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• tax man
• 2022/02/08 (Tue) 00:27
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First of all, please understand that
basically the rule is that you cannot maintain an account in Japan if you do not have a certificate of residence.

This applies not only to FX but also to bank accounts, and if you do not have a resident registration in Japan, you
should first confirm that you cannot open or maintain an account regardless of your nationality.

In addition, we will explain
how you should handle your tax return if you reside in the US.

First of all, income earned in Japan should be treated as withholding tax in Japan.

As an example, if a Japanese tourist earns money gambling in Las Vegas,
there are two ways to process it.
One is to pay 30% income tax on the spot as a foreigner, or
the other is to file an IRS form and report the income in Japan
tax free.

For income from an account opened with a Japanese FX company while living in Japan,
1 ） Have the FX company withhold tax in Japan and complete the income tax payment
2 ） Report the income in Japan on your US tax return

In the case of 2), you will need to file an FBAR in the US.

If you have withheld taxes in Japan, you do not need to file a double return in the U.S.
since the tax treatment has been completed.

Furthermore, how much income you have in 1,000,000 yen is
based on the assumption that you file in the US, but the income from FX and stocks will be taxed at the capital gains rate
unless your US income is several hundred thousand dollars, in which case it is a part of other income. It will be taxed
at maybe 10% tax, which is about $1000.

I would like to inform the readers of this site that
1 ） people without a certificate of residence in Japan cannot basically maintain a bank account for the first time
2 ） income in Japan will be withheld at source and taxed in one country （ Japan ） to complete the payment of income tax in one country and not include it in the US
tax return
3 ） If this is not possible, not only bank accounts but also stock and FX accounts must be declared separately
on the FBAR or other tax returns.

• FX808
• 2022/02/08 (Tue) 01:22
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Thank you for the detailed explanation ！

My account does not seem to be able to withhold tax on FX profits, so I will report it as capital gains in the US.
（ It seems that stocks can withhold tax ）.

• こーの字
• 2022/02/08 (Tue) 16:56
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• Delete

Tax man, please let me study.

>> 2 ） Income in Japan should be withheld at source and income tax should be completed in one country （ Japan ） and not included in the US
return


In terms of construction,
US U.S. resident taxpayers are required to report their worldwide income and get
foreign tax credit ） if not all （ taxes collected in Japan ） back
, but

in practice, it is not possible to get the tax credit back in Japan.
Is it often the case that income withheld in Japan is not reported in the U.S. and the Foreign Tax Credit is not used
？

In the past, I had a small amount of income in Japan.

• tax man
• mail
• 2022/02/09 (Wed) 18:02
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I will answer your questions. I apologize for the length of this message.

I understand that Japan is a country with extremely detailed rules and regulations regarding laws and taxation
procedures. I understand that Japan is a country with very detailed rules and regulations regarding the law, and that the tax process is quite thorough.

By contrast, in the U.S., anyway, everything is mainly run on voluntary returns.

I would not be able to file another return in the US for something that has already been processed in Japan, have the income taxed
again as income, and then refund the taxes paid in Japan in the form of Foreign Paid Tax
even if the IRS Even if it is in the IRS regulations, I understand that it is not
practical （as Americans like to ）do.

Furthermore, there are people who are very worried about the treatment of inheritance assets received in Japan, which many Japanese misunderstand
and are worried about whether they have to file a tax return and pay income tax in the U.S.
and secretly ask for advice.
I feel that there are many people who are not afraid of Japanese law but are afraid of American law
.

We have many people who report their Japanese bank account information on their FBAR every year, and many of them have misunderstood
completely. Of course, Japanese bank account information is required to be declared on the FBAR
, but each Japanese bank website clearly states
that Japanese who have moved out of Japan without resident registration
are not allowed to maintain a bank account. This is not a legal rule, but rather an understanding that if a bank were to allow an account for a person
residing outside of its jurisdiction, the bank would have to （ process the account in accordance with the rules of that person's ） place of residence, for example the US
, which would interfere with the bank's business.
I understand that this is not allowed because it would interfere with the banking business. In other words, even if a Japanese person lives in the U.S. and maintains a substantial amount of money in his/her account
, the bank is not obligated
to report it to the U.S. according to its own rules, so the IRS cannot know about it, and even if he/she does not report it,
the IRS cannot obtain evidence of this from anywhere. IRS will not be able to obtain evidence of this from any source. Therefore,
even if you had a bank account when you lived in Japan and still maintained it,
it would be a violation of the bank's rules, but the IRS would not know because the bank is not required to
report that account information to the IRS. Of course, the rules themselves must be followed, but
unless it is for the purpose of tax evasion, there is no need to worry too much about it.
Unless it is for the purpose of tax evasion, we think it is unnecessary to worry too much.

As for the treatment of income in Japan,
as a general rule, income earned through commercial activities in Japan should be treated
for income tax purposes in Japan. In addition, for Americans （ who have become U.S. citizens ）,
a work visa is required to engage in commercial activities in Japan, in which case
the income is withheld.
Furthermore, if a permanent resident wishes to work or engage in commercial activities in Japan, he/she must
report his/her residence status to the Immigration and Naturalization Service (INA), and if he/she does work in Japan, it is
a violation of US immigration law and the permanent resident status will be revoked.
Therefore, especially in the case of Permanent Residents, they are basically
not allowed to work or engage in commercial activities in Japan, and therefore, it is
basically prohibited to report the income earned there in the U.S.

As an extreme example, if you reported income earned in Japan in the U.S., and immigration had
access to that record, they would naturally ask, "Why can you earn income in Japan
when your status is permanent resident ？? and inquire,
you may even have your Permanent Resident status taken away.

Therefore, I think it is a big misunderstanding to think that if you maintain an FX account
with a Japanese address and earn income, you can declare the income in the U.S.
without any problem.

• こーの字
• 2022/02/09 (Wed) 20:53
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Tax man,

Thank you for your
informative and thoughtful reply at the start of tax filing season when you are busy.

As an unstable （ and vulnerable ） foreigner living in the U.S.,
I feel I must follow the law more closely than an American, but on the other hand,
when filing a tax return for a dollar （ or actually several tens of yen ） in interest on a Japanese bank deposit, I feel
that I must be careful. I am a small person who puts in such a small amount of money, （ as you say, in the U.S., ） which is sometimes rough
in my sense, and I think they will never care whether it is there or not, but I am a small person who puts it in properly.

As for my bank account in Japan, I have been using the same account I had when I lived in Japan
although I have been taking out my resident card since I came to the US.
However, I heard that the megabank I use offers an account service for overseas residents, so
I think they are responding to globalization in that aspect
（ I honestly do not know if the IRS will inspect such an account. ） .

I had never considered that a green card holder would be considered a renouncer of permanent residency if he or she put in a residence permit.
I have lived in the U.S. for over 10 years, but my green card was recently obtained, so I did not have this feeling.
I also read in other articles that if a resident has been out of the U.S. for more than 10 years, his or her U.S. assets are not considered for inheritance in Japan.
I have never had a certificate of residence when I temporarily returned to Japan, but I think this is a matter that I will be careful about in the future.

Also, I was asked to give a lecture in Japan before I got my green card, and I received a little over 100,000 yen as a reward.
I felt like I lost something ～ because the credit was less than the tax deduction in Japan.
Next time, if you have such an opportunity, you may not file a tax return in the U.S. if you have withholding tax in Japan, or
you may avoid withholding tax in Japan and file in the U.S. as a foreigner.

Thank you again for your valuable information.
I will continue to read tax man's comments.

• green
• 2022/02/09 (Wed) 22:25
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Dear tax-man
Thank you for your interesting content.
I have a question about a matter that has been bothering me, and I apologize for the sidetrack.

I have real estate in Japan and I earn rental income.
I file a tax return and pay taxes in Japan every year, but I was told by a Japanese tax accountant that I have to report this income as income in the US on my tax return, which I did.
According to the tax accountant, this is because the income tax rate is different between Japan and the U.S. (Japan's tax rate is lower), and the difference must be reported and paid in the U.S.

I was planning to do the same this year, but since I was told that I do not necessarily have to report my income in Japan in the US, I was curious and asked a question.
(Green card holder, Japan has moved out)

Sorry to bother you, but I would appreciate it if you could enlighten me.
Thank you very much.

• tax man
• mail
• 2022/02/10 (Thu) 02:15
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＞ I have real estate in Japan and earn rental income.
＞ I file a tax return and pay taxes in Japan every year, but I was told by a Japanese tax accountant that I have to report this income as income
＞ in the US on my tax return, which I did.

＞The tax accountant told me that this is because the income tax rate is different between Japan and the U.S. (Japan's rate is lower) and I have to file and pay the difference in the U.S.
＞.

Basically, US residents are required to report their worldwide income in the US
.

However, we understand that there is an agreement between Japan and the U.S. to avoid double taxation, so that income taxed in one country will not be
taxed again in another country.

The difference in income tax rates between Japan and the U.S. is not limited to this, but is included in
the exemption from double taxation.

Normally, again, if you own real estate without resident registration in Japan
and have rental income, the management company receives the income and
they pay the tax on your behalf at the source if the owner is abroad. I understand that
tax processing is completed in Japan.

As I mentioned earlier in my explanation, I think the issue is not the detailed tax interpretation, but how
realistic it is.

Therefore, I understand that it would be futile from a practical point of view to file a tax return to the IRS
where income earned in Japan is paid in Japan and further
it cannot be monitored that you own land in Japan at all.

I think that by going through the trouble of doing this, you are being too honest and
making a fool of yourself by having immigration question why you have income in Japan even though
you are a permanent resident of the US.

I sometimes talk to IRS staff on the phone, but they have no idea
about Japanese income tax rules and regulations, and are far from tax experts.

Moreover, the IRS is not dealing with Americans and Japanese, but with Iranians
, Russians, Ukrainians, and other people from countries where the US has no direct
access to local information. If you interpret
IRS rules and regulations with the meticulousness of the Japanese, you will end up with an abnormally nervous population.

Therefore, again, my understanding is that there is no need to be
unusually nervous except for intentional acts such as tax evasion.

• green
• 2022/02/10 (Thu) 11:31
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Dear tax-man
Thank you for taking the time to reply.

This is the income from real estate that I declared to the US side after inheritance.
I was told that this declaration was also obligatory, so I was honest about it.
Maybe he is a meticulous tax accountant.
I know I can't stop filing this year, but I appreciate your very valuable reply.
Thank you very much.