Hello everyone - I tried a search on this topic but found nothing pertinent.
I have done some research on a possible French income tax scenario that I'd like to share, and get some comments and validation if possible.
The situation is as follows: retired couple have established tax residence in France. Their total income is USD 45K from US Social Security, and USD 55K from interest/dividend income. for a total of USD 100k (for round numbers).
The method I used to determine the French income tax liability comes from this publication: http://www.overseasretirementletter.com/issues/1312/orl-63-french-taxes.html - essentially the publication cites that total tax liability would be divided in 2 (myself and my wife) and each would be taxed for half of the total income - which would reduce the total taxes as compared to the total income being taxed a single time as it would avoid the higher marginal rates.
I have put together a spreadsheet accessible at this URL: https://docs.google.com/spreadsheets/d/1vC1Vf7PZ7CDV8DUQW_13R_qVCY6yNbdlHTOoJ0mcxH8/edit?usp=sharing - If you follow the math, I convert USD 100K to EUR 94K (the current conversion), and apply the tax table from the article above. What I come up with is EUR 8,670 per person in taxes, total of EUR 17,340, for an effective income tax rate of 18%. I calculated the US income taxes on the same amount of income using a commercial tax preparation software for the year 2015. The US income tax rate is 10% on USD $100K of income, which is lower than the French rate. My understanding is that the taxes paid in France would be credited to the US return yielding a zero tax liability situation for the US tax return since the taxes paid in France far exceed the taxes owed in the US.
I would welcome comments and feedback. My intention is to better understand income tax as a budget item for retirement as an expat. I've noted through research (and the spreadsheet URL highlights this) that income taxes in Europe are highly variable - and sometimes very surprising with respect to effective tax rates. For example, if my math is correct, I am very pleasantly surprised by the low income tax rate for France.
Cheers
I have done some research on a possible French income tax scenario that I'd like to share, and get some comments and validation if possible.
The situation is as follows: retired couple have established tax residence in France. Their total income is USD 45K from US Social Security, and USD 55K from interest/dividend income. for a total of USD 100k (for round numbers).
The method I used to determine the French income tax liability comes from this publication: http://www.overseasretirementletter.com/issues/1312/orl-63-french-taxes.html - essentially the publication cites that total tax liability would be divided in 2 (myself and my wife) and each would be taxed for half of the total income - which would reduce the total taxes as compared to the total income being taxed a single time as it would avoid the higher marginal rates.
I have put together a spreadsheet accessible at this URL: https://docs.google.com/spreadsheets/d/1vC1Vf7PZ7CDV8DUQW_13R_qVCY6yNbdlHTOoJ0mcxH8/edit?usp=sharing - If you follow the math, I convert USD 100K to EUR 94K (the current conversion), and apply the tax table from the article above. What I come up with is EUR 8,670 per person in taxes, total of EUR 17,340, for an effective income tax rate of 18%. I calculated the US income taxes on the same amount of income using a commercial tax preparation software for the year 2015. The US income tax rate is 10% on USD $100K of income, which is lower than the French rate. My understanding is that the taxes paid in France would be credited to the US return yielding a zero tax liability situation for the US tax return since the taxes paid in France far exceed the taxes owed in the US.
I would welcome comments and feedback. My intention is to better understand income tax as a budget item for retirement as an expat. I've noted through research (and the spreadsheet URL highlights this) that income taxes in Europe are highly variable - and sometimes very surprising with respect to effective tax rates. For example, if my math is correct, I am very pleasantly surprised by the low income tax rate for France.
Cheers
