Vivinavi : Los Angeles : (United States) Los Angeles

• SJDummy
• mail
• 2022/04/29 (Fri) 12:45
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The following is a quote from a previous discussion in the exchange forum of Vivinavi Hawaii by an accountant in Los Angeles.
"With respect to income from an account opened with a Japanese FX company while you were living in Japan
1 ） Have the FX company withhold taxes in Japan and complete the income tax payment
2 ） Report the capital gain 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. because the tax treatment has been completed.

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

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 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 reported separately on the FBAR and so on." End of quote.
My interpretation is that you don't have to be too stupid （ honest and report ） as the IRS requires. There is no investigation by the IRS unless you report it here. I have been maintaining （ bank accounts in the U.S. and Japan for over 25 years, ） and my experience is that although the accounts are strictly checked when they are opened, once they are opened, the bank never asks why they are still there unless I report it to the IRS. （ Of course, the reason for the bank's existence is not clear. Of course, a contact address in Japan is always required. I use a mail forwarding sercice address. ） I assume that the FATCA you are referring to is the IRS Form 8928, but I have never applied for it. （ I have never had a balance of more than $50,000. ） I check the box that I have a foreign account on my 1040 and only apply for FinCen114 every year. I have never been investigated by the IRS. I have been reporting my pension income in Japan to the Pension Service as tax exempt as I reside outside of Japan, and I do not pay taxes in Japan. During the years I resided in Japan, I was not allowed to purchase new Mutual Funds in my US investment account, but I could sell them. （ This seems to depend on the Financial Institution's Policy, which may be the same in Japan. ）
I would like to reiterate that following the rules and regulations too strictly may cause problems. Both the Japanese and US tax authorities are not that busy, so unless the amount is very large （ for example, $ over 500k, ） it is unlikely that they will initiate an investigation. As for the Japanese pension, since you can voluntarily join even if you live outside of Japan, I think it would be advantageous to voluntarily continue the National Pension Plan in consideration of the amount you will receive in the future. （ I have been a voluntary member of the National Pension Plan since I left Japan. ）

• sati2929
• 2022/04/30 (Sat) 01:57
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Dear SJDummy

Thank you for your kind and long explanation. It is very helpful.

I asked two accountants and got different answers.
I came to the US last year, so I am not required to file income tax returns.

The first one told me that I did not need to file FBAR or fatca in that case.
Now the second person explained the procedure which surprised me.
FBAR 6 years back, fatca 3 years back, amended return 2020.
Total is about $5000.
The first person was kind enough to get back to me right away, but there was an aspect of wondering if it was ok ？.
The second person was too expensive even if I was obligated to file. I was surprised. I feel like I'm being replaced with a question about how I ？ didn't file so far but how can I do it.

I think SJDummy is right, not to take it too seriously.
I don't think FBAR and fatca are that difficult, but
what I didn't know is that tax returns for mutual funds and fx are complicated.
I hope there is an accountant who can file just this part of the return, but if not, I will look for one then, since the only time the return is complicated is next year. I will check back to see if it is necessary this time.

• SJDummy
• 2022/05/01 (Sun) 10:53
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One more point, just as a side note, both Japanese and U.S. banks are required to report to the tax authorities each time an overseas remittance of $10,000 or more is made. Therefore, it seems that banks are subject to quite strict checks regarding the purpose of remittance. This is especially true in Japan, even for online domestic transfers, and I have received phone calls from banks to confirm the purpose. （ However, I have never received a check from a bank in the US. ） Therefore, for all money transfers （ whether domestic or foreign ） I think it is necessary to document the destination, reason for transfer, etc. so that I can provide a detailed explanation in the event of a tax audit later, and I keep such documents for at least 3 years.

• sati2929
• 2022/05/14 (Sat) 14:58
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Dear SJDummy and everyone

Thank you very much for your kind explanation.

First of all, my accountant told me that I need to file a tax return to get a stimules check this time, so I need FBAR ・ Form 8938.

As you mentioned, we had to be careful about sending more than $10,000.
Therefore, if you think about living here in the future, you may need to send money from a Japanese bank, and if you have not declared your FBAR, etc., it is likely that you will be checked ？ as to where this money came from.


In addition, I would like to know

1 ＞ If I complete withholding tax in Japan, such as FX, I do not need to file a tax return in the U.S. If I have a special account with withholding tax for stocks at a securities company, does that mean I do not need to file a tax return? ？

2 ＞ If I hold US stocks with a Japanese brokerage firm and get dividends, I already have to pay US tax （ probably 10% ） and Japanese tax in Japan. ？ I feel like I would be subject to double taxation if I did so, but is there any way to avoid this by filing a tax treaty return or something?
The total amount of dividends is only about $40 and taxes are taken, so if I don't have to file a tax return, it would save me a lot of trouble.

Thank you in advance.

• SJDummy
• 2022/05/14 (Sat) 20:21
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I feel that you are quite confused because different accountants have different answers. There are a variety of accountants （ from those who are quite reasonable to those who strictly interpret the law ）, so I don't think you need to be too honest and file as the law requires （ in my opinion ）. Especially if you file Form 8938, it may be interpreted that you have a lot of assets, dividend income, etc., which may increase the possibility of being scrutinized even more. Unless your financial income in Japan is very large （ for example, more than 100K per year $, I think it would be less problematic to pay the required taxes in Japan by withholding and not fill in the return in the US. （ Personal Opinion ）. To get a credit for the tax paid in Japan, you would file Form 1116, but I think it would be better to consider this only if the amount is very large. According to "tax man", there is no sharing of detailed tax information between Japan and the U.S. at this time, so I think it would be a quackery to put your Japanese income on your tax return too honestly. （ Personal Opinion ） Especially in your case, since you are still in the transitional period when your status is not even GC, I think it is a good idea to submit the minimum information required. Even if you have to pay double tax in both countries, as long as the amount is acceptable, I think it is essential to turn a blind eye and try not to make waves as much as possible. In my case, I have applied for tax exemption under the Japan-Pakistan tax treaty for my pension income in Japan and am exempt from paying taxes in Japan. However, when I changed my residence from US->Japan to Japan->US, I had to pay taxes in both countries for about 2 years. As I have said many times before, it is important not to submit unnecessary information as much as possible so as not to poke the snake out of the quack.