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Question for the Money Doctors

Question submitted on Nov 30, 2012.

Question

I''m finishing up my PhD. in engineering here in the US (Florida) and am considering a 1 year (it might be extended) post doctoral research postition in France. The inital job offer is from May 1, 2013 to May 1, 2014. I will be paid by the University in France.

Post doctoral postions in engineering here in the US typically pay between $40,000 and $70,000 a year, but from what I hear, post docs a generally paid less in Europe.

My question is, will I need to pay US income taxes on my salary? Will I need to pay both US and French income taxes? How about social security and other payroll taxes?

Thanks for any response you can give.

Answer

Congratulations on finishing up your PhD in engineering. Generally, as a U.S. citizen, your worldwide income is subject to U.S. income taxation, regardless of where you are living.

IRS Publication 54 is always a good reference tool for US citizens working abroad. The publication discusses special tax rules for U.S. citizens who work abroad or who have income earned in foreign countries.

IRS Publication 54 discusses several tax provisions applicable to US citizens working abroad, such as:

  • Foreign earned income exclusion
  • Foreign housing exclusion and deduction
  • Foreign moving expenses
  • Foreign tax credit
  • Tax treaty benefits

There may be a special French treaty provision that exempts post doctoral income at an educational institution from taxation in France. Otherwise, you will owe taxes to both France and the US. However, the above special tax provisions outlined in Publication 54 will help alleviate the burden of double taxation.

Also, there does appear to be an agreement between France and the US to avoid double social security taxation by both countries. The human resources department at the University of France should be very helpful in providing you with the necessary paperwork and answering your questions as they relate to French payroll taxation for US citizens.

That being said, please note that the income tax rules applicable to expatriates are very complex and that you would be well served by contacting a CPA/PFS who will be able to help you analyze the tax rules and whether or not you are eligible for treaty benefits. Please visit www.findacpapfs.org to find a CPA/PFS near you.


For additional information visit http://www.360financialliteracy.org/