Family allowances are various federal and cantonal allowances for children, education, birth, and adoption. They are not included in U.S. taxable income.

Social Insurance: The basic pension insurance and taxable income in Switzerland and the United States are subject to the Foreign Tax Credit (FTC) to eliminate double taxation. Report it in the Income > Passive Income > Pension section of our Tax Questionnaire.

The salary statement is used throughout Switzerland to provide information about income and expenses received. Main document required for preparation of U.S. tax return for expats employed in Switzerland.

Choosing your name after marriage: Regardless of the family name used on Swiss documents, you must provide your family name in the Personal Details > The Basics section of our Tax Questionnaire as shown on your U.S. Social Security card until you officially change your name with the U.S. Social Security Administration.

Taxation on Inheritance: Cantons may impose taxes on the person who inherits an estate. There is no U.S. federal taxation on inheritances, whether they are from the U.S. or abroad. However, U.S. inheritance may be subject to state-level taxes in certain cases.

Pillar 2 - Occupational Pension Provision. Employer contributions to Pillar 2 are included in the calculation of the U.S. annual taxable income of the employee. Report it in the Income > Wages section of our Tax Questionnaire. 

Pillar 3 - Individual Pension Provisions. Contributions to Pillar 3 are not deductible from the U.S. annual income. Still, distributions are treated on U.S. tax returns as the payout from the regular investment made with the previously taxed money (only growth is taxable). The balance of Pillar 3 in the Non-US Financial Accounts section of the Tax Questionnaire is reportable on FBAR/FATCA. Click the Configure Life & Income button and click Yes next to the statement I have financial accounts outside the U.S. to make the Non-US Financial Accounts section appear.

Note: contributions are not reportable annually - only balance.

Income earned from gainful employment.

Property tax, sometimes known as land or real estate tax, is a cantonal or communal tax on land and buildings. It is calculated on the total taxable value of the property, i.e., without taking into account any related debts or mortgages.

❗ Important note: property tax on foreign residence deduction was suspended through 2025.

Tax on gains from the selling of property. In Switzerland, a profit made on the sale of the property is either subject to a special tax (property gains tax) or should be declared ordinary income. In the U.S., tax on gains from the sale of the property may be treated as long-term or short-term profits and, in certain cases, may be tax-exempt.

Report in the Taxes and Deductions > Taxes  Paid section, the question Did you pay any tax to a non-U.S. country on the sale of any capital assets (stock, mutual funds, cryptocurrency, real property, etc.)?

The wealth tax on the value of real estate property is not allowed as a Foreign Tax Credit (FTC) but can be deducted as a part of itemized deductions on U.S. tax returns. Report it in the Taxes And Deductions > Deductions section of our Tax Questionnaire.

Income Tax: The foreign income tax (federal and cantonal) can be utilized as a Foreign Tax Credit to offset U.S. tax liability. Report tax imposed on the particular income type in the Taxes And Deductions > Taxes Paid section of our Tax Questionnaire.

Spousal support, Alimony: Deductible from taxable income by the spouse paying alimony. Please report it in the Income > Other Income section of our Tax Questionnaire, the question Did you pay or receive Alimony during the tax year?

Church tax is not considered a cantonal tax, although it is collected by the cantons. It is explicitly excluded from qualification for the Foreign Tax Credit (FTC). The reason is that you must register your religion as Catholic to be subject to this levy. In other words, paying this tax is voluntary, and you cannot deduct FTC contributions made to any religious organizations.

The Swiss Social Security system comprises three pillars:

Note: contributions to the Swiss Social Insurance system withheld from your paycheck or made on self-employment income are not deductible from the U.S. taxable income. They do not qualify for the foreign-earned income credit.

A bilateral agreement between the United States and Switzerland improves Social Security protection for people who work or have worked in both countries. It helps people who, without the agreement, would not be eligible for retirement, disability, or survivor benefits under the Social Security system of one or both countries. It also helps many people who would otherwise have to pay Social Security taxes to both countries on the same earnings.

The agreement's provisions eliminate double Social Security taxation and permit dual residents to use their work in both countries to qualify for benefits.

Article 24 of the U.S. - Switzerland Tax Treaty requires the United States to grant national treatment to residents and citizens of Switzerland, even if that person is a citizen of the United States. Specifically, the application of the Non-Discrimination Clause allows deferral of income earned in pension funds through the time when benefits are paid, although, in the absence of the non-discrimination clause, income in pension funds earned by U.S. tax residents must be included in U.S. annual taxable income.

U.S. Green Card holders residing in Switzerland may elect to apply what is known as the tie-breaker rule of the U.S. - Switzerland Tax Treaty and be deemed a resident only of the State (i.e., country) with which their personal and economic relations are closer (Switzerland).

Under such an election, the individual would file Form 1040NR and report only income derived from U.S. sources. The requirement to provide full disclosure of foreign bank accounts remains, and the tax on income from U.S. sources will be higher than the tax on the same income when applied to U.S. residents filing Form 1040.

Moreover, the person would be treated as a U.S. resident for U.S. tax purposes other than determining the individual's U.S. tax liability. For example, in determining whether a foreign corporation is a controlled foreign corporation, shares in that corporation held by the individual would be considered to be owned by a U.S. resident, and Form 5471 information return concerning certain foreign corporations will be required.

When you start receiving pension distributions, your monthly benefit will consist of taxable and non-taxable portions. The central non-taxable portion is all of your contributions that have not been deducted from taxable income in the U.S. In addition, employer contributions that have been reported on your U.S. tax return will be a part of the non-taxable portion. All this taken together will make up the "cost" of the pension.

The taxable portion will be calculated using an IRS calculator that takes into account your pension cost and your age when you receive the benefits. This is not a simple calculation, but after it is done once, it will be easy to continue in subsequent years.

Tax treaties with some countries provide a much simpler way of calculating the taxable portion: for example, 25% of the U.K. pension distributions are non-taxable in the U.S.

Report your gross salary shown on line 8 of the Certificat de Salaire. Separately report the number of employer contributions to Pillar 2. Generally, the amount of your employer contributions to Pillar 2 is equal to your Regular Contributions shown on line 10.1 of the Certificat de Salaire. If you had more than one employer over the year, add amounts from both Certificates.

Income from self-employment is a turnover of your unincorporated business. To report it, navigate to Income > Self-employment and enter the amount under the question Gross Income from the Self-employment.

Note: income is reported as the gross amount before any deductions allowed in Switzerland, e.g., before contributions to Pillar 1; those are reported separately.

If you received severance or redundancy pay, add the gross amount to the annual gross salary.

Report other types of income such as workplace pension, state pension on Income > Passive Income > Pension and alimony, royalties, and unemployment on the respective lines of Income > Other Income.

Similarly to income, the tax must be reported separately for each type of income on which tax was paid. The base amount of income tax withheld from wages is shown on line 12 of the Certificat de Salaire. 

The payor may withhold taxes on unearned income, e.g., a bank withheld income tax from dividends, or you may owe tax upon completing the tax assessment form. Report each type of tax paid during the filing year in the respective section of our Questionnaire, even if it applies to income received in prior years.

Wealth tax is not a part of income tax. It can be deducted on your U.S. tax return as a part of itemized deductions. 

To report this tax:

We will take specific deductions allowed for Swiss residents by the U.S. - Switzerland Tax Treaty. For example, Swiss residents who remain in the United States long enough to become tax residents under the U.S. internal law but do not acquire permanent residence status, i.e., they do not become Green Card holders, will qualify for various tax exemption benefits if they conflict with the Internal Revenue Code rules.

Further, the Taxes And Deductions > Deductions section of the TQ offers you questions related to various additional deductions. Such deductions include mortgage interest, alimony payments, and investment advisor fees. The U.S. tax system applies a concept of "Standard deduction": $12,950 per single person and $25,900 for the married couple for the 2022 tax year. For most Swiss residents filing a U.S. tax return standard deduction option is more tax efficient than "itemized deductions" - grossing up individual deductions. Refer to Standard vs. Itemized deduction on the U.S. tax return for more information.

To report employer contributions and your contributions to the pension scheme (Pillar 2):

To report payouts from foreign pensions of all types: Social Security, Occupational Pension:

Note: if you have not received your AHV tax certificate, please request one at your cantonal Compensation office.

Report distributions from Pillar 3 accounts as income from regular investment. From the IRS perspective, contributions to Pillar 3 were made from after-tax funds. Therefore only growth in history is subject to tax.

A: Contributions to AVS and other components of Pillar 1 (AHV/IV/EO, AVS/AI/APG) are not deductible. Likewise, you do not "deduct" income tax. We need to report gross salary and then take the foreign tax credit for income tax (not for the contributions to Pillar 1).

Another example of non-deductible taxes is VAT.

The Foreign Account Tax Compliance Act (FATCA) is a piece of legislation introduced by the United States government in 2010 to avoid double taxation and prevent fiscal evasion concerning taxes, allowing the exchange of tax-related information.

The Swiss Parliament has chosen the Model 2 type. For customers who do not consent to this, the financial institutions must tell the IRS the number and the total value of these accounts. The IRS can then request "administrative assistance" from the Swiss government to get the full details.

To comply with U.S. FATCA regulations, Swiss financial institutions search their data for indications (indicia) that an account holder may be a U.S. person (U.S. Specified Persons or foreign entities in which U.S. taxpayers hold a substantial ownership interest). These indications include:

Specific entities are exempt or deemed FATCA compliant because they present a low risk of being used by U.S. persons to evade U.S. taxes. Such entities/financial products include vested benefits insurance under Swiss law, restricted pension plan insurance (Pillar 3a), certain employer-funded welfare funds, and particular investment foundations.

Even though specific retirement plans are exempt from direct FATCA reporting, the FATCA rules applying to individuals were not relaxed. Form 8938 requires reporting by U.S. taxpayers participating in foreign pension plans.

Swiss financial assets exempt from FBAR/FATCA reporting are limited to Social Insurance (Pillar 1), Real Estate Holding, precious metals held directly, and collectibles.