Living between France and the United States offers a great deal of flexibility… but it also creates
a major risk: being considered a tax resident in two countries.
Many expatriates believe that spending fewer than 183 days in a country is enough to
avoid being taxed there.
In reality, it is much more complex.
In both the United States and France, tax residency is based on several criteria, and a
misinterpretation can lead to double taxation or burdensome reporting obligations.
1. The U.S. “Substantial Presence Test”
In the United States, tax residency does not depend solely on the current year.
The IRS applies the Substantial Presence Test, based on a three-year formula:
● 100% of the days spent in the United States during the current year
● 1/3 of the days from the previous year
● 1/6 of the days from year N-2
If the total exceeds 183 days, you are considered a U.S. tax resident.
Source: https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test
Consequence:
● taxation on your worldwide income
● full reporting obligations (FBAR, FATCA, etc.)
Even without a green card, you can therefore be considered a tax resident.
2. The French criterion: center of economic interests
In France, the approach is different.
The tax authorities do not rely solely on the number of days, but also on:
● the household
● the main place of residence
● the main professional activity
● the center of economic interests
Source: https://www.impots.gouv.fr/resident-de-france
As a result, a person living primarily in the United States may remain a French tax residentif:
● their main income is in France
● their assets are primarily located in France
3. The real risk: dual tax residency
In some cases, a person may be considered a tax resident inboth countries.
This happens in particular when:
● time is split between France and the United States
● economic interests are divided
● family is in one country and income is in the other
The France–United States tax treaty provides rules to resolve these situations:
● place of permanent home
● center of vital interests
● habitual place of residence
Source:https://www.irs.gov/businesses/international-businesses/france-tax-treaty-documents
But these rules require a precise analysis.
4. The consequences of an incorrect classification
A misunderstanding of your tax residency can lead to:
● double taxation on income
● reporting obligations in two countries
● penalties in the event of an error or omission
In the United States, certain obligations such as the FBAR may apply once cumulative
foreign financial assets reach $10,000.
Source: https://www.fincen.gov/report-foreign-bank-and-financial-accounts
In the most complex cases, the stakes can be significant.
5. How to secure your situation
To avoid these risks, several best practices apply:
● track your days of presence in each country precisely
● analyze your sources of income and where they are located
● document your tax situation
● anticipate changes in status
A clear strategy helps:
● avoid tax conflicts
● optimize overall taxation
● secure compliance
Conclusion
The 183-day threshold is often misunderstood.
It is not a simple rule, but a complex mechanism that must be analyzed
within a broader framework.
For French-American expatriates, tax residency is a strategic issue.
At USA France Financials™, we help our clients clarify their tax status, anticipate risks,
and structure their situation between France and the United States.
Olivier Sureau
Partner, USA France Financials™
Future written communications may be in English only.Financial advisors do not provide tax advice; individuals should consult a qualified tax professional for guidance regarding their specific situation. Guardian and its subsidiaries do not provide advice regarding French law, and laws are subject to change.
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