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Paying taxes in both Japan and the U.S? 2008/2/12 14:56
I plan on moving to Japan for work and am leaving the U.S. I know the 1st year I won't have to pay taxes in Japan but going forward, would I have to look forward to paying taxes in both Japan and my home country?
by Hong  

... 2008/2/12 17:24
I know the 1st year I won't have to pay taxes in Japan

Really? Why is that? At least on Japanese income, you will need to pay taxes even in the first year. The US-Japanese tax agreements deal with the issue of double taxation, so that people don't get double taxed, but I don't know the details.

More on Japanese taxes:
by Uji rate this post as useful

taxes 2008/2/13 00:26
If you are out of the US for at least 11 months (need not be consecutive or on a calendar year basis) you are able to exclude about $90k from US income under the foreign earned income exclusion. Frequently Japan will not tax you either so instead of double taxation you may have close to zero taxation!
by acase rate this post as useful

maybe then I heard wrong 2008/2/13 09:02
I thought they tax you on what you made last year in income. If I didn't make anything in Japan last year, someone told me you won't be paying tax for the 1st year.
by Hong rate this post as useful

Be careful 2008/2/15 16:31
I am currently working in Japan from the US and dealing with all of the fun tax issues right now. There are several tax related items that you should read over with a fine toothed comb before you make any assumptions.
The first one is for the Japanese taxes on foreign citizens. This can be found here: http://www.japan-guide.com/e/e2206.html, with official links to both the Ministry of Finance and to the National Tax Agency appearing at the bottom.
The second one that you should read is the US IRS Publication 54, dealing exclusively with foreign earned income, found here: http://www.irs.gov/publications/p54/index.html. I suggest that you find a tax professional to discuss your actual options before you go.
While you will not be taxed in both countries for all of your income it can be a pain to figure out which portion goes to whom.
Also you need to consider the foreign earned income exclusion carefully. I saw mention of it in an early post, but even if you meet the number of days out of the US requirement you may still not qualify. You must prove to the government that you have a "tax home" in Japan, or some other foreign country. The easiest way to prove this is to be able to say that your expected stay in the foreign country was to be longer than a year, even if it turned out to not last that long. You can get in to lots of trouble if you do not have documentation for this though. Taking this deduction from the US government may make you liable for paying taxes on your "world wide", not just your Japan earned, income to Japan, for that tax year though. Then you would not be responsible for paying taxes in the US.
In my case, since I worked in Japan for one year April-April, but can not claim a "tax home" in Japan, I do not fit the requirement for the tax exclusion. I am responsible for only partial taxes to both countries due to the tax agreement preventing double taxation though. I will pay taxes only on income earned in Japan to the Japanese government. I will pay taxes only on income earned in the US (and my other non-work related "world wide" income) to the US government.
Also keep in mind that if you are here for a period extending in to the next year you will have to file taxes in both countries for both years. In my case, I am here part in 2007 and part in 2008, so I will have to file taxes in both countries in 2008 and 2009.
I hope this helps you out some.
by USExpat rate this post as useful

taxes 2008/2/16 00:44
As the other poster said, you can have a tax home to be eligible for the foreign-earned income exclusion but you don't have to. It is an OR test--not an AND test. If you are out of the country for 330 days during a fiscal year you do NOT have to have to be a bona fide resident of the foreign country. If you have a tax home and are a bona fide resident then you can come back to the US for more than 35 days during the year and still qualify.

The other thing to consider is that even if you miss the 330 days and bona fide resident test you can still qualify for the a foreign tax credit in the US which means that you won't be subject to double taxation.
by acase rate this post as useful

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