US Taxes Living in France: FBAR, FATCA and Treaty Explained

Most Americans who move to France know, in an abstract way, that they still have US tax obligations. What almost none of them know before their first French tax year is exactly what those obligations are, how they interact with French taxes, which forms they need to file, and where the real risks are.

This article explains the key US tax concepts that apply to Americans living in France: the fundamental obligation to file, FBAR and FATCA reporting for foreign accounts, the Foreign Earned Income Exclusion (Form 2555), the Foreign Tax Credit, and the US-France tax treaty. It also explains what French tax residency means and why the two systems interact rather than cancel each other out. This is educational information, not tax advice. Your specific situation may differ, and a qualified cross-border CPA is the right professional for planning and compliance decisions.

The Fundamental Rule: Americans File US Returns No Matter Where They Live

The United States is one of only two countries in the world that taxes its citizens based on citizenship rather than residency. Moving to France does not end your US tax obligations. Moving does not even reduce them until you proactively take steps like claiming exclusions or credits.

The IRS is clear: US citizens and resident aliens who live outside the United States are generally required to report their worldwide income on a US tax return. The filing deadline is April 15, with an automatic two-month extension to June 15 for Americans abroad (you still owe any taxes due by April 15 even if you file in June). A further extension to October 15 is available by request.

This means that as an American living in France, you file a French income declaration and a US return every year. You pay taxes in France as a French resident. The treaty and the credits described below prevent you from being fully taxed twice on the same money, but they do not eliminate either filing obligation.

State taxes add a layer. Moving abroad does not automatically sever your state tax residency. California, Virginia, and several other states have aggressive residency rules and may still consider you a tax resident if you maintain ties there (bank accounts, driver's license, property). Before you move, consult a tax professional about cleanly establishing non-residency with your state.

FBAR: The Most Common Reporting Requirement Americans Miss

FBAR stands for Report of Foreign Bank and Financial Accounts. It is filed separately from your tax return, with the US Treasury (not the IRS), using FinCEN Form 114.

The threshold that triggers the requirement: if the combined balance of all your foreign financial accounts exceeds $10,000 at any point during the calendar year, you must file an FBAR. This is a cumulative threshold across all accounts. One French checking account with $11,000 triggers it. Two accounts with $5,001 each trigger it. The threshold is not about how much you earned or transferred. It is about aggregate balance at any single moment in the year.

"Foreign financial accounts" for FBAR purposes includes foreign checking accounts, savings accounts, investment accounts held at non-US institutions, and certain other financial interests. A US account (like an Interactive Brokers US account held by an American expat) is generally not a foreign account for FBAR purposes.

The FBAR deadline is April 15, with an automatic extension to October 15. No additional extension beyond October 15 is available. The penalties for willful failure to file an FBAR are severe by any standard. Non-willful failures can also carry significant fines. FBAR is not something to ignore.

File your FBAR electronically through the FinCEN BSA E-Filing system. It is a separate process from your tax return.

FATCA and Form 8938: The IRS Version of Foreign Account Reporting

FATCA (Foreign Account Tax Compliance Act) requires foreign financial institutions to report accounts held by US persons to the IRS. That is the part French banks deal with, and it is why some French banks have historically been reluctant to open accounts for Americans. Our guide to FATCA-friendly French bank accounts covers that side in detail.

Form 8938 (Statement of Specified Foreign Financial Assets) is what you file with your tax return as an individual American holding foreign financial assets above certain thresholds. The thresholds are higher than the FBAR threshold and vary by filing status and residency:

For Americans living abroad, single filers: $200,000 on the last day of the tax year, or $300,000 at any point during the year. For Americans living abroad, married filing jointly: $400,000 on the last day of the year, or $600,000 at any point during the year.

Form 8938 and the FBAR overlap in what they cover but are not duplicates. Both may be required for the same accounts in the same year. They are filed in different places (Form 8938 with your tax return; FBAR separately with FinCEN) and serve different regulatory purposes.

The IRS Form 8938 overview provides the current thresholds and instructions.

Form 2555: The Foreign Earned Income Exclusion

The Foreign Earned Income Exclusion (FEIE) is one of the most valuable tools available to Americans working abroad. It allows you to exclude a portion of foreign-source earned income from US federal income tax.

For 2024, the exclusion was $126,500. This amount adjusts annually for inflation; the current figure is on the IRS website. If you earned $90,000 as salary working in France (or for a US employer while living in France), you could potentially exclude all of it from US tax using the FEIE.

The FEIE applies to earned income: salaries, wages, self-employment income, and certain allowances. It does not apply to passive income: interest, dividends, capital gains, rental income, or pension distributions. Those income categories are subject to different rules.

To claim the FEIE, you must meet one of two tests. The bona fide residence test requires that you have established your tax home in a foreign country and been a bona fide resident there for an uninterrupted period that includes an entire tax year. The physical presence test requires that you were outside the United States for at least 330 full days in any 12-month period.

You claim the FEIE on Form 2555, which you attach to your Form 1040. The IRS Form 2555 information page covers eligibility and filing instructions.

Important: the FEIE is not automatic. You elect to claim it. And once you have claimed it, revoking the election requires IRS approval for a period of years. Get professional guidance before making the election for the first time.

The Foreign Tax Credit: The Alternative Approach

Instead of using the FEIE, or for income that is not eligible for the FEIE, the Foreign Tax Credit (Form 1116) allows you to offset US tax liability with taxes you have already paid to France on the same income.

The logic: if you paid $10,000 in French income tax on a particular income item, you generally get a dollar-for-dollar US tax credit of up to $10,000 on the US tax owed on that same income. This prevents true double taxation on most income.

The FEIE and the Foreign Tax Credit cannot both be claimed on the same income. The optimal approach depends on your income level, tax rates in both countries, and the composition of your income. For most Americans in France, where French tax rates are often higher than US rates, the Foreign Tax Credit tends to eliminate US tax liability on income that has already been taxed in France. For lower-income earners, the FEIE may be more beneficial. A cross-border CPA runs the comparison for your specific numbers.

The US-France Tax Treaty

The US-France income tax treaty is the bilateral agreement that allocates taxing rights between the two countries and prevents double taxation for most income categories. The IRS publishes the treaty text.

The treaty covers: wages and salaries, pension income, investment income (dividends, interest, capital gains), business profits, and other categories. For each category, the treaty specifies which country has the primary right to tax and whether the other country provides a credit or exemption.

Practical examples that matter for EasyFranceNow's audience: US Social Security income received by a French resident is generally taxable only in France under the treaty, not in the US (for Americans who are French tax residents). Interest and dividends from US sources are generally taxable in both countries, but at reduced rates and with a credit mechanism. Capital gains on real property are generally taxable in the country where the property is located.

The treaty also has a "tie-breaker" provision for determining tax residency if someone appears to be a resident of both countries simultaneously. If both France and the US claim you as a resident, the treaty applies specific rules (primary home, center of vital interests, habitual residence, citizenship) to determine which country's full tax treaty benefits apply.

French Tax Residency and Your French Obligations

Becoming a French tax resident is separate from holding a French visa or residence permit, though in practice they often align. France applies criteria including: where your principal home is, where you spend most of your time, and where your primary economic interests are located.

An American living in France for most of the year will generally be a French tax resident. As such, France expects you to declare your worldwide income on your annual French tax return (déclaration des revenus, typically due in May or June). The French tax authority explains how foreign-source income is taxed for French residents.

France taxes residents on worldwide income, but the treaty prevents double taxation. The result is typically that you pay taxes in France at French rates, and the treaty credit mechanism ensures you do not pay the same taxes again in the US (or vice versa, depending on income type and amount).

One category worth noting: French prélèvements sociaux (social contributions: CSG and CRDS) apply to many investment income categories in France. These social contributions are separate from income tax and have been a contested area for Americans who are covered by the US social security system under the US-France Totalization Agreement. This is a technically complex area where the advice of a cross-border professional is particularly valuable.

For Americans with investment accounts, the tax picture is directly connected to where those accounts are held and what they contain. Our guide on Fidelity, Schwab, and US brokerage accounts for French residents covers why keeping investments in US-domiciled accounts (rather than French or European funds) avoids the severe PFIC tax problem while simplifying the cross-border reporting picture.

What About Retirement Accounts in France

IRAs and 401(k) plans are recognized under the US-France treaty. The treaty specifically addresses US pension and retirement accounts, and generally provides that distributions from qualified US retirement accounts are taxable only in the US for US citizens who are French residents (under certain conditions). However, the specific treatment can depend on the type of account, the source of contributions, and how distributions are characterized.

This is an area where treaty language is specific and where generalized guidance can be misleading. Our guide to retiring in France as an American covers the retirement income picture, and a cross-border CPA is essential for anyone whose financial situation involves significant retirement account distributions.

Common Mistakes to Avoid

Not filing a US return because you "live abroad now." Living abroad does not eliminate the filing obligation. The IRS has become increasingly effective at identifying non-compliant Americans abroad, and the penalties for late or missing returns on foreign income are significant.

Confusing FBAR with Form 8938 and filing only one. They are separate requirements, filed in different places, with different thresholds and different purposes. Both may be required.

Claiming the FEIE without checking whether it is the optimal approach. For Americans in France where tax rates are often higher than in the US, the Foreign Tax Credit is sometimes more beneficial than the FEIE. The calculation depends on your specific income composition.

Missing state tax obligations. Some states do not release you from residency just because you moved abroad. California is the most aggressive example. Before you move, take deliberate steps to establish non-residency with your home state if that is your intent.

Investing in French or European mutual funds or ETFs. These are classified as PFICs (Passive Foreign Investment Companies) under US tax law and subject to punitive tax treatment. Keep your investments in US-domiciled securities at a US brokerage. Our guide to French banking for Americans and the separate brokerage accounts guide cover the investment account picture.

Practical Checklist

Before arriving in France:

• Identify a cross-border CPA who works specifically with Americans in France

• Note your arrival date: this will determine when your French tax residency likely begins

• Confirm your last state of domicile and take appropriate steps to establish non-residency if needed

• Review your investment accounts and ensure they are held at US-registered brokers in US-listed securities

During your first year in France:

• Track your days in France from day one (relevant for the physical presence test)

• Open a French bank account and note the balance milestone: if it exceeds $10,000, FBAR applies

• Keep records of all income, separated by source and type (earned vs passive, US vs French)

• Note the FBAR deadline: April 15 (automatic extension to October 15)

At tax time:

• File your US return (Form 1040 with applicable attachments: 2555 or 1116 depending on your situation, 8938 if thresholds are met)

• File your FBAR separately through FinCEN if foreign account balances exceeded $10,000

• File your French income declaration (typically due May-June in France)

• Verify that the treaty credit mechanisms are being applied correctly across both returns

When to Get Help

This is one area where professional support is not optional for most Americans in France. The combination of French tax residency, US citizenship-based taxation, the treaty framework, FBAR/FATCA reporting, the FEIE vs Foreign Tax Credit decision, and retirement account treatment is complex enough that the cost of a cross-border CPA is almost always less than the cost of getting it wrong.

EasyFranceNow's First-Year Tax Orientation service does not provide tax advice or file returns, but it gives you the calendar, the documentation structure, and the organized file that makes your engagement with a CPA efficient and avoids redundant billable hours. If you arrive in France organized and deadline-aware, the CPA conversation goes quickly and costs less.

FAQ

Do I really have to file a US tax return if I live in France and all my income is French?

Yes, if your worldwide income (including French income) exceeds the filing threshold (approximately $14,600 for single filers in 2025, adjusted annually). Even if you ultimately owe no US tax because of the Foreign Tax Credit or FEIE, the filing obligation still exists. Americans abroad also qualify for an automatic two-month extension to June 15, but taxes owed are still due by April 15.

What exactly is the FBAR and how is it different from my tax return?

The FBAR (FinCEN Form 114) is a separate report filed with the US Treasury's Financial Crimes Enforcement Network, not with the IRS. It is required if your foreign financial accounts have a combined balance exceeding $10,000 at any point during the year. It is not a tax form and does not calculate or pay any taxes. It is purely an informational report about the existence and balance of your foreign accounts. The penalties for failing to file can be severe. File it electronically at the FinCEN BSA E-Filing portal by October 15.

Can I use the Foreign Earned Income Exclusion to avoid US tax on my French salary?

The FEIE (Form 2555) allows you to exclude up to approximately $126,500 (2024 figure, adjusted annually) of foreign-earned income from US federal tax if you meet the bona fide residence or physical presence test. If your French salary is below that threshold, you could potentially exclude it entirely. However, the FEIE does not apply to passive income (interest, dividends, capital gains), and using it has implications for tax credits and retirement account contributions. Whether the FEIE or the Foreign Tax Credit is the better approach for your specific situation depends on your income level and composition. A cross-border CPA runs the comparison.

What does the US-France tax treaty do for me as an American living in France?

The treaty allocates taxing rights between the two countries and establishes credits and exemptions to prevent double taxation. In practical terms: for most income categories, you pay taxes in one country and receive a credit or exemption in the other, so the total tax is roughly the higher of the two countries' rates rather than the sum of both. The treaty also specifies how specific income types (pensions, Social Security, dividends, capital gains) are treated. It does not eliminate your filing obligation in either country, but it does prevent most cases of true double taxation.

Conclusion

Living in France does not simplify your US taxes. It adds a layer of French obligations on top of your unchanged US filing requirements. The good news is that the treaty, the FEIE, and the Foreign Tax Credit together mean that most Americans in France do not pay taxes twice on the same income. The complexity is in filing both sets of returns correctly, claiming the right credits and exclusions, meeting the FBAR deadline, and staying organized as your financial life spans two countries.

EasyFranceNow's First-Year Tax Orientation service is the right starting point: it gets your calendar set, your documentation organized, and your file ready for the cross-border CPA who will handle the actual compliance. Starting organized saves time, money, and the anxiety of discovering obligations you did not know existed.