- How to read Japanese Tax Statement (Gensen Choshu Hyo)
- Japanese Income Reporting
- My salary gets paid by an employer in Japan. Do I need to file?
- My spouse is not a resident and has no U.S. income. Do I need to get a US tax ID number for them?
- What about my spouse’s parents? Can they be claimed as dependents?
- My filing status is head of household. Am I required to report income from my Japanese spouse?
- What exchange rate should I use?
- Japanese Pension & Deductions
- Am I required to pay taxes on my Japanese pension (kōsei-nenkin)?
- I pay tuition to a Japanese school. Am I allowed to claim a tuition deduction?
- I own a home in Japan and pay property taxes and mortgage interest. Am I allowed to claim a deduction?
- Am I subject to double taxation in Japan and the United States?
- Japanese Businesses & Investments
- I have interest from Japanese post office and bank accounts. How is the interest reported?
- I own stocks that are held in a brokerage account in Japan. Am I required to report this to the Internal Revenue Service?
- My Japanese spouse has accounts that don’t have my name on them. Am I required to report these?
- I am the owner of a KK (Kabushiki Gaisha) - what does this mean for my U.S tax filing requirement?
How to read Japanese Tax Statement (Gensen Choshu Hyo)
A Gensen-Choshu-Hyo is the official tax form that you get from your employer. It outlines your earnings and the amount of taxes you paid during the calendar year.
A. Taxpayer’s Address
B. Taxpayer’s Name
C. Total Salary earned during the year
Gross Salary - Report the total amount of the annual Gross Salary in Income > Wages > Income Outside of the U.S. section of our Tax Questionnaire.
D. Income after employment income deduction
E. Total income credit
F. Income tax withheld at source
Income Tax - Amount of foreign income tax paid or withheld. Can be utilized as a foreign tax credit to offset U.S. tax liability. Report tax imposed on the particular income type in the same section of our Tax Questionnaire where you reported that income.
Note: Resident tax should be added to income tax when reporting foreign income tax paid/withheld.
G. Marital status and the spousal exemption
H. The number of dependents
This should include children in each category: specific dependents (16-22 yrs old), elderly dependents (70 and over). Report dependent children and other dependents on Personal Details > The Basics > Children tab of TQ.
I. Details of income credits
This includes social insurance, life insurance, earthquake insurance, mortgage, spouse’s income, personal pension, long-term accident insurance.
J. Date of Employment and Date of Termination
K. Taxpayer’s DOB
L. Employer’s Address
Report your employer’s address in the tax questionnaire under the Income > Wages > Income Outside of the U.S. tab.
M. Employer’s Name
Report your employer’s name in the tax questionnaire under the Income > Wages > Income Outside of the U.S. section.
- Shown income tax withheld at source is only National income tax excluding the resident income tax.
- The resident tax is also withheld but is not shown. Add resident tax paid to the amount of income tax on Taxes & Deductions > Taxes Paid tab of TQ. If you submitted other tax statements issued by your previous employers, all those earnings and withheld tax are also reflected and adjusted on this statement.
Japanese Income Reporting
My salary gets paid by an employer in Japan. Do I need to file?
Yes, you do. This certainly adds a bit of work to you or your tax accountant, but the effect on your taxes is likely to be minimal. For salaries less than USD $100,300 (for 2016) there is a zero net effect. It is placed on the form first as a positive, and then later on down the form as a negative.
My spouse is not a resident and has no U.S. income. Do I need to get a US tax ID number for them?
No, but there are situations where it may be beneficial to do so. Secondly, unlike Japan, they cannot be claimed as a dependent on your tax return. However, it is important to note that if you are married you are not allowed to file a single. You don’t have to declare your non-US spouse’s information, but you cannot file single on your tax return.
What about my spouse’s parents? Can they be claimed as dependents?
There are rules that must be met to qualify as dependents. One of the key rules is that your parents or your spouse’s parents must have US Social Security numbers or live in the US. Then other conditions such as their income may be further considered to qualify them as your dependents.
My filing status is head of household. Am I required to report income from my Japanese spouse?
No. The only time you must report your spouse’s income is if you file using married filing jointly status. Please see Tax Implications of Foreign Spouse of a US Citizen.
What exchange rate should I use?
Optimizing currency for the benefit of the client is a tool we use to help mitigate tax due. The Internal Revenue Service allows any published rate to be used, as long as it is consistently used throughout the return. There are some rates published by the IRS as guidance, though.
Unlike the tax return which allows more flexibility, the rates for form 8938 and FBAR must be the treasury rate.
Japanese Pension & Deductions
Am I required to pay taxes on my Japanese pension (kōsei-nenkin)?
If you receive these payments, you must report it on your U.S tax return. However, if you pay tax in Japan on these distributions, the payments will count as foreign tax credit towards your US tax obligations.
I pay tuition to a Japanese school. Am I allowed to claim a tuition deduction?
No. There are no provisions for this.
I own a home in Japan and pay property taxes and mortgage interest. Am I allowed to claim a deduction?
Yes. The rules are the same as for homes in the United States. You can itemize deductions or claim the standard deduction (whichever is higher). Please see Standard vs Itemized Deductions on the US Tax Return.
Am I subject to double taxation in Japan and the United States?
If your return is prepared correctly there should be no double taxation in most cases. There are tax treaties involved, and any tax paid to Japan should be applied to your U.S. tax liability.
Japanese Businesses & Investments
I have interest from Japanese post office and bank accounts. How is the interest reported?
The entries for regular post office accounts will show gross income, along with withholding tax (20.315%). Passbooks for bank accounts usually only show the net, so you must divide by 0.79685. For the United States, report the gross amount as income, then claim the foreign tax credit for the Japanese withholding tax.
I own stocks that are held in a brokerage account in Japan. Am I required to report this to the Internal Revenue Service?
Simply holding the stocks do not generate a tax obligation, but a taxable event occurs (i.e. if you receive dividends or sell stock) you must report this on your tax declaration.
My Japanese spouse has accounts that don’t have my name on them. Am I required to report these?
No. You must report financial accounts on form FBAR which is an informational form - no tax due generated. If you are not a signatory on the account, you do not need to report them. See FinCEN Form 114 (FBAR) Reporting.
I am the owner of a KK (Kabushiki Gaisha) - what does this mean for my U.S tax filing requirement?
This may require the filing of Form 5471 which is submitted with your U.S. tax return.
Please see the following information which may be useful for you.