Tax: income earned in Japan from the US

7 comments

1. This is a copy of your post for archive/search purposes.

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   **Tax: income earned in Japan from the US**

   Taxes earned in Japan from the US

   I am moving early next year to Japan. Not sure if this is the right sub for tax advice but since it has to do with moving to Japan, figured it can’t hurt.

   I will be working as a 10-99 for my company which is based in the US, while living in Japan. I have heard of “foreign earned income exemption” as a way to not get double taxed from the US and Japan. However I read that it does not cover income earned from the US, which makes sense given the name.

   Then I heard about “foreign tax credits”, which seem to be more of the way I would need to go.

   I would like to avoid paying double tax since the US decided that was a nice thing to do.

   If anyone has incite on this it would be appreciated.

   Alternatively, if there is a better sub to post this on that information would be great as well.

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2. What the heck is a 10-99? All I know is that Americans in Japan have a lot of extra BS to deal with, in terms of taxes.

   Anyway, you’d probably have a way better time over in /r/JapanFinance.

3. I mean it really depends on what kind of visa you have and how long you intend to be here.

   The minute you touch grass in Japan you are a resident and even if your income is from the U.S. on a 1099 it’s still considered “Japan sourced”.

   So either you fly under the radar if that’s possible with your visa and you don’t intend to stick around long term or you self report and pay 50% income taxes to Japan, and file the FEIE on your U.S. tax returns which should discount all the tax payments to Japan up to 100K.

4. As others have said, living in Japan as a resident means your income in the US is “Japan Sourced” and thus you will have to file for taxes in both Japan and the US. For the US, you may be eligible for either the FEIE or FTC exclusions to reduce/eliminate your US tax liability.

   You will still be subject to your visa limitations if such limitations exist. What work visa will you be using or are you coming over on a spouse visa?

5. You file taxes in Japan first and then file with the IRS. You can deduct your Japanese tax, Japanese insurance, Japanese pension and the FEIE. If you are over the amount of deductions you have to pay tax on the full amount in both nations. I think the cap is somewhere around $140k.

   Your Japanese liabilities will be 30% to 45% of your income. If you don’t pay it it’s tax and visa fraud.

   ​

   One thing, what visa? Only two allow remote work from outside Japan and neither is a work visa.

6. I am in a similar situation to you but have lived in japan for just about 3 years.

   Either way you will be filing taxes in both Japan and the US there is no getting around filing US taxes, even if the amount owed is 0. The Foreign Earned Income Exemption takes something like 120k off of your income. Unless you are making a significant amount of money, this will likely zero out your US income and the taxes owed to the US government will be effectively zero. If you have taxes taken out of your paycheck, this means you will get a big chunk of money back.

   In Japan, you will have to file income tax and pay whatever is due based on any income earned while you are a resident of Japan regardless of what country the money is paid to you from. Your city tax office should be quite helpful getting you sorted out the first year and after you learn the online system, it’s not too bad. I’ve found that the amount I owe to Japan is about equal to what I get back from my US taxes. The exchange rate can hurt a bit though as it will push you into a higher tax bracket and make other things like NHI more expensive.

7. This is really something to check with an accountant on. Just for your own piece of mind.