2022 incoming JET. Based on what I understand so far:
* U.S. JETs are no longer Tax exempt and must file both U.S. and Japanese taxes.
* Despite this, if you file The Foreign Earned Income Exclusion, you thereby exclude your JET salary from taxes. You do this by applying for a deadline extension to October 15th because you need to be in Japan for 330 days to file the FEIE.
Please correct me if I am wrong about these two things.
Essentially, while we file taxes for both Japan and the U.S., the U.S. income tax owed is $0 because it is excluded? This has me rather confused.
Can someone confirm if this is true, or if there are still U.S. taxes owed. I am mostly trying to understand if we are being double taxed? Also, do I file the Japanese taxes or does the CO handle this and deduct it from pay?
5 comments
You’re correct. Please note that your CO will file your Japanese taxes for you. As long as your sole income in Japan comes from your CO, you don’t need to worry. Income tax is deducted from your pay, but residence tax is paid either as a lump sum, or in regular installment payments.
As for the US, we have to file on virtue of being US citizens. We use the Foreign Earned Income Exclusion to exclude our Japanese income from US taxation. This means you will owe nothing at the Federal level. Check with your state as you may be subject to tax at the state level.
Regarding US taxation, if you use the Foreign Earned Income Exclusion, you can’t use your Japanese earned income towards your U.S. retirement accounts, as it won’t be taxed in the US. If you want to invest it, you can invest it in a regular brokerage account (ex. Schwab, Fidelity, etc…).
Hope this helps! Feel free to reach out with additional tax questions! If you have any money questions, there’s this one guy who’s Knowles able about finances in my prefecture
Yes maybe. The FEIE covers Japan earned income. It doesn’t cover anything from before you moved to Japan. It doesn’t cover unearned income, such as interest or investment income.
Follow the instructions for US taxes in the Kumamoto JET tax guide and you will be fine. Your Japanese taxes will be taken care of by your employer.
The reason your owed tax is $0 is because the Japanese government already takes taxes from you. Just think of filing US income tax forms as reporting what you make abroad, rather than “filing taxes”.
Essentially correct.