# Young French-American dual citizen, Taxes, savings accounts



## stantb

I have questions about the difficulty that is being a US citizen trying to work and invest while abroad:

My situation: French-American dual citizen with ties in both countries and no intention of abandoning US citizenship. I am a student with not much in terms of savings in each country

FR: under 10k in French savings (mostly in a PEL) + a checking account (all at BNP Paribas) 
US: around 10k in US savings + Checking and less then 10k in a taxed brokerage (all at SoFi)
I have never been asked (yet) by BNP to declare as a US person but my brother has (around the same amount of savings) and following his declaration nothing happened (a few years ago) 

I have never paid taxes in either country but will next year in the US since I have worked 6 months in 2022 in the US.

This year I will graduate and start working full time with a decent salary in either France or the US. 

I would like to set up savings accounts that are tax-sheltered and from my understanding:

If I work in the US there shouldn't be an issue I can just set up an IRA or use my company's 401k
If I work in France it will be much more complicated, from what I understand:
I will have to file taxes in both countries (which doesn't sound fun)
The French PEA and Assurance Vie are a nightmare for Americans, forget it
The French PER, which has been recently revamped and seems to be a very attractive savings vehicle, also looks like it is one of the accounts that is excluded from the definition of Financial Accounts and therefore is not treated as a US Reportable Account. However, this distinction seems to be for the financial institution and not the taxpayer. This account allows you to reduce your taxable income by investing financial assets that can't be touched until retirement unless you use the money to buy your primary residence, anyone knows how this would work on the US tax reporting side 
The final solution, send money with a platform like Wise to the US and invest in an IRA

Anything I am missing, any tips on how I can work in France, invest in a tax-efficient manner, and avoid any type of premature asset liquidation or IRS hassles 10 years from now 

It just feels like I should forget about working in France and just work on getting a job in the US, but I have some great opportunities lined up in Europe and would like to go to the US later in life maybe after completing an MBA

Thanks


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## Bevdeforges

You need to take a look at IRS Publication 54 (available on the IRS website) for the overview of all the US taxation of "overseas taxpayers". It's actually a pretty complicated situation.

Basically, the US doesn't recognize any French "tax free" accounts - not Livret A, not Development Durable and not any of the "retirement savings accounts." You are expected to report gains and earnings on those investments and can only take the Foreign Tax Credit generated on "like kind" of income (i.e. investment income taxed in France) - which doesn't work for tax-free accounts.

Don't know about the new PER accounts, but I'd be amazed if they are in any way exempt from US taxation, other than through the standard Foreign Tax Credit (form 1116) approach.

As far as paying into an IRA from France, if you do so, you lose the ability to take the Foreign Earned Income Exclusion for your salary income. You can't take the FEIE against only part of your salary income (unless your salary is more than the FEIE limit). All IRA and 401K contributions have to be made with taxable earned income.

What some folks do is to forego the FEIE altogether and use just the FTC to eliminate the double taxation - but with any sort of tax-free French accounts, that usually requires having some significant taxable investment accounts to generate the "additional" taxation necessary to wipe out the taxes on the tax free ones.


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## Yours truly confused

sorry, posted to wrong thread


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## stantb

What about sending money from France and investing into a Roth IRA since it is post tax dollars would that make more sense?
This whole situation is kind of a pain and I am happy I am learning about it prior to starting to work 



Bevdeforges said:


> Don't know about the new PER accounts, but I'd be amazed if they are in any way exempt from US taxation, other than through the standard Foreign Tax Credit (form 1116) approach.


I dig deeper into the PER and you are right:
The PER such as the livret A are accounts where French financial institutions aren’t subject to FATCA. Therefore they will let a “US Person” open them. However the tax payer is still required to respect US tax law and if I were to hold over 50k in assets in the PER, you are correct I would have to declare on form 8938.


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## Harry Moles

The whole situation is indeed a pain if you are intending to be fully compliant, which of course makes sense if you plan on possibly working in the US in the near future. Otherwise dual citizens can safely ignore US tax filing obligations, though FATCA can present problems for anyone with a US birthplace on their national ID.


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## Bevdeforges

stantb said:


> What about sending money from France and investing into a Roth IRA since it is post tax dollars would that make more sense?


What makes sense doesn't always jibe with US tax law. You'd have to check with the banks in the US on how the Roths work. They popped up some time after I left the US - though you may have to check on how the Fisc treats those sorts of accounts here in France. You do have to report foreign bank accounts on your French declarations. IRAs are written into the tax treaty as being considered the same as US "government" pensions - but the last treaty amendments were done before the Roth IRAs came along. 

There is also the issue of getting a bank or investment house to open a new account for someone resident overseas. At a minimum, set the Roth up before you leave the US.


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