I am an American living in Japan for over 13 years. Currently I am using Interactive Brokers and paying the standard 20% Japanese tax on capital gains and dividends. Ive read that Americans should not bother with NISA due to tax rules related to Passive Foreign Investment Companies (PFIC) and the fact that the US does not recognize NISA as tax-advantaged. However, unless I’m missing something, it would seem that many Americans could still greatly benefit by purchasing individual stocks using the growth portion of the fund which under the new NISA now has a 2.4m yearly limit. I am a teacher and all of my Japanese salary is excluded as taxable income using the Foreign Earned Income Exclusion (FEIE) and therefore I believe I qualify for low capital gains rates and dividend rates for my US taxes. For example, my tax on qualified dividends would be 0%, in addition to my long term capital gains also being 0%. Needless to say, there would be a huge difference between having my qualified dividends and long term capital gains be tax free using a Japanese NISA compared to the 20% I am currently paying for Japanese taxes.
I would really appreciate if anyone knows any reasons why Americans (especially lower income earners) wouldn’t benefit from investing in individual stocks with the new NISA and thereby reducing the tax burden from 20% to 0% on qualified dividends and long term capital gains, not to mention reduced taxes on short term capital gains and unqualified dividends. Also, is it true that people, including Americans, can purchase American and Japanese stocks of individual companies or are only Japanese stocks available with NISA?
Thanks a million!
by ZenJapanMan
