I’m a dual citizen and thinking about moving to Japan, this will be my first time moving there as an adult and I have no idea what I’m doing.
I have a few tax related questions that I’m confused on and apologizes in advanced if these are stupid questions.
I have read the wiki, so I just want some clarification.
1. If I move to Japan in September of next year, would I have to report my income from when I was living in the US to Japan and pay taxes on that to Japan in addition to my US taxes? (I was reading the foreign-sourced income section and was confused on that)
2. As a follow up to 1, if I don’t find a job before the end of the year in Japan, would I have to file something?
3. If I transfer money from my US savings account to my Japanese bank account (which I will open when I move there), would I have to pay taxes on that? A remittance tax?
Thank you very much
by JPthrowaway67
4 comments
1. Generally no.
2. Nope.
3. Nope. There is no remittance tax. You are free to transfer your savings.
3. Depends. Remittance might have tax consequences if you have overseas income from the period you were tax resident in Japan. It’s not correct when people here attach a zero tax consequence to cash remitted.
Great questions. There is no double tax.
1) Japanese citizens resident in Japan are taxed on world wide income. Tax in Japan will be from your resident start date on both employment and investment income. Tax credits are allowed for tax paid in Japan against US tax, etc.
2) Yes, if you have investment income.
3) Since you a Japanese citizen, they may try to tax you on income you earned prior to residence in Japan. I’d like to ask a colleague about this to make sure but at the moment, I believe that you may avoid since you are a Japanese citizen and would be taxed on all income after you become a resident.
> would I have to report my income from when I was living in the US to Japan and pay taxes on that to Japan in addition to my US taxes?
Nothing that you “received” (as defined by tax law) prior to coming to Japan would need to be declared to Japan. But if you receive income after coming to Japan it would need to be declared to Japan, even if the income was paid in exchange for work performed before you came to Japan.
Income received in exchange for work performed outside Japan would be “foreign-source” income, so you would only owe Japanese tax on it to the extent you remit any funds from outside Japan during the same year as the year in which the income was received.
If you do receive foreign-source income and you do remit funds, thus acquiring a Japanese tax liability with respect to the income, you can claim a foreign tax credit in Japan with respect to any US tax you paid on the income, to alleviate double taxation.
> if I don’t find a job before the end of the year in Japan, would I have to file something?
Only if you have an income tax liability that you need to settle.
> If I transfer money from my US savings account to my Japanese bank account (which I will open when I move there), would I have to pay taxes on that?
You never pay tax on remittances. However, if you have foreign-source income (received after coming to Japan), you can only avoid paying Japanese tax on that foreign-source income to the extent that you make no remittances. If you do remit funds (regardless of whether the funds are derived from savings), the foreign-source income will be taxable in Japan to the extent of the remittance. Though as discussed above you can claim a foreign tax credit in Japan to alleviate double taxation.