Do American Expats Need to File US Taxes in Japan?

With a recent jump of Americans moving to Japan for its near futuristic technology, stable economy, and robust social services, it’s no wonder that Americans living in Kyoto, Osaka, Tokyo, and beyond may wonder if they need to file US taxes. 

Whether you are working in Japan or simply enjoying a new way of life in a culturally rich country, it is crucial to understand both the Japanese tax system and the US tax system and how it may affect US expats living overseas.  

IRS Deadlines for US Expat Taxes in Japan 

As a US expat, no matter where you have landed in the world, including Japan, there are specific filing deadlines to be aware of. Luckily for expats, there is an automatic extension to file by June 15th. See the table below for more information. 

• April 15th: Standard deadline especially if you owe the IRS
• June 15th: Expat Tax Deadline
• October 15th: FBAR and Extension Deadline
• December 15th: Final Extended Deadline

If a deadline falls on a national holiday or weekend, including any corresponding extension, it jumps to the following weekday. For example, in 2024, June 15th fell on a weekend, so the official deadline was moved to the following workday, June 17th. If you are unsure, check and mark your calendar ahead of time or set a reminder for yourself. 

Need to file from Japan?

You will likely have to file US taxes if you are a US citizen or Green Card Holder and have income exceeding the threshold amounts below. Want to know more about thresholds to see, which would best suit your situation, check out our tax guide detailing all you need to know about thresholds!

Didn’t know you needed to file US expat taxes from Japan? Whether you are an Accidental American unaware of your filing obligation or an American living in Japan who has fallen behind on your US tax return, rest assured: you can get caught up! 

The Streamlined Procedure is an amnesty program for Americans to catch up on their overdue returns by filing a limited number of delinquent tax returns and FBARs without facing penalties. 

It is vital to use the Streamlined Procedure before the IRS comes looking for you! It is too late if they have sent a letter asking why you have yet to file. 

Filing US taxes for Your Family in Japan (+FBAR)

Determining your filing status is a crucial first step when filing US expat taxes from Japan.

Choosing Married Filing Jointly is likely the best option if you are married to a US citizen or a Green Card Holder. However, if your spouse is neither a US citizen nor a Green Card Holder, Married Filing Separately is generally recommended. 

Some tax firms may try to convince you to apply for an ITIN for your non-US citizen spouse, but it is not mandatory if you are Married Filing Separately to a Non-Resident Alien. At MyExpatTaxes, we can file your taxes without an ITIN!

If you have dependent US children with valid US Social Security Numbers and are married to an NRA while paying more than half the expenses of maintaining your household, filing as Head of Household should be considered! 

Child Tax Credits for Families in Japan 

If you are a parent living abroad, you may be eligible for the Child Tax Credit. This means you have the opportunity to claim up to $1,600 per child as a refundable tax credit.

Remember to look at the specific Child Tax Credit Qualifications to see if you are eligible for the credit and how much you may receive.

Tax Forms to Get Comfortable With 

As a US expat, there are a handful of tax forms you should become acquainted with and comfortable with. Get more in-depth explanations when you read our blog about the top six expat tax forms. 

•  FBAR: for reporting all foreign bank accounts (including joint accounts) that reach a combined $10,000 or more annually. This form is sent to FinCEN. 

•  FATCA: For reporting your financial accounts if the total amount you hold in foreign accounts reached $200,000 on the last day of the tax year or more than $300,000 at any time during the year. If you’re married and filing jointly, the minimum reaches $400,000 on the last day of the tax year or more than $600,000 at any time during the year. This form is reported to the IRS. 

When signing up for a foreign bank account, they will ask you to fill out this paperwork before they can open an account for you. Be aware some banks will not open accounts for US citizens if they do not want to comply with FATCA. 

• Form 1116, The Foreign Tax Credit: One possible form to help US citizens avoid double taxation

• Form 2555, The Foreign Earned Income Exclusion: Filing form 2555 allows you to exclude up to $120,000 of income on your tax return. It increases annually to match inflation. 

• Form 8833, The Treaty-Based Return Position: If you are using a tax treaty to avoid double taxation, you must file this form to inform the IRS which tax treaty article you are using. 

•  Form 4868, The Automatic Extension Application: This form allows you to extend your filing date to October 15th and may be filed electronically or via mail-in. 

Types of Taxation in Japan

Inhabitant Tax: In Japan, expats considered residents must pay an inhabitant tax at the local level. This tax calculation is based on a flat fee of 5,000 JPY plus 10% of the resident’s annual income. Non-residents are usually exempt from paying the inhabitant tax. 

Enterprise Tax: Self-employed individuals in Japan must pay enterprise tax, which local governments impose. The tax rate varies from 3% to 5%, depending on the nature of the business. 

Social Security: Japan has a comprehensive social security system. As an expat, you may have an obligation to contribute to this system or the US Social Security system. However, it will depend on the US-Japan totalization agreement. This agreement is designed to prevent expats from having to pay into both systems simultaneously. 

If a US company assigns you to work in Japan for less than five years, you will typically pay into the US Social Security system. However, if the assignment exceeds five years, you will pay into the Japanese social security system. 

 If you work for a non-US employer in Japan, you will always pay into the Japanese social security system. 

If you are self-employed, you will contribute to the country’s social security system, where you reside for more days during the tax year.

Self-Employed in Japan? 

Are you self-employed in Japan? Filing expat taxes as a self-employed individual abroad is like filing as an employee. 

3 Tips for Filing Self-Employed Taxes as a US Expats in Japan:

1. Anyone with a net profit of $400 or more from self-employment must file a US tax return.
2. Self-employed residents of Japan are subject to an enterprise tax levied by the local government. The enterprise tax is between 3-5% depending on the type of business. 
3. If your registration does not have you as a self-employed individual in Japan, you’ll need to make sure to set aside 15.3% of your net profit for US self-employment taxes.

What to Know About Investing in Japan as an American 

There are strict investment guidelines for expats, but it is still possible! Here are common ways to invest in Japan:

• Property: purchasing land or a house in Japan can be pricey, depending on the area, but US expats can buy property for personal or investment purposes. 
• IRAs/ Roth IRAs: Expats can contribute up to $6,500 annually to their Retirement Accounts assuming you have enough taxable compensation and your AGI is below the relevant thresholds
• US-based Stocks and Bonds: To keep things simple for your US taxes, you should keep a US-based portfolio to avoid higher fees and tax rates than investing in foreign investment products like mutual funds. 

The Foreign Housing Exclusion 

Whether you rent or purchase in Japan, The Foreign Housing Exclusion can be a valuable way to save on costs. For instance, this tax exclusion considers rent, property insurance, utilities, household repairs, and more! 

Looking to Retire in Japan? 

 For those considering moving to Japan for retirement, knowing there is no specific retirement visalike in other countries is crucial. You will, however, need a long-term visa. The visa length varies depending on the type of visa you can acquire. After around ten years in Japan, expats can apply for permanent residency, allowing them to live in Japan indefinitely. 

It’s most essential for US Expats to prove they are financially independent and can support themselves plus any dependents. They must also have a clean criminal background, and have valid health insurance before traveling to Japan. 

 If you are thinking of retiring in Japan, having the following accounts can help you save:

•  Pension through your employer
•  US Individual Retirement Account (IRA)
•  US Social Security Benefits 

Get Help Filing from MyExpatTaxes 

Are you an expat living in Japan and need help with filing taxes? Look no further! MyExpatTaxes provides expert assistance to ensure a smooth tax filing process. Still have questions? Take a look over some of our tax tips or contact a Tax Professional via our chat service. We never use bots!