I couldn’t find the “Americans in France” group so I’m posting here.
Do any Americans out there have experience with drawing from their IRA accounts while being resident in France? I know that the income, if not from a Roth IRA, is taxable in the US. Could anyone tell me if the tax is withheld at source? If not, and it is reported on a tax return, what are the options for making any payments owed to the IRS? I do not currently have a checking account in the US and am wondering if it will be necessary to have one.
Any advice or experience would be appreciated!! Thanks in advance.
Hello Robin,
My wife has an inherited IRA from which she makes the minimum required withdrawal each year. Her particular IRA provider does not deduct tax at source. We use a US checking account for any IRS payments that become due, but I believe that payments can also be made online using a debit or credit card. The IRS has tax advisers attached to the US Embassy in Paris during filing season and we have found them to always be most helpful when it comes to advise. A phone call to the Enbassy will probably provide all the answers to whatever further questions you may have.
Incidentally, you may wish to be aware that the provisions of the Franco/American tax treaty mean that such ‘passive’ US income is not taxable (or subject to ‘social charges’) here in France.
Best wishes, Robert.
Thank you, both, for your replies. Robert, I have dealt with the IRS tax advisors in Paris before and, as you say, they are very helpful. Perhaps I will contact them early on in the year… I assume they will be around to assist in January. I will look into whether or not payments can be made online. It would be quite helpful if I could, as I really do not want to have to set up an account in the US.
I wish to add one or two or even perhaps three points to Robert’s reply. 1) The IRS will only withhold income at source if they have advised you that they will. I assume that this is done where the IRS believes that they will be done out by the tax payer. I have been paying my US taxes from oversea’s addresses for the last 35+ years, so it does not appear that being expatriated will automatically place you on the black list. 2) A checking account in the USA may be useful. The IRS offers a free option of making your payments on line from a US checking account. Using a credit card will inevitably involve a third party that will charge a fee. The link is https://www.irs.gov/payments. Then again, if you no longer have a US address, the problem may be to find a bank that is still willing to open an account for you. 3) US passive income is not taxable in France as stated by Robert, but unfortunately it is not as simple as that. The Euro countervalue of the USD income has to be figured for each sales lot separately using the official exchange rate applicable at the times of purchase and sale. The holding period has to be also calculated as a discount may be applicable. Finally, the income, although not taxed strictly speaking, is included to figure the tax rate for the income that is taxed. They must have picked this trick up from the IRS that started pulling this about 15 years ago.
Robert. Saw your post on inherited IRA. I’m wondering if it is to be considerd inheritance in French law - thus subject to estate tax as well as income tax? Did you come across anything?