Common IRS tax issues of US-Japanese filers and Expats

Along with FATCA and FBAR reporting, these are the specific Japanese IRS tax issues our team of tax attorneys, CPAs, and tax preparers assist our clients with:

Typical tax issues we see with Japanese-American tax filers and Expats

  • Foreign reporting — the Bank Secrecy Act requires US person to retain bank records for 5 years. Yet in Japan, banks don’t necessarily give or create bank statements.
  • A spouse who is not a US person — There are gifting limitations. Also, it is possible to file a joint return with a spouse who is a non-US person to lower taxes.
  • Inheritance issues — often times, US taxpayers did not know that their parents or in-laws put a bank account or asset in their name. The correct forms may be missing with great risk of penalty.
  • US Children — there are instances where children’s investment income may spring a “kiddie tax” on their US parents.

Are you a US person living in Japan?

In Japan, resident taxpayers are taxed on their worldwide income. However, non-resident taxpayers are taxed only on income received in Japan or on income arising in Japan.

Are you a Japanese person living in the United States? (Visa/Substantial Presence Test)

If you are a Green Card holder you are subject to universal taxing jurisdiction on all your income, anywhere in the world. If you are a visa holder the rules are a bit more complicated about when universal taxing jurisdiction is triggered.

The Foreign Earned Income Exclusion

Citizens and residents living and working outside the U.S. may be entitled to a foreign earned income exclusion that reduces taxable income. In addition, you may exclude housing expenses, but with limits. There are limits and special rules about who qualifies for the exclusion, and we can help you understand if you qualify.

Foreign Tax Credits

This is a non-refundable tax credit for income taxes paid to a foreign government as a result of foreign income tax withholdings. The foreign tax credit is available to anyone who either worked in a foreign country or has investment income from a foreign source. There are qualifying factors, and we can help you understand if you are eligible to tax advantage of this credit.

Offshore Voluntary Disclosure Programs

If you have made a mistake in previous IRS tax filings, or haven’t filed at all, we can help. We are the nation’s premier offshore disclosure firm. We have helped thousands of Chinese and others from around the globe properly disclose to the IRS. We can help you too. Call us at 888-727-8796 or email info@irsmedic.com.