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Pensions and Taxes 2017/7/8 14:38
I'm a U.S. citizen living in Japan as a permanent resident. When I retire in a few years at 65, I expect to receive a Japanese nenkin pension because I'll have worked here and paid into the nenkin system for about 27 years.

Also, when I turn 67, I'll be entitled to a small amount of U.S. Social Security because I qualified by working in the U.S. and paying into the U.S. system for more than 10 years. Unfortunately, due to the so-called "Windfall Elimination Provision" or W.E.P., it looks like my U.S. Social Security will likely be cut in half.

Anyway, assuming I stay in Japan, who will tax what? And how?

Has anyone been through this already? I've heard lots of guesses and I've also found a few tidbits of information, but things aren't clear. I'd really appreciate hearing from someone who knows the answer based on personal experience.

By the way, I've read the book "Growing Old in Japan", but the information there is very superficial.
by Sammy (guest)  

Re: Pensions and Taxes 2017/7/8 22:30
you paid 27 years in Japan and 10 years in US. totally, 37 years.
there is a mutual agreement between Japan and US about pension calculation.
you are expected 37 years paid. (you may cancel WEP.)
you have to get the certificate from both Japan and US.
in Japan, if you add the US certificate when you apply, they calculate : you totally paid for 37 years. 27 years in Japanese pension system and 10 years in another system.
if you add the Japan pension certificate when you apply in US, they will calculate similarly. : total payment of 37 years. 10 year in US and 27 years in another system.

about tax,
since you are staying in Japan, you have to pay tax in Japan. (you are requested to file your total income (Japan and US) every year.)
if you are a salary man in Japan, probably you have no experience to file tax return in Japan, because the employer takes care of your tax paying. but, after you have pension benefit, you have to file your tax return every year, until you die.
pension benefit is 公的年金. there is 公的年金控除, a deduction about pension benefit. deduction is relatively high and you can save income tax.
if US withdraws some tax when paying, I believe you can ask 外国税額控除, when you file tax return in Japan.
by ken (guest) rate this post as useful

Re: Pensions and Taxes 2017/7/8 22:57
In addition to paying tax in Japan, as a US citizen you will have to file returns 1040 every year, you will get credit for taxes paid in Japan but you cant escape IRS
You also have to file FBAR if you have a bank account with more than 10K dollars balance
by .... (guest) rate this post as useful

Re: Pensions and Taxes 2017/7/10 16:05
I don`t believe Ken`s explanation is correct on combining years for pension payout. If qualified under each, I believe you need to apply for each separately and thus receive separately. The comingling of years is for when insufficient years for vesting in one of the plans occurred. Of course it could be me, and not Ken who is incorrect on this point.
by Paul (guest) rate this post as useful

Re: Pensions and Taxes 2017/7/10 16:35
Thanks Ken. I'll get both KOSEI and KOKUMIN nenkin in Japan, so after reading your note I made some phone calls today.

First, I phoned about my KOSEI nenkin, and I discovered that when I retire, I will actually have 30 years and 5 months (365 months) of Japanese work credit. So my total Japanese (30+) and American (10+) years of work will add up to over 40 years.

Anyway, the KOSEI nenkin representative said that I have already qualified in Japan with over 25 years here, and therefore they won't use any information from the USA. And he knew nothing about a certificate for the USA.

I then went to see a KOKUMIN nenkin office representative. He said the same thing. With over 25 years on my Japanese work record, they won't use any American data. I tried showing him my US Social Security estimate, but he wasn't even interested. He, too, knew nothing about a certificate.

As for my US Social Security, an American friend in Japan whose situation is similar to mine, and who has started getting US Social Security, tells me that she had to submit this "Modified Benefit Formula Questionnaire" for the W.E.P. to the US Social Security Administration:
https://www.ssa.gov/forms/ssa-308.pdf
and she said she also had to enclose the information from the Japan Pension Service about her pensions from Japan. So I guess in a few more years, when I'm old enough to apply to the US for Social Security, I will need to get some sort of "certificate" or proof from Japan about my Japanese pensions to show to the US (but not to Japan).

As for tax, it seems clear that Japan gets first right of taxation on my Japanese nenkin since I live in Japan. As you indicated, Japan grants a pension exemption up to 1,200,000 yen for people over age 65. But I'll get more Japanese nenkin than that, so I'll have to pay some Japanese tax.

For America, since I have to report ALL income on my US tax return, I also must report my Japanese pension (less an annuitized amount for the payments I made into the nenkin system over 30 years). So I guess I'll pay US tax on my Japanese pension and then I'll get to claim a tiny bit of US tax credit for the Japanese tax paid on the amount over 1,200,000 yen.

As for the US Social Security, I wonder who gets first right of taxation? Japan, since I live in Japan?? I kinda doubt the IRS would see things that way, and there's nothing I've found in the tax treaty that indicates I can take that position for pension money that comes from the USA.

My American friend living permanently in Japan says she just reports her Social Security to the USA but not to Japan. Somehow that seems wrong to me!

This is confusing, and I'm not the first person to be in this situation. For instance, there are many Japanese retirees in Japan who once worked in the USA, so there must be some clear and accurate answers out there somewhere. I can read and write Japanese, so if anyone knows of a Japanese-language forum about international matters such as tax and pensions, I'd like to also try posting my questions in Japanese there.

by Sammy (guest) rate this post as useful

Re: Pensions and Taxes 2017/7/10 21:59
you may try to search the words, "年金 アメリカ 申告" in google.
there are a lot of information about taxation in Japan.
http://www.plumandapple.jp/%E3%82%A2%E3%83%A1%E3%83%AA%E3%82%AB%E5%B9%...
http://gerbera.co.jp/blog/p01/c03/theme-2481/

you can also search similar information in US google about US taxation.
by ken (guest) rate this post as useful

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