I'm currently working in Japan and getting paid in USD. Because of the weak yen vs the dollar I'm facing a big Japanese tax bill which will be based on the theoretical calculation of my salary in USD into JPY, even if I don't remit any of it to Japan. Does that seem right? That's what the tax office told me I'd have to do for my situation but that seems crazy to be taxed on the entire theoretical calculation of the total USD to JPY amount even if I don't convert all of it. They said it's not how much I convert, it's the entire amount because I'm based here in Japan.
Because of this, I'm looking at all possible ways to further reduce my taxable income for this year to bring myself from the projected 40% tax bracket down to the 33% bracket. I've calculated what I need to do to get back down to the 33% bracket, but it's hard to tell because of the fluctuating USD-JPY rate, but I was thinking about starting and maxing out an IDECO account from now through the end of the year (total of 408,000 yen).
As a US citizen I understand I shouldn't be investing any IDECO funds into mutual funds because of PFIC concerns and would need to just keep it as cash. Do others here think it's worth it to invest in IDECO regularly purely for the tax benefits even though it will just sit there as cash until retirement age? Being able to bring my tax rate down to 33% from 40% seems huge (I know it's marginal though, so I don't know how much of a difference it really makes if I'm barely at the 40% level), but I'm still 20+ years away from retirement. With my current work plans and the current high dollar, I might need to do this for a few years, but I would hope it wouldn't be necessary for the long term. I don't know if it makes sense to build up a small IDECO fund for a few years and then it just sits there as cash until retirement.
I'd appreciate any thoughts or advice here!
by teqqtite
