# Pension income



## boating2go

My wife and I have US pensions we receive to an account here in the US, if we would decide to move to Japan would they tax us on them? Since we are already taxed by the IRS here how would that be handle if Japan taxes us? Currently we have about net income 561,645.20 Yen and about 717,430.00 gross income all from the pensions.


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## larabell

I assume the numbers you quoted are monthly. If they're annual numbers, you're probably not even at the level where you'd be required to file a return.

If those are monthly figures, you may be talking about a significant amount of money so I'd really recommend you talk to a tax expert. That said... as far as I understand, retirement income from a foreign company is non-Japan-source income (because the work you're being compensated for wasn't performed in Japan). For the first five years you're here, you'll probably only be taxed on however much of that money you transfer to Japan. After that, you're considered (for tax purposes) a "permanent" resident and Japan will want to tax you on your total worldwide income. However... in Japan, retirement income is listed under "separate taxation" which means that, in general, the tax is withheld when the money is paid and you don't have to do anything. However, in the instructions for filing one's tax return (the "foreigner's" version), it says that receipt of retirement income from a foreign source that has not had tax withheld implies that you have to file your own return at the end of the year.

As for being taxed in both countries, the US and Japan have a treaty that addresses that. You should be able to claim all or part of whatever you paid in the US against your Japanese tax bill. How much I'm not sure -- in the case of taking credit on the US return for taxes paid in Japan it's one-to-one (limited, of course, to whatever income was actually taxed in the US). But someone recently mentioned on this forum that the Japanese tax credit had some limitations.

Again... unless someone on the forum is actually in your position and knows how things work, you really should be talking to a tax expert.


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## boating2go

larabell said:


> I assume the numbers you quoted are monthly. If they're annual numbers, you're probably not even at the level where you'd be required to file a return.
> 
> If those are monthly figures, you may be talking about a significant amount of money so I'd really recommend you talk to a tax expert. That said... as far as I understand, retirement income from a foreign company is non-Japan-source income (because the work you're being compensated for wasn't performed in Japan). For the first five years you're here, you'll probably only be taxed on however much of that money you transfer to Japan. After that, you're considered (for tax purposes) a "permanent" resident and Japan will want to tax you on your total worldwide income. However... in Japan, retirement income is listed under "separate taxation" which means that, in general, the tax is withheld when the money is paid and you don't have to do anything. However, in the instructions for filing one's tax return (the "foreigner's" version), it says that receipt of retirement income from a foreign source that has not had tax withheld implies that you have to file your own return at the end of the year.
> 
> As for being taxed in both countries, the US and Japan have a treaty that addresses that. You should be able to claim all or part of whatever you paid in the US against your Japanese tax bill. How much I'm not sure -- in the case of taking credit on the US return for taxes paid in Japan it's one-to-one (limited, of course, to whatever income was actually taxed in the US). But someone recently mentioned on this forum that the Japanese tax credit had some limitations.
> 
> Again... unless someone on the forum is actually in your position and knows how things work, you really should be talking to a tax expert.


Yes they are monthly totals. I shall consult a tax expert prior to making a decision. Thank you for the advice.


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