Hi all. US taxpayer with PR and new to investing. I’m trying to figure out taxes on my taxable Vanguard brokerage account (opened previously but only recently saving). I’m paid in JPY and transfer JPY to USD each month to save. I have some (hopefully) easy questions that I’d like some help with. Sorry if anything is confusing. Thinking about how the taxes on this stuff works kind of breaks my brain, so easy explanations like I’m a complete idiot are much appreciated.
​
1. When purchasing shares what exactly do I need to record for tax purposes? For example – First transfer JPY to USD, then record the average JPY/USD exchange rate for the day stocks are purchased in USD? And also record the number of shares purchased?
2. When realizing gains or selling what exactly do I need to record? For example, I was initially saving in VTI and VXUS, but then decided to go the simpler route and put everything in VT. To do so I realized gains in VTI and VXUS. In this case, what should I record? I’m guessing the average JPY/USD exchange rate on the day the sale was made? And also the number of shares of each sold? Then, record the average exchange rate on the day VT was purchased and the number of shares for that as well?
3. If in question 2, I instead didn’t buy VT, but just transferred my newly gained USD to JPY. Do I then need to also record information for transferring back to Japan? Would I be paying tax on the gains at time of sale, or the gains when the money actually arrives in Japan? I’m very confused on what needs to be done here.
4. When dividends are paid, do I need to record the day they were paid, average exchange rate, and amount paid out, and then shares subsequently purchased if being reinvested?
5. In Japan you pay taxes earlier than in the US. How does this affect paying taxes on investments? I’ve read something about the US getting the first 10% of capital gains, and then Japan getting the rest. I honestly have no idea how this works or what I need to do to navigate this. As far as I know, Japan has a flat 20.315% tax on capital gains. If I sold my stock shares that I held less than a year to switch to VT, I guess I need to pay taxes on short term capital gains. Looking at the short term capital gains chart it seems like I’d be taxed at 12%. How exactly do I go about paying the correct amount of tax to the US and/or Japan?
6. Additionally, as a follow up to my previous question 5, what happens in the mixed case of some stocks being sold as long term capital gains, and others as short term capital gains?
7. Lastly, when selling stocks in my taxable account (to rebalance for example), does this raise my income bracket in Japan? For example will I be paying higher residence taxes and medical insurance taxes for the next year because of this? And if this is the case, if I rebalance a more substantial amount in the future, will I be screwing myself on Japanese residence/insurance taxes by making them on paper think that I have some huge income rather than just trying to save for retirement? My income is definitely not high, so I’m a little worried about this, especially if I wanted to save in a taxable account for a somewhat far off house purchase where I’d pull the money out all at once.
​
A huge thank you for any advice!
by redfinadvice