Trap 1: assuming Swiss residence ends US filing
US citizens and resident aliens abroad generally remain subject to US tax filing on worldwide income. Swiss salary, investments, property income and pension-related amounts can therefore enter a US return even when Swiss tax has already been paid. Extensions for taxpayers abroad do not necessarily extend payment deadlines, so check current IRS rules each year.
Trap 2: confusing FBAR with Form 8938
The FBAR is filed electronically with FinCEN and can apply when the aggregate value of reportable foreign financial accounts exceeds the statutory threshold at any time during the year. Form 8938 is filed with the federal income-tax return when its separate asset and threshold tests are met. The IRS expressly states that filing one does not replace the other.
Swiss bank, brokerage and some pension-related accounts require fact-specific classification. Maintain maximum balances and account details throughout the year rather than reconstructing them at filing time.
Trap 3: buying a non-US fund without checking PFIC status
Many non-US collective investments can be passive foreign investment companies for US purposes. Form 8621 reporting, complex elections and potentially punitive tax treatment can follow. The label "Swiss fund", "ETF" or "pension investment" does not determine the US result by itself.
Review the underlying legal vehicle before purchase. A fund that is efficient for a non-US Swiss resident may be unsuitable for a US taxpayer.
Trap 4: treating the foreign earned income exclusion as a complete solution
The foreign earned income exclusion applies only when its requirements are met and does not cover every category of income. The foreign tax credit can reduce double taxation on qualifying foreign income taxes, but limitations, baskets and interactions matter. The IRS notes that tax on income excluded under the foreign earned income exclusion cannot also generate a foreign tax credit.
Compare the approaches over several years, including effects on credits, investment income and future carryovers, rather than choosing solely by the current refund.
Trap 5: assuming Swiss pension labels control the US treatment
Swiss occupational pensions, pillar 3a and insurance-based arrangements do not automatically receive the same US tax treatment they receive in Switzerland. Contributions, employer funding, investment growth, distributions, foreign trusts and treaty positions can require separate analysis.
Coordinate the Swiss adviser, US preparer and investment provider before contributing, transferring or withdrawing. The right answer depends on citizenship, residence, plan documents, ownership and the applicable treaty provisions.
A better next step
Before acting, bring the pension, tax and investment decisions into one cross-border review. Hansa Perpetual can help structure the questions and coordinate the planning process with appropriately qualified tax and legal specialists where required.