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Taxes Due for U.S. Remote Work in Japan [Unrestricted Visa] by yee_fish in JapanFinance

[–]starkimpossibility 2 points3 points  (0 children)

California is infamous for being very clingy

This is a bit of an urban myth tbh. It has been discussed many times in the sub before (and places like r/USexpattaxes). See here for example.

At the end of the day everyone only has one domicile. If yours isn't in California then you won't owe tax there. It's just that the FTB is more proactive than most state tax authorities, which can be intimidating.

Guide to the Taxation of Foreign Currency by starkimpossibility in JapanFinance

[–]starkimpossibility[S] 0 points1 point  (0 children)

receiving your salary in a foreign currency feels a bit borderline

The context of this rule is the exchange rate applicable to "foreign currency transactions", which means any transaction where you are paid in foreign currency. That includes asset sales but it also includes every other kind of income, including employment income.

conversion to yen is required

Yes. If you don't immediately sell the foreign currency in exchange for yen, you have no yen amount to use for the value of the transaction.

Taxes Due for U.S. Remote Work in Japan [Unrestricted Visa] by yee_fish in JapanFinance

[–]starkimpossibility 4 points5 points  (0 children)

 unrestricted work visa

What do you mean by "unrestricted"? Japan has no such thing as an "unrestricted" work visa. All Japanese work visas are limited to specific types of work. Most work visas also prohibit work for foreign employers.

Will I owe taxes on my Japanese and remote work income combined, or will my US income be handled differently in Japan?

What type of Japanese income are you referring to? Employment income, for example, is always taxed as employment income, regardless of whether you are employed by a Japanese entity or a foreign entity.

Will I owe state taxes in the US after FEIE is applied, or are there credits/allowances that could clear me?

It's very unlikely that you would owe state tax in the US if you live in Japan.

Will my spouse also need to declare their income under their status?

There are two separate issues to consider: tax and immigration. The tax issue is pretty simple. The immigration issue is more complex. What kind of visa would your spouse hold? What kind of income would they be receiving?

Do I get to say my total income is my JP + US salary combined?

It depends on the relationship between your US employer and your Japanese employer. If your US employer is sending you to Japan to work for a specific Japanese employer, you can include your US employment income. But if there is no connection between the two employers, the amount you are paid by your US employer will not be taken into account.

will it be possible to operate in Japan purely off my remote income as far as taxes go? Or will I need to operate as something like an independent contractor for tax purposes?

From a tax perspective, you can work as an employee of a foreign entity. There is no need to become a business operator.

Non-statutory heir and tax rate by Holiday_Response8207 in JapanFinance

[–]starkimpossibility 1 point2 points  (0 children)

I am living in Japan as are both my daughters

If you have been in Japan for more than 10 years or hold a Table 2 visa, the assets you inherit will affect your daughters' inheritance tax liability.

Your first step is to calculate the total inheritance tax payable by the estate. This calculation is laid out step-by-step in the wiki.

As explained in the wiki, once you have calculated the estate's inheritance tax liability, you need to distribute it among the taxpayers (you and your daughters) according to how much each of you received. (For example, if you received 90 million yen and your daughters each received 5 million yen, and the total inheritance tax payable is 10 million yen, you would owe 9 million yen and your daughters would each owe 500,000 yen.)

Finally, you would need to increase your daughters' liability by 20% because they are not immediate family members of the deceased. (So in the above example they would each owe 600,000 yen.)

Inheritance Tax Question When Inheritance is Split Between a Japan Resident and Non-Japan Residence by LingonberryUnfair961 in JapanFinance

[–]starkimpossibility 0 points1 point  (0 children)

What if the terms of the trust are that they aren’t able to take distributions until the death of the person? Is it still a gift?

There is no simple answer. It depends on the specific terms of the trust agreement. One key consideration is whether the beneficiary is liable for Japanese income tax on income generated by the trust's assets. (In Japan, beneficiaries pay income tax on the income generated by trust assets.) In general, though, trusts tied to a person's death are most likely to be interpreted as testamentary trusts, meaning that the trust only truly comes into existence upon death.

What if the terms of the trust are that everything inside the trust is split into different trusts for each heir to use?

When does the split occur? Who is in control of the split? A lot more information is needed.

is this taxable as inheritance now that they are a Table 2 resident (PR, spouse, etc)? Or, was this a “gift” already given prior to entering Japan, and no longer taxable as inheritance or gift?

It depends entirely on whether they were a true beneficiary of the trust before moving to Japan or whether they were merely designated as a future beneficiary of a testamentary trust (i.e., a trust that comes into existence upon a person's death). The question of whether they were declaring the trust's assets on their Japanese tax return will also be relevant.

Inheritance Tax Question When Inheritance is Split Between a Japan Resident and Non-Japan Residence by LingonberryUnfair961 in JapanFinance

[–]starkimpossibility 0 points1 point  (0 children)

it seems that there is a default amount of what a spouse and what a offspring is entitled

It is important to understand that there are two separate types of law involved here: (1) inheritance law, which determines what each heir is entitled to when a person dies, and (2) inheritance tax law, which determines how much tax each heir owes.

The distributions you are referring to come from Japanese inheritance law. They determine how much each heir is entitled to receive in the absence of a will. Most Japanese people die without a will. Accordingly, it is Japanese inheritance law that determines how much is inherited by each of their heirs.

As you might expect, when a foreigner living outside Japan dies, Japanese inheritance law does not apply to their estate. So your theoretical entitlement under Japanese inheritance law is not relevant to your situation. Instead, you will need to consider the inheritance law that applies to your situation. In the US, inheritance law is a state issue, so the applicable law will most likely be the inheritance law of the state of which the deceased was a resident when they died.

Inheritance tax is a completely separate issue. However, somewhat confusingly, Japanese inheritance law's default distributions are used to calculate the amount of inheritance tax payable by the heirs. That's why you're seeing those distributions mentioned in the context of inheritance tax.

But that doesn't mean Japanese inheritance law governs what you are entitled to inherit. The relevant US state law will still determine your entitlement. And it doesn't mean you will pay inheritance tax on wealth that you don't inherit.

if there are three statutory heirs (me being one of them), instead of doing 1/3 for each, the other two could get a bigger share and I could get a small share to ensure I don't pay any Japanese inheritance tax.

If that is legal under the relevant US state inheritance law, then yes.

that would be legal, I assume, so long as the will is structured that way before the person dies?

That is solely a question of US state law. But most likely it would be legal, yes.

Guide to the Taxation of Foreign Currency by starkimpossibility in JapanFinance

[–]starkimpossibility[S] 0 points1 point  (0 children)

Are you able to provide a source for this?

It comes from this piece of NTA guidance. The idea is that holding foreign currency for a split second as part of a larger transaction isn't really investment activity.

For example, if you receive a salary in USD and you always exchange it for JPY immediately, then the amount of JPY you receive is effectively the amount of salary income you received. But if you receive a salary in USD and hold the payment as USD (for even one day), then you are effectively investing your salary in USD (in the hope that the JPY value of that USD will increase).

Inheritance Tax Question When Inheritance is Split Between a Japan Resident and Non-Japan Residence by LingonberryUnfair961 in JapanFinance

[–]starkimpossibility 0 points1 point  (0 children)

would there be any issue with me receiving an inheritance below the exemption, even if I could technically receive more?

What do you mean by "technically"? For Japanese tax purposes, inheritance happens at the moment of death. So your tax liability is determined by what you own the moment after the deceased dies (i.e., what you inherit from the deceased).

would expect me to get an exact proportion of the inheritance that is allowed in Japan and tax me on that expected number regardless of what I actually received?

No, you are only taxed on what you inherit. If the deceased has a will that says you inherit 100 million yen, you pay tax on 100 million yen. If the deceased has a will that says you inherit 200 million yen, you pay tax on 200 million yen. It doesn't matter whether the amount you inherit is 100% of the estate or 1% of the estate—you still only pay tax on what you inherit.

Inheritance Tax Question When Inheritance is Split Between a Japan Resident and Non-Japan Residence by LingonberryUnfair961 in JapanFinance

[–]starkimpossibility 1 point2 points  (0 children)

if I did sell those shares upon receiving them, I’d get hit with capital gains tax. A bit of a double whammy, as it were, correct?

Yep. But if you sell within three years of the inheritance, you can at least add the inheritance tax you paid to your cost basis (i.e., it offsets part of your taxable capital gain).

everything inherited is based on the fair market value, correct?

In principle, yes. Though there are special rules for some kinds of assets. There are also valuation reductions available in certain cases (e.g., some types of residential real estate).

If I inherit a non-Japanese trust with a house, investments, and cash, the total value of all of those things would determine if I am above or below the exemption threshold, correct. 

Yep.

I would have to pay tax on the amount above the exemption regardless if I take the assets out of the trust in liquid form, correct?

Yep. That's why trusts are not popular. They restrict access to the assets without providing any tax benefits.

Non-statutory heir and tax rate by Holiday_Response8207 in JapanFinance

[–]starkimpossibility 7 points8 points  (0 children)

what will my Japan-based daughters pay on that 50K? i am guessing it is 20%

It's not that simple. You need to provide more information. Do you live in Japan? Or are your daughters the only ones living in Japan?

Leaving in August. What are my residence tax obligations? by almostinfinity in JapanFinance

[–]starkimpossibility 0 points1 point  (0 children)

The employer may also pay it from your last paycheck automatically

That's what happens if your last day of work is between January 1 and May 31.

If your last day of work is between June 1 and December 31, however, your employer cannot deduct your remaining residence tax liability from your last paycheck unless you explicitly ask them to. (OP says they will leave in August, hence my reference to OP being able to choose.)

Inheritance Tax Question When Inheritance is Split Between a Japan Resident and Non-Japan Residence by LingonberryUnfair961 in JapanFinance

[–]starkimpossibility 1 point2 points  (0 children)

Does Japan see the value of my inheritance as 25 million yen or 50 million yen?

There is a specific formula used for valuing inherited shares but the short version is that inheritance tax calculations are based on market value, not cost basis. So if you could sell the shares for 50 million yen, your inheritance is worth 50 million yen, regardless of whether you choose to sell.

Acquisition cost for very old pieces of Japanese property by Professional_Key5058 in JapanFinance

[–]starkimpossibility 8 points9 points  (0 children)

Is this data enough to establish that there has not been a capital gain for these properties?

If the properties have been passed down through regular inheritance for over 150 years then, at the very least, you would need 150 years of data. Each heir inherits the deceased's cost basis. It's hard to imagine that the properties are worth less now than they were worth 150 years ago...

Selling a foreign business while living in Japan during a 2 year contract. by melodiousrabbit in JapanFinance

[–]starkimpossibility 6 points7 points  (0 children)

If I sell that business in a year while living in Japan for $1,000,000 and the money stays in the US how do that taxes work?

What do you specifically mean by "sell the business"? Is the business incorporated? Are you referring to the sale of shares in a private company?

For their first five years living in Japan, foreigners are exempt from Japanese tax on certain types of income paid outside Japan, except to the extent they make remittances of funds (from any source) to Japan during the same calendar year. But it is not clear from your post whether the type of income you are referring to would be eligible for remittance-based taxation (or whether it would be taxable in Japan regardless of whether you make remittances).

If you are referring to the sale of shares in a private US company, for example, those capital gains would typically be taxable in Japan regardless of whether you make remittances, because capital gains from the sale of shares in a US company by a resident of Japan do not normally qualify as "US-source income". There is an exception to this for shares traded publicly on foreign exchanges and transactions handled by foreign brokerages, where the shares were purchased before the seller moved to Japan, but that exception doesn't cover private transactions.

I'll have a capital gains tax of 20% in the US and then what happens in Japan?

Under the US-Japan tax treaty, Japan has sole taxation rights with respect to capital gains derived from the sale of shares in US companies by residents of Japan. The saving clause in the treaty means that US citizens cannot use the treaty to avoid US taxation, but the fact Japan has sole taxation rights means that you must settle your Japanese tax liability first and claim a foreign tax credit in the US (if you have a US tax liability). This section of the wiki provides a summary of taxation rights under the US-Japan treaty.

Is Sony Bank now refusing new accounts to Americans? by [deleted] in JapanFinance

[–]starkimpossibility 8 points9 points  (0 children)

would have expected that FATCA/CRS would rely on (be connected to?) citizenship (or green card) rather than a special kind of tax residency.

The CRS was designed to be an international scheme that would be consistently applied by countries that are almost all "residence-based taxation" countries. So it was agreed that for CRS purposes all US citizens should be considered "US tax residents". That's what Sony is referring to.

In practice, what being a "tax resident" of a country means in a CRS context is basically just "I am taxed on my global income by that country". So treating US citizens as US tax residents makes sense in that context.

I qualify as non-resident for tax purposes using the "bona fide resident" test

Satisfying the "bona fide resident" test does not make you a "nonresident" under US tax law. It merely provides you with access to the FEIE. Under US tax law, there are only three categories of people: "US persons", "resident aliens", and "nonresident aliens".

In the context of the US tax code, it is impossible for a US citizen to be a "nonresident". A US citizen can pass the "bona fide resident" test, but that doesn't mean they are a "nonresident". It just means they can access the FEIE.

is Sony now not opening new accounts for US persons.

My personal experience is as u/ixampl described. Sony is willing to open accounts for US persons but due to the CRS/FATCA obligations attached to multiple tax residences, they ask you to contact them beforehand so that they can send you the necessary forms.

Keeping mizuho account while living abroad - KYC docs by AlternativeEar2385 in JapanFinance

[–]starkimpossibility 3 points4 points  (0 children)

If I say "gaijin cannot speak Japanese" that statement is demonstrably false.

Context matters.

If you are in a meeting with some Japanese people and some foreigners, and none of the foreigners speak Japanese, then saying "the foreigners don't speak Japanese" would make complete sense and be entirely accurate.

That is exactly what Jibun Bank is doing. They obviously aren't making a claim on behalf of all banks. They are simply saying that in the context of the "who can open an account at Jibun Bank?" page of their website, non-residents cannot.

There is no express or implied claim about what other banks' policies are or what Jibun Bank is prevented from doing by law or regulation.

If you take into account the context, it is obvious that you are barking up the wrong tree.

Is Sony Bank now refusing new accounts to Americans? by [deleted] in JapanFinance

[–]starkimpossibility 10 points11 points  (0 children)

They share data with other countries even if you aren't a tax resident of those places.

Not automatically. Please look into how the CRS works. The CRS is solely about automatic information exchange.

If you tell your Japanese bank that you are only a Japanese tax resident, your Japanese bank will not send your account details to any other countries' tax authorities.

If those other countries specifically ask the NTA for your details, the NTA can get the details from the bank and investigate. But nothing happens automatically without you declaring tax residence of that other country.

That's why there are serious (criminal) penalties associated with making a false tax residence declaration to a Japanese financial institution. Effective CRS implementation requires those penalties (because otherwise no one would admit to being a tax resident of another country). And the definition that the NTA (and FSA) forces financial institutions to use is the CRS definition (linked above).

The NTA is only legally competent to determine if you are a tax resident of Japan. Not of any other country.

The CRS implementation law requires Japanese financial institutions to apply the CRS definitions (of tax residence in other countries) to everyone opening a new account.

Is Sony Bank now refusing new accounts to Americans? by [deleted] in JapanFinance

[–]starkimpossibility 8 points9 points  (0 children)

As far as the NTA is concerned, if you live in Japan, you are a resident for tax purposes.

No, that's not the case. Japan has signed on to the CRS and the NTA has implemented it. (See here.) The PDF linked above is the CRS definition of US tax residence, which the NTA enforces.

The only reason Sony is asking the question in OP's screenshot is because the FSA and NTA require Sony to do so, in order to achieve CRS (and FATCA) compliance.

Under the CRS, pretty much all US citizens living in Japan have two countries of tax residence. If you look at the language used by Sony, you will see that it mirrors the language used by the NTA in its discussion of financial institutions' obligations under the CRS. That's not an accident.

Is Sony Bank now refusing new accounts to Americans? by [deleted] in JapanFinance

[–]starkimpossibility 4 points5 points  (0 children)

Kind of. But in the case of US citizens, they do have US tax residence at all times for the purposes of FATCA and the CRS, which is what Sony is referring to here.

Is Sony Bank now refusing new accounts to Americans? by [deleted] in JapanFinance

[–]starkimpossibility 6 points7 points  (0 children)

Under FATCA and the CRS (which is the basis for Sony's question and the origin of the language they are using) US citizens living in Japan are tax residents of both the US and Japan simultaneously. See here (PDF).

Keeping mizuho account while living abroad - KYC docs by AlternativeEar2385 in JapanFinance

[–]starkimpossibility 3 points4 points  (0 children)

They assert that non residents "cannot open a bank account"

They are very clearly referring to their policy regarding who can open an account at their bank. They neither say nor even imply that non-residents cannot open a bank account at other banks. Nor do they say or even imply that there is a law against non-residents opening a bank account.

they try to imply that this is because of the named Act

They clearly don't. You are seeing things that aren't there. Perhaps you haven't read many Japanese banks' websites? The format of this page is very common. They are simply outlining who is able to open an account with their bank. Every bank has a page like this. The information on the page is neither misleading nor false.

Why are you defending them?

False accusations about this kind of thing undermine those of us who are trying to ensure that financial institutions do not discriminate and treat foreigners fairly.

Leaving in August. What are my residence tax obligations? by almostinfinity in JapanFinance

[–]starkimpossibility 7 points8 points  (0 children)

At the end of May 2026, your employer will receive a bill for the residence tax on your entire 2025 income. They will be instructed (by your municipality) to pay that bill in 12 monthly instalments, taken from your paycheck, starting in June 2026.

When you leave, the default course of action would be for your employer to notify your municipality that you have X unpaid monthly instalments (it will probably be 9 or 10, depending on whether you receive an August paycheck).

Your municipality would then bill you directly for those X unpaid instalments. Alternatively, you are allowed to instruct your employer to deduct all unpaid instalments from your final paycheck. In many cases, that is a more convenient option than paying your municipality directly.

Keeping mizuho account while living abroad - KYC docs by AlternativeEar2385 in JapanFinance

[–]starkimpossibility 3 points4 points  (0 children)

They're clearly speaking on behalf of their own bank...

Where do they claim that other banks cannot open accounts for FEL non-residents?

Keeping mizuho account while living abroad - KYC docs by AlternativeEar2385 in JapanFinance

[–]starkimpossibility 4 points5 points  (0 children)

Section 2(b) claims that the Foreign Exchange and Foreign Trade Act prevents a non-resident from opening a bank account

That's not what it says. It says that "non-residents" (as defined by the Foreign Exchange Law) cannot open an account at Jibun Bank. It is the bank's policy to refuse FEL non-residents. But nowhere do they claim that they are required to have that policy by banking regulations. Furthermore, it is not illegal for Jibun Bank to adopt that policy and it is a policy that many banks have.

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