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Simple Tax Guide for Americans in Switzerland

Simple Tax Guide for Americans in Switzerland

At TFX we’ve been preparing U.S. taxes for Americans living in Switzerland for over 20 years. Our clients hail from all parts of this small yet diverse country but roughly half come from Zurich, Geneva and Bern.

US citizens, as well as permanent residents, are required to file expatriate tax returns with the federal government every year regardless of where they reside. Along with the typical tax return for income, many people are also required to submit a return disclosing assets which are held in bank accounts in foreign countries by using FinCEN Form 114 (FBAR).

Please note - if you have undeclared Swiss bank account(s), we can help you resolve this issue with the IRS. Do not wait for your bank to contact you first or even freeze your account. Find out more about our special service for Swiss Clients:

Swiss Bank Disclosure Service

The United States is among only a few governments who tax international income earned by their citizens, as well as permanent residents, residing overseas. There are, however, some provisions that help protect from possible double taxation. These include:

  • The Foreign Earned Income Exclusion. This exclusion allows one to exclude USD 101,300 (this amount is for 2016 taxes) in earned income from foreign sources.
  • A tax credit allowing tax on remaining income to be reduced based on the taxes paid to foreign governments.
  • An exclusion on foreign housing that allows additional exclusions from their income for some amounts paid to cover household expenses due to living abroad.

Preparing a quality tax return following proper tax planning should allow one to use these, as well as other strategies, in minimizing or possibly eliminating tax liability. Note that in most cases the filing of a tax return is required, even if taxes are not owed.

Am I Required to File My Taxes if I’m Residing in Switzerland?

Absolutely! Even if you are not living in the United States or in a US territory, and even if you don’t have any income from the US, you must still file a tax return, as well as pay taxes, calculated on all your income worldwide. The tax laws are quite confusing, and frequently change. It seems nearly impossible to file a return accurately. Along with filing income taxes, you might have compliance obligations for the Foreign Bank and Financial Account Reporting (FBAR) regulations as well. Penalties for incorrect reporting can be substantial.

What Happens if I Have Not Filed My Taxes?

The IRS offers some relief to delinquent taxpayers via a special procedure for filing. This may be a benefit to you if your returns have not been filed in previous years. Contact an expert tax advisor, who can help you get back on schedule with IRS filings.

If I Pay Swiss Taxes, Do I Need to Pay US Taxes?

There are ways for United States expatriates to avoid much double taxation. There is a treaty between Switzerland and the United States that outlines some of these benefits. A tax professional will help you understand the treaty and the available benefits.

We'd like to shed light on many questions that we are frequently asked by our clients from the Switzerland. Below we will explain tax concepts that are important to you as a Swiss resident and also explain how to report the details of your Swiss life on our Tax Questionnaire.

How to Report Swiss Income on our Tax Questionnaire

1. How do I report income on the tax questionnaire?

2. How do I report taxes paid on the tax questionnaire

3. How do I report my deductions?

4. How do I report pension contributions?

5. How do I report pension payouts?

6. My taxes are taken out of my salary automatically but then I also have a deduction taken out for contributions to AVS (Basic Pension Insurance). Do I add these together for my income tax?

Swiss Pension and Social Security Systems

1. Social Security in the Switzerland (Old-age, Survivors' and Invalidity Benefits)

2. Swiss - UK Social Security Totalization Agreement

3. Taxation of Social Security Benefits

4. Contributions to Employer Pension Schemes

5. Taxation of Pension Benefits

6. Extension of Treaty Benefits through the Non-Discrimination Clause

7. Tie-Breaker Rule to Apply Treaty Benefits

8. Is my Swiss Pension going to be double taxed? No

Swiss Financial Accounts and FBAR/FATCA

1. Swiss - US FATCA Treaty overview

2. FATCA model type chosen by Swiss Parliament

3. What searches does a Swiss bank have to do to comply with US FATCA?

4. Which types of Swiss financial accounts the U.S. individual must report on FBAR / FATCA ?

5. Which types of Swiss financial assets are not required to be reported on FBAR / FATCA ?

Swiss Tax Glossary for US Expats

1. Les parts sociales

2. Allocations familiales / Familienzulagen

3. Assurances sociales / Sozialversicherungen

4. Certificat de Salaire / Lohnausweis

5. Choix du nom de famille / Namenswahl bei Heirat

6. Imposition des successions / Besteuerung von Erbschaften

7. Le 2e Pilier / Die 2. Säule

8. Le 3e Pilier / Die 3. Säule

10. L’impôt foncier / Liegenschaftssteuer

11. Impôt sur les gains immobiliers / Grundstückgewinnsteuer

12. L’impôt sur la fortune immobilière / Vermögenssteuer auf Liegenschaften

13. L’Impôt sur le revenu / Einkommenssteuer zur Verfügung

14. Pension alimentaire / Unterhalt Aufcommen