US Taxes

April 16th, 2008

It’s the least wonderful time of the year! Last week I dug into the crazy thick book of instructions sent from the Internal Revenue Service (IRS) to my mailbox here with love. It was the official form 1040 filing pack for overseas filers. I tore into it, and with the help of a few websites, I deconstructed the legalese into understandable instructions. Last Thursday I mailed off my long-form 1040 form (this is THE form, for those who don’t know), with an attached 2555-EZ (declaration and exclusion of foreign-earned income) form, and I even included – just for kicks – a copy of Worksheet 4-1 from page 30 of Publication 970 to show how I arrived at the amount of student loan interest that I deducted. I also provided proof of interest I earned on investments, and made it really neat and easy to understand. Of course, this was completely unnecessary, because the full amount I earned with no deductions is still not taxed. Gotta love it. I made copies of everything for my files, too. Anyway, I posted it with a tracking number and had my polite Japanese complemented at the post office. Cool. And yes, I filed “early” for an overseas filer. Just by living over here, I get an extra 2 months to do taxes. And I suppose I could have dropped a 4868 on them. But why not do it now? Besides, I love knocking down that phone book size packet into one nice little envelope. Ha ha.

Now…here’s my one unresolved thing…do I need to refile a new 8802 and the subsequent 6166 (available after application is reviewed) for US Residency Certification to shield from Japanese taxation on my second year here? Third year is taxed on the Japanese side under the agreement between the USA and Japan, regardless. So…any ideas? Thanks!

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Deas Customary Drivel, Unsolicited Commentary

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  • Bryan - I will face Japanese taxation this year. And thanks for the info, but I'm gold on the American taxes. Filed already, without any issues. I did my homework! :-D I'm only wondering if I should preemptively file for the retroactive residency certification for later on. But it's not terribly urgent, I think.
  • Alex,

    You don't need an ITIN for your spouse unless you are claiming her as a US domicile. But if you ever do that I'm sure you'll have her SSN (issued after green car phase) by then. I called the IRS about the ITIN/SSN issue in March actually as I'm in a similar situation and they said to just file as "married, separately filing", and where ever your spouse's SSN is asked for, just write "non-resident alien". That would let the IRS know that your spouse is not a US resident and thus not subject to income taxes. It was a lot easier than the documents and IRS website make it out to be.

    Deas,

    So you now face Japanese taxation? Lucky you, they jacked up the local taxes a lot this past year due to the population decline and increased number of retirees. National income tax was supposed to decrease, but mine only decreased by about 1000 yen a month while the local tax doubled. If you're in the countryside like me then it is expensive due to the disproportion of companies and working age people relative to the student/retired population. Minato-ku in Tokyo is supposed to have really nice, low taxes. :-)

    So for your third year, since you are paying tax in Japan you want to claim income exclusion from US taxes. To claim US income tax exclusion, you have to be out of the US for more than 330 days of the tax year to establish foreign domicile. Then you just file f1040 and f2555-EZ and you're all set. Just include a document explaining your income form you receive from your Japanese employer around December and and where you got the exchange rate from, usually it is best to use the yearly average listed on the embassy's homepage.

    Bryan's last blog post..Testing worries
  • Alex - I'm ineligible for electronic filing too, just because I'm a foreign filer. So I wonder if it's just the ITIN standing in your way there. My guess is that even if it wasn't a problem you'd still have to go old school long-form. I feel your pain. I hope the ITIN application goes smoothly!
  • No idea, but I'm ineligible for electronic filing because I have to apply for an ITIN for my non-resident foreign spouse since she has no social security number! What a pain. She has no income to claim anyway.

    Alex's last blog post..Art
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