Year-End Tax Planning for Americans in Switzerland (Sponsored)

As year-end approaches, many Americans in Switzerland are preparing for skiing season, holiday gatherings, and maybe even a toast with Glühwein.

Many also face a unique challenge: navigating two tax systems simultaneously. In case this sounds like you, we have some good news. Before you fully switch into holiday mode, we’ll help you check one thing off your list: your year-end U.S. tax planning.

Whether you have been in Switzerland for years or have recently relocated, taking a few proactive steps before December 31 can make a real difference come tax time. Here's how to wrap up the year with your finances and peace of mind intact.

The December Advantage

Acting before December 31 isn't just good organization, it can directly impact your U.S. tax bill. Switzerland and the U.S. both operate on a calendar tax year, but their filing systems and deadlines differ, which can lead to missed opportunities if you don't plan ahead.

Common year-end actions include adjusting income timing and reviewing deductions. It is also important to finalize any planned charitable gifts or business expenses before year-end.

Optimize Deductions You Already Have

You don't need complicated tax maneuvers to reduce your tax bill. Just make the most of what's already available.

• Charitable Contributions: Donations to qualified U.S. or Swiss charities made before December 31 may be deductible on your U.S. return. Keep receipts and proof of payment.
• Mortgage Interest: Homeowners in Switzerland can still deduct mortgage interest on U.S. taxes, within U.S. limits. Consider making one extra payment before year-end to maximize deductions.
• Business Expenses: If you're self-employed or consulting, ensure that deductible expenses like professional fees or travel are recorded before year end. Expenses charged on your credit card in December are deductible in the current year, even if you don't pay the bill until January.

Coordinate Your Foreign Tax Credit or Exclusion

Americans abroad can often avoid double taxation through the Foreign Tax Credit or the Foreign Earned Income Exclusion. While Swiss and U.S. tax years align, their payment schedules often do not.

Fortunately, you can still claim the credit for taxes paid in the following year by using the accrual method. Planning ahead and knowing when your Swiss cantonal and federal taxes will be assessed can help ensure your foreign tax credit lines up smoothly on your U.S. return. If you earn a bonus or plan to exercise stock options, consider how that income aligns with your Swiss tax year to avoid mismatch issues.

Currency considerations: Remember that all Swiss income and deductions must be converted to USD for U.S. tax reporting. Keep records of the exchange rates you use for major transactions throughout the year.

Don't Forget Your Pensions (Pillar 1, 2 and 3)

Swiss pension plans can be a blessing and a headache. While contributions to the pillars may reduce your Swiss tax bill, the U.S. doesn't always recognize these contributions as deductible. Tracking your basis, essentially your after-tax contributions, is key for future distributions.

Pillar 3 accounts require special attention. These accounts may trigger additional U.S. reporting requirements depending on their structure, particularly if they contain investment components.

If you’ve contributed to a Pillar 3a or 3b this year, request a year-end statement from your provider showing contributions and balances. This documentation is essential for both Swiss and U.S. tax preparation and helps you track your contribution basis for when you eventually withdraw funds.

Before year-end, gather statements from all your pension providers. This makes tax preparation significantly easier and ensures you don't miss any required disclosures.

Don't Miss the Q4 Estimated Tax Deadline

If you expect to owe more than $1,000 in U.S. taxes for the year, you may need to make a fourth-quarter estimated tax payment by January 15 of the subsequent year.

This is crucial for avoiding underpayment penalties. Review your year-to-date income and withholding now to determine if an estimated payment is needed.

Reporting Rules Still Apply

Even if you owe nothing to the IRS, you still need to file information forms like the FBAR (FinCEN Form 114) and FATCA Form 8938 if your account balances exceed certain thresholds. Gather your year-end bank statements now, it's much easier than hunting for them in March.

If you have fallen behind on prior filings or did not know that you had these reporting obligations, you may qualify for the IRS Streamlined Offshore Procedures to catch up without penalties.

State taxes: Don't forget that you may still have state tax obligations depending on where you last lived in the U.S. and your ongoing connections there.

Plan for Next Year and Beyond

Smart planning doesn't end with December. Use this time to think strategically about next year:

• IRA contributions: Even after December 31, you can still make IRA contributions for 2025 until April 15, 2026, which can reduce your current-year tax bill.
• Business structure: If you own a business, evaluate whether your current structure (sole proprietor, GmbH, LLC, etc.) is still tax-efficient.
• Gifting strategy: U.S. citizens can gift up to $19,000 per person in 2025 without triggering gift tax reporting.
• Estate planning: Update your estate plan if you have purchased property or opened accounts in Switzerland.
• Recordkeeping: Set reminders for estimated tax payments and establish a system for tracking income, expenses, and account statements as you go.

Your Year-End Expat Tax Checklist

1. Review income, deductions, and Swiss tax payments before Dec 31
2. Make final charitable contributions and business purchases
3. Confirm pension contributions and request year-end statements
4. Download all foreign bank statements for FATCA/FBAR reporting
5. Calculate whether Q4 estimated taxes are due January 15
6. Convert major Swiss transactions to USD and document exchange rates
7. Review state tax obligations if applicable

The Takeaway

Year-end tax planning isn't about making the IRS happy, it's about giving yourself options. A few smart moves before December 31 can simplify your U.S. return, reduce your stress, and help you stay compliant while enjoying life in Switzerland.

Whether you're optimizing deductions or catching up on past filings, Offshore Relief helps expats make sense of U.S. taxes abroad.

Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or financial advice. Information was current as of November 2025. Tax laws change frequently, and readers should consult a qualified tax professional regarding their specific circumstances.

About the Author: Nicole Green, EA, MST, is a U.S. Tax Advisor specializing in cross-border compliance and tax strategy for Americans abroad.