# FEIE and extended return to the US



## koppazee (Mar 11, 2011)

Can I ask a "stupid question" related to taxes and a French residence? Right now, I reside in France and will for 2013 receive the income exclusion from the US Government. All this tax returned will then be turned over to the French Fisc plus, plus, plus...

Now if I were to return to the USA for 6 months to work, while maintaining the current home with my French spouse who will remain in France, how does that effect my tax situation for 2014 (who do I pay...both? and my CDS renewal)? Thank you & warm regards!


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## Bevdeforges (Nov 16, 2007)

I've moved you into your own thread because I think this may come up more than you realize and it may be of interest to others.



> All this tax returned will then be turned over to the French Fisc plus, plus, plus...


First of all, I have no idea what you mean by this - though I've heard other telecommuting expats say something similar. Your US income taxes are completely separate from your French income taxes, except and unless you are using the ITC (income tax exclusion) rather than the FEIE.



> Now if I were to return to the USA for 6 months to work, while maintaining the current home with my French spouse who will remain in France, how does that effect my tax situation for 2014 (who do I pay...both? and my CDS renewal)?


Um, this would really booger up your respective tax returns, I would imagine. 

Basically, if you were to return to the US to work for 6 months, you lose your ability to take the FEIE - pretty much regardless of which "test" you use. Under the physical presence test, you can't make the 330 days out of 365 part of the test for the period just before nor for the period just after. Under the bona fide resident test, you still have to declare the period of time you were in the US "on business" and that income is excluded from the exclusion. (Yeah, these are taxes - they get you one way or another.)

You'd have to pay US taxes for that six months you were in the US either way, then you declare your salary income on your French declaration and on the special form for foreign source income, indicating that you had paid US income taxes on the salary because you were physically located there. The fisc will exonerate the salary income you earned while in the US, even though you retain your French residence during that period of time. (It's how they'd treat a French national sent over to the US for 6 months.)

As far as your CDS renewal goes, I would perhaps advise the prefecture well in advance of this situation. We've had a few folks report back that the local prefectures get squiffy about long absences from France, however I think you're at an advantage here being married to a French citizen. There are prefectures, however, where you can renew your CDS by mail, so it may not be an issue at all.
Cheers,
Bev


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## koppazee (Mar 11, 2011)

Bevdeforges said:


> I've moved you into your own thread because I think this may come up more than you realize and it may be of interest to others. First of all, I have no idea what you mean by this - though I've heard other telecommuting expats say something similar. Your US income taxes are completely separate from your French income taxes, except and unless you are using the ITC (income tax exclusion) rather than the FEIE. Um, this would really booger up your respective tax returns, I would imagine. Basically, if you were to return to the US to work for 6 months, you lose your ability to take the FEIE - pretty much regardless of which "test" you use. Under the physical presence test, you can't make the 330 days out of 365 part of the test for the period just before nor for the period just after. Under the bona fide resident test, you still have to declare the period of time you were in the US "on business" and that income is excluded from the exclusion. (Yeah, these are taxes - they get you one way or another.) You'd have to pay US taxes for that six months you were in the US either way, then you declare your salary income on your French declaration and on the special form for foreign source income, indicating that you had paid US income taxes on the salary because you were physically located there. The fisc will exonerate the salary income you earned while in the US, even though you retain your French residence during that period of time. (It's how they'd treat a French national sent over to the US for 6 months.) As far as your CDS renewal goes, I would perhaps advise the prefecture well in advance of this situation. We've had a few folks report back that the local prefectures get squiffy about long absences from France, however I think you're at an advantage here being married to a French citizen. There are prefectures, however, where you can renew your CDS by mail, so it may not be an issue at all. Cheers, Bev


Thanks Bev for your reply but I am confused. I was under the impression that the returned taxes I received from the US Government and the State of NY, lets say $5,000.00 for example would be pretty much turned over to the French Government under the joint tax filing my wife and I will make. I say in my post plus, plus, plus as the tax base is far higher here (from my understanding) so I suspect we will add much to what is being turned over to the tax folks here. 

My impression is when declaring the taxes, my wife earns say K euros. I earn L dollars which on December 31, 2013 converted to M euros. This means the total 2013 household income was N euros and the taxes to be paid are O euros (O euros not zero euros  Am I all wrong in my understanding? My wife says she doesn't fully understand what we will need to do but will go down there and speak with them when the time comes. Any clarification you can offer would be greatly appreciated as this is a high stress area for me. 

Thanks again and warm regards!


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## koppazee (Mar 11, 2011)

koppazee said:


> Thanks Bev for your reply but I am confused. I was under the impression that the returned taxes I received from the US Government and the State of NY, lets say $5,000.00 for example would be pretty much turned over to the French Government under the joint tax filing my wife and I will make. I say in my post plus, plus, plus as the tax base is far higher here (from my understanding) so I suspect we will add much to what is being turned over to the tax folks here. My impression is when declaring the taxes, my wife earns say K euros. I earn L dollars which on December 31, 2013 converted to M euros. This means the total 2013 household income was N euros and the taxes to be paid are O euros (O euros not zero euros  Am I all wrong in my understanding? My wife says she doesn't fully understand what we will need to do but will go down there and speak with them when the time comes. Any clarification you can offer would be greatly appreciated as this is a high stress area for me. Thanks again and warm regards!


Hi Bev, 

Can you please help me with this and if my understanding is correct? Thanks very much!! Warm regards.


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## Bevdeforges (Nov 16, 2007)

Sorry for the delay in getting back to you. Things have been a little hectic lately and I sometimes "miss" a post.

First of all, stop thinking of your US filing and your French filing as having anything to do with each other. They are two independent things. Taxes are figured entirely separately for US and French purposes (and actually in very different ways).

First of all, I assume you're filing your US taxes as "married, filing separately" - since your wife has no connection with the US, no US SSN (or ITIN) and no US source income anyhow. You get to exclude your "earned income" via the FEIE (unless you choose to go the Foreign Tax Credit route, which IMO is probably way too complicated for far too little return in your circumstances).

Like the Nike ad says, "Just do it." You're filing MFS, mainly to get most, if not all of your withholding back.

Now, come late April, early May, you'll get the French declaration forms. Those you MUST file jointly with your wife. You have no options on that. However, the way they figure the taxes (if you haven't downloaded and read the English language tax info book from the fisc) is very different from how these things work in the US and they honestly don't care a whit about what taxes you have or haven't paid in the US.

Very briefly put, French taxes usually start with about 80% of your gross income (not in your case, since you're not paying French cotisations). The French "imposable" (taxable) income figure is gross salary less most of the cotisations paid. They then deduct 10% of that 80% as a sort of standard deduction for "professional expenses" (if you want to keep all your receipts in a year, you can take your "actual" but almost no one does).

There are some further adjustments from there, but let's keep it simple. Once they have arrived at an "income" figure for the household, they then divide that by the number of parts you are entitled to: one each for husband and wife, and then a half for the first two kids "en charge" etc. So, your reduced total income (90% of 80% of gross salary) is cut in half to look up the actual "tax rate" to be applied. That tax amount is calculated and then doubled to get your actual tax due figure. What it means is that you're in a much lower "tax bracket" by filing jointly (or as a household) than under the US method, where you have separate tax tables for each filing status. If you had 2 children "en charge" they'd divide by 3 to get the tax rate and then multiply by 3 to get the tax due.

For tax purposes, your US filing and your French declaration are two distinct and basically unrelated tasks. You're filing to get your withholdings back from the US, whereas you're filing in France as a tax resident.
Cheers,
Bev


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## koppazee (Mar 11, 2011)

Thanks very, very much Bev for taking the time to explain this to me. I have read what you wrote several times and still trying to digest it. Eventually it will be understood but after 7.5 hours today trying to sort out issues between NY and our Chinese factories, I have achieved a vegetable state of mind. Again, thank you very, very much! Warm regards!


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