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Be wary of your investments -- the TAXMAN is watching

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  • Originally posted by Ken44 View Post
    Under the new FATCA law you may be required to file a Form 8938 with your US tax return depending on your assets in Japan.

    In theory J-banks are supposed to report such holdings to the US government which are then cross checked with your 8938.
    Desyiyuye - No money, No assets, Nada,No income, and under American law I qualify for the overseas exemption so I file nothing, Fack them !

    Comment


    • Originally posted by BackDoor_Man View Post
      Desyiyuye - No money, No assets, Nada,No income, and under American law I qualify for the overseas exemption so I file nothing, Fack them !

      In your case FACTA doesn't apply so you wouldn't have to file a 8938. (Not sure how foreign banks and their reporting to the IRS works.)

      However, to qualify for the oversea exemption you are required to file a US tax return.

      If you decide someday you want back into the tax system the IRS is fairly lenient about filing past returns.

      I didn't have any documentation or year-end tax statements when I cleaned up my tax mess and no idea what I earned from 1990-96.

      Maybe between 2.5 and 3.5 million a year.

      I was just your average broke as a joke gaijin.

      Just make up figures that sounds right.

      Comment


      • Originally posted by BackDoor_Man View Post
        Desyiyuye - No money, No assets, Nada,No income, and under American law I qualify for the overseas exemption so I file nothing, Fack them !
        Be careful with the words "exclusion" and "exemption", the IRS treats them slightly differently.

        A US citizen living overseas is supposed to file either a 2555 or 2555-EZ along with their 1040 to claim that the Foreign Earned Income Exclusion (FEIE). This exclusion isn't automatic (you need to satisfy certain conditions and have to file to claim it) and it is not necessarily a total exculsion (the actual amount depends on your income level and the number of days you are "outside the US"). Do you do that?

        US citizens who statisfy certain conditions related to age, filing status and gross income may be exempt from filing a 1040 for a particular year. For example, a single individual under the age of 65 who had a gross income of less than USD 9,750 (less than USD 11,200 for single age 65 or older) in TY 2012 is not required to file a 1040. "Gross Income" includes all income in the form of money, goods, property, and services that is not tax exempt from sources both within and outside the US. I guess that if you are exempt from filing a 1040, then you would really have no reason to claim the FEIE. Is this you?

        One more thing is that US citizens abroad are also required to file a TD F 90-22.1 with the US Treasury Department if they hold or have control over any foreign bank accounts or other types of financial accounts whose combined balance is USD 10,000 or more at any time during the year. This is seperate from the IRS stuff and doesn't depend on your income for a particular TY.

        Comment


        • Originally posted by BackDoor_Man View Post
          Desyiyuye - No money, No assets, Nada,No income, and under American law I qualify for the overseas exemption so I file nothing, Fack them !
          You're breathing, right? Still an American national, correct? Then the IRS wants their pound of flesh. But, you're golden as long as you don't set foot back in the US. As soon as you do the DHS flunkies will flag you for further investigation, the IRS will get a nice email and you'll be back on their radar.

          Comment


          • Originally posted by Shimi View Post
            ... One more thing is that US citizens abroad are also required to file a TD F 90-22.1 with the US Treasury Department if they hold or have control over any foreign bank accounts or other types of financial accounts whose combined balance is USD 10,000 or more at any time during the year. This is seperate from the IRS stuff and doesn't depend on your income for a particular TY.

            My accountant gave me the TD F 90-22.1 to send if needed but I didn't file.

            Maybe twice last year I had slightly over 10 grand combined (Citibank and J-bank) at one time

            Usually I send half of my monthly salary to my BOA account in the States as soon as I receive it.

            I doubt I will go over the 10 grand mark anytime soon given the increased strength of the USD.
            Last edited by Ken44; 2013-03-08, 03:08 PM.

            Comment


            • Originally posted by Ken44 View Post
              Well, if you're so worried about getting nabbed then declare what you earn back home and pay the additional taxes.
              I roughly know what I would have to pay when getting "nabbed", and it's too much of a risk for me. Hence I decided a while ago voluntarily to clear the mess up. No questions asked. Better sleep since then. But as I said before: Everybody is in a different situation.

              I would say anyone who plans to retire in Japan and plans living off funds in another country needs to be careful.

              Best bet is to withdraw money each month with a cash card like a co-worker of mine does.
              Yep, it seems the cash card is the tool which is almost impossible to trace. Considered and tried. But: Withdrawal with a cash card means, you get the amount here in JPY, you have no choice to wait for a the right "rate", and cash withdrawal always cost you additional charges. If you do this for years, you lose quite a lot compared with wire transfers into a foreign currency account at a Japanese bank.

              Comment


              • .
                Originally posted by chainbolt View Post
                I roughly know what I would have to pay when getting "nabbed", and it's too much of a risk for me. Hence I decided a while ago voluntarily to clear the mess up. No questions asked. Better sleep since then. But as I said before: Everybody is in a different situation.
                Right. And as a US citizen unless has NTA has proof I am doing something dodgy they will have a difficult time auditing me simply because I do not declare overseas assets.

                So fu-k em.

                Originally posted by chainbolt View Post
                ...Yep, it seems the cash card is the tool which is almost impossible to trace. Considered and tried. But: Withdrawal with a cash card means, you get the amount here in JPY, you have no choice to wait for a the right "rate", and cash withdrawal always cost you additional charges. If you do this for years, you lose quite a lot compared with wire transfers into a foreign currency account at a Japanese bank.
                I not planning on retiring in Japan so this isn't a concern.

                However, should I suddenly needed money in Japan I would use the cash card and/or my wife and I would bring cash back with us after our vacation.
                Last edited by Ken44; 2013-03-09, 08:57 AM.

                Comment


                • In addition to "opinions", there is a lot of useful "factual" information in this thread, such as
                  • the rules regarding the taxation of worldwide income for permanent residents,
                  • the upcoming new rules regarding the declaration of assets,
                  • the exchange of information between the NTA and other tax authorities in certain cases,
                  • the statute of limitations for income tax and the interest and penalties due for undeclared income
                  • the usual procedure if they audit an individual
                  • known incidents that could trigger an audit
                  • links to information sources
                  • etc


                  Quite difficult to find this in this lengthy thread for someone who has not followed up constantly the discussion. Maybe the OP can summarize some important, factual points and put them in the first post?

                  Comment


                  • Originally posted by chainbolt View Post
                    In addition to "opinions", there is a lot of useful "factual" information in this thread, such as
                    • the rules regarding the taxation of worldwide income for permanent residents,
                    • the upcoming new rules regarding the declaration of assets,
                    • the exchange of information between the NTA and other tax authorities in certain cases,
                    • the statute of limitations for income tax and the interest and penalties due for undeclared income
                    • the usual procedure if they audit an individual
                    • known incidents that could trigger an audit
                    • links to information sources
                    • etc


                    Quite difficult to find this in this lengthy thread for someone who has not followed up constantly the discussion. Maybe the OP can summarize some important, factual points and put them in the first post?

                    If you're worried about NTA accessing your financial records back home then find out the steps they must take.

                    Because this American says that and that Canadian says this and the guy from the UK goes on about what happened to him.

                    And while NTA is all powerful in Japan.

                    This isn't necessarily the case in other countries.

                    Comment


                    • I fail to see what your comment has to do with my post.

                      I was suggesting to summarize the known facts about Japanese tax laws and NTA activities so that new readers don't have to go through more than 700 posts to find them.
                      • rules regarding the taxation of worldwide income for permanent residents,
                      • upcoming new rules regarding the declaration of assets,
                      • exchange of information between the NTA and other tax authorities in certain cases,
                      • statute of limitations for income tax and the interest and penalties due for undeclared income
                      • procedure if they audit an individual
                      • known incidents that could trigger an audit
                      • inks to information sources
                        etc


                      Frankly speaking, I find your attitude not helpful. I understand that you believe that you are safe when you do not declare income in the US in Japan. That might be so. Other people have a different opinion, are in a different situation, have made different experiences, and anyway not everybody here is an US citizen. Fact is that everybody residing in Japan longer than 5 years has to pay income tax on his worldwide income, that the Japanese tax office is sometimes investigating individuals, and that certain activities such as money transfers from and to abroad or purchase of real estate might trigger an investigation. Quite a few posters here have been investigated by their tax office. I was merely suggesting to summarize the related facts in the OP so that the reader can draw his own conclusions.
                      Last edited by chainbolt; 2013-03-10, 09:36 AM.

                      Comment


                      • Originally posted by chainbolt View Post
                        Quite a few posters here have been investigated by their tax office.
                        Exactly!!

                        Which is why I suggest learning how NTA accesses your financial records back home.

                        Then weigh the risks.

                        For many gaijin teachers I work with this is a non-starter and they have very little back home.

                        But there are those who do receive a monthly pension check or in one instance a fat inheritance.


                        Originally posted by chainbolt View Post
                        ...Frankly speaking, I find your attitude not helpful.
                        I'm sure you don't.

                        But I pay J-taxes with what I make in Japan.

                        And what I earn in the US is none of their business if I can help it.

                        I think it boiled down the transfer of funds overseas which caught the attention of NTA.

                        But yes if anyone wants to summarize the "facts" that would be nice.


                        [QUOTE=chainbolt;1309009]...Frankly speaking, I find your attitude not helpful. QUOTE]

                        I'm sure you don't.

                        But I pay J-taxes with what I make in Japan.

                        And what I earn in the US is none of their business if I can help it.
                        Last edited by Ken44; 2013-03-10, 11:40 AM.

                        Comment


                        • Originally posted by chainbolt View Post
                          ... I was merely suggesting to summarize the related facts in the OP so that the reader can draw his own conclusions.

                          I think it boiled down to the transfer of funds overseas which caught the attention of NTA.

                          But yes if anyone wants to summarize the "facts" that would be nice.
                          Last edited by Ken44; 2013-03-10, 11:47 AM.

                          Comment


                          • Originally posted by Ken44 View Post
                            But I pay J-taxes with what I make in Japan.
                            I understand where you come from, but this is a much different subject: The fairness of the Japanese tax system against foreign residents. I could give you many more examples how a foreign resident is disadvantaged by the Japanese tax regime:
                            • Why are the social insurance contributions I pay in my home country not tax deductible in Japan, although the income I get in my home country is fully taxed in Japan, and social insurance contributions paid in Japan are deductible? Unfair!!!
                            • Why are the dividends, interest, and capital gains I get abroad are taxed with the marginal tax rate, which is in my case 50% in Japan, while domestic interest and dividends are taxed with the flat tax rate of only 20%? A Japanese tax payer pays 20% "flat" on the dividends he gets in Japan, while I pay up to 50% on the dividends I get in my home country. How come????
                            • Why is a company pension I receive in my home country taxed in Japan with the regular "full" tariff, while a company pension paid in Japan is taxed with the reduced "pension" tariff? Grossly unfair!!!


                            And so on.

                            All this is "unfair" to a taxpayer with income abroad, including many foreigners. But the discussion of "fairness" is not the point here. The point and purpose of this thread is discussing how income abroad is taxed according to the laws of the land, and how the taxman is checking us out. I would prefer to stay with the facts in this regard, to collect as many as possible, and let everybody draw its own conclusion. A discussion about "how bad and unfair" the gaijin is treated by the Japanese taxman is not helpful, because there isn't anything we can change about it.
                            Last edited by chainbolt; 2013-03-10, 02:03 PM.

                            Comment


                            • Originally posted by chainbolt View Post
                              All this is "unfair" to a taxpayer with income abroad, including many foreigners. But the discussion of "fairness" is not the point here. The point and purpose of this thread is discussing how income abroad is taxed according to the laws of the land, and how the taxman is checking us out. I would prefer to stay with the facts in this regard, to collect as many as possible, and let everybody draw its own conclusion. A discussion about "how bad and unfair" the gaijin is treated by the Japanese taxman is not helpful, because there isn't anything we can change about it.
                              Agreed. The NTA annual review made it very clear that if you live in Japan then they strongly feel that it is only right that all your income is taxable. If the income is from funds generated in Japan, then they are going to feel even more justified in pursuing it.

                              Looking at it as evenhandedly as possible I can see that although we all agree that double taxation is wrong, we are not so strict on claiming double relief/allowances. It could be argued that if you insist on being taxed separately on J and Non J income then you are in fact benefiting from two sets of allowances and reliefs. That could be seen as unfair.

                              Anyway, the law is the law. Personally, I would rather obey it.

                              I do not believe that the NTA are either stupid or incapable of enforcing the law. Nor do I believe that they can't get information either by demanding it from me or by asking tax authorities abroad for it.

                              I am also adverse to allowing things to accumulate. If I pay a bit of tax every year, I don't have to worry about it.

                              And that's that.

                              Comment


                              • Originally posted by chainbolt View Post
                                The point and purpose of this thread is discussing how income abroad is taxed according to the laws of the land, and how the taxman is checking us out.
                                Which is why I spoke with the IRS and my US bank and recommend others do the same where they are from.

                                Comment

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