| French income taxes -- spouse lives and works in France
Hello all! I'm new here, and this is my first question. I searched the previous postings and did not find a good match to my question, so here goes. I am a U.S. citizen and my wife is a citizen of France. We lived together in the U.S. for many years. Last year, however, my wife moved back to France in order to resume teaching in the French public school system. Having turned in her green card, she is now considered a resident of France by both French and U.S. authorities. For the French authorities, as an employee of the state, working in France, my wife is definitely a French resident and must pay taxes there. I meanwhile remain a U.S. resident, working in the U.S.
Now that our respective countries of residence have been established, I thought that doing our income taxes would be a simple matter. It is at the U.S. end--IRS Publication 519 explains it all. The problem seems to be at the French end, as my wife has now been told that there is no provision in French tax law for married couples living apart, where one resides outside of France. In fact, there isn't even a way for a married couple to file separately -- married couples can only file jointly. In the case of my wife, if she files as married, this means that she must report and pay taxes on my income as well as hers, even though as I as a U.S. resident am obliged to pay taxes to the IRS. On her French income tax reporting, she will fortunately be allowed to deduct a credit equal to the French tax on my income, but I see that this credit does not come close to the taxes I will owe the IRS (probably because married couples enjoy a considerable advantage over singles under French tax law). The result for us then would seem to be a partial double taxation, despite the French-U.S. tax treaty, as full taxes would be paid to the IRS on my income, and a partial tax on that income would also be paid to France.
Or would the tax treaty allow me to deduct from what I owe the IRS the net tax owed the French on my income as the spouse of a French resident? That would be the fair thing to do, but it seems a bit weird to pay a large portion of my income taxes to France, given that I am a resident of the U.S. and work here in the U.S.
In short, what does the law allow us to do in our circumstances? What are our options, and what would be your advice? Is there a way we can pay our French and U.S. taxes at the more favorable married rate, or must my wife to file as a single person in France to avoid my being doubly taxed? If she chooses to do the latter, would that lead to further trouble?
 | 
Linear Mode
