices.
Cheers,
Bev


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## maz57 (Apr 17, 2012)

For those on this forum who live in Canada, the US/Canada treaty specifies that government pensions are taxable only in the country of residence. That is common sense residence based taxation, at least for government pensions. Now if the US would just come to it's senses and tax everything else in similar fashion!

I believe BBC's reading is correct. Government pensions do not even need to be declared on a 1040 because under the treaty they are "exempt" from US taxation. In the case of Social Security being paid to a resident of a treaty country, the US government would already know about the payments anyway and also would know that under the treaty they are exempt from US tax. 

For retirees whose income is largely government pensions, this may quite possibly put their gross income under the US filing threshold and and therefore relieve them from the obligation of filing a US return at all. No filing obligation=no Form 8938 even if one's assets exceed the threshold for that form. Note this still doesn't get you off the hook for FBAR, however.


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## Bevdeforges (Nov 16, 2007)

maz57 said:


> In the case of Social Security being paid to a resident of a treaty country, the US government would already know about the payments anyway and also would know that under the treaty they are exempt from US tax.


US Social Security isn't always exempt from US tax. It varies by treaty - and there is the little "gotcha" regarding US taxpayers married to NRAs who generally file as "married filing separately." If you file separately (whether from overseas or from the US), US Social Security benefits are taxable by the US on 85% of the benefit unless there is a specific treaty exemption. (Example: US SS paid to an Italian citizen resident in Italy are NOT subject to tax by the US.)



> For retirees whose income is largely government pensions, this may quite possibly put their gross income under the US filing threshold and and therefore relieve them from the obligation of filing a US return at all. No filing obligation=no Form 8938 even if one's assets exceed the threshold for that form. Note this still doesn't get you off the hook for FBAR, however.


Absolutely, positively correct! (Thank goodness.)
Cheers,
Bev


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## maz57 (Apr 17, 2012)

Sorry, I was unclear Bev. I was only referring to the US/Canada treaty. Residents of other countries will have to research their own treaties. 

I believe provisions like this are generally found in the totalization agreements. Unfortunately, with respect to government pensions, there many countries which have no agreement in place with the US.


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## Bevdeforges (Nov 16, 2007)

maz57 said:


> Sorry, I was unclear Bev. I was only referring to the US/Canada treaty. Residents of other countries will have to research their own treaties.
> 
> I believe provisions like this are generally found in the totalization agreements. Unfortunately, with respect to government pensions, there many countries which have no agreement in place with the US.


Just be careful, because although there are a limited number of countries that have social security treaties with the US (these are usually what is referred to as the "totalization" treaties in my experience), there are many more countries that have tax treaties with the US that specify the treatment of government pensions, even if there is no "social security treaty." 

As someone has said here recently, "they really don't make it easy for you."

On the other hand, how likely is it that the US tax folks would know anything about a government pension from a foreign government if it's not passing through a US bank?
Cheers,
Bev


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## maz57 (Apr 17, 2012)

Bevdeforges said:


> As someone has said here recently, "they really don't make it easy for you."


They sure don't!


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## maz57 (Apr 17, 2012)

Bevdeforges said:


> On the other hand, how likely is it that the US tax folks would know anything about a government pension from a foreign government if it's not passing through a US bank?


Very unlikely. Often for the expat taxpayer the IRS can only know what the taxpayer chooses to tell them. "Selective compliance" anyone? LOL.


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