Thanks, Chris, for pointing out the provisions of the
> savings clause. Please allow me to ask a couple of follow-up
> questions.
>
> Let's assume the scenario that at retirement, my income
> level will be such that I must file a U.S. income tax return
> and pay taxes. Let's furthermore assume that I must also
> file a Swiss income tax return and pay taxes on the same
> sources of income.
>
> Do you know if I am entitled to filing Form 1116 (Foreign
> Tax Credit) with my 1040 and get credit for whatever taxes I
> pay to the Swiss tax authorities?
>
> If this is not possible --and purely from the standpoint of
> U.S. income tax laws-- is there a way to legally mitigate
> double taxation for a person in my situation?
>
> I am also trying to decipher Article 23.1.(d) of the
> Convention: The way I interpret it, Switzerland must allow
> me to deduct whatever taxes I pay to the USA (with regards
> to Social Security only) and grant an income deduction of
> 1/3 of the net Social Security payments. Is my
> interpretation correct?
>
> Thanks.
You are entitled to file form 1116 but you may wish to look at Form 2555 as well. As for Social Security, you may wish to look at the other treaties, namely Social Security Treaties. While I do not know Swiss Treaties, the Canada-US Treaty allows Social Security to be taxed only in the country of residence and not in the country paying. You will need to find it there is a similar clause applying to you and it isn't in the tax treaty.
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