# Tax Question: Working Remotely for American Company



## lemonbrigade

My wife (a Japanese citizen) and I are planning to move to Japan from the US next year. She's a nurse here and is in the process of getting her Japanese nursing license. I work remotely for a company here and am hoping I can keep my job after moving to Japan and avoid the whole "finding employment in Japan" hassle, at least until I am completely fluent.

My question is about taxes. If all goes according to plan, my paycheck will still be going to our American bank. We've got my parents' address for our domestic paperwork. Our ideal plan was to live off her paycheck in Japan as much as possible, and use mine to pay off her student loans, invest for retirement, and maybe only convert some of it to Yen when we need it for trips or special expenditures. This is kind of convenient economically with less concern about exchange rates/fees/etc. and being able to easily pay for things in either country, but I'm not sure what taxation considerations I should be taking into account.

Would I pay US taxes on my income, she pays Japanese taxes on her income? I read that resident aliens also need to pay US income taxes, so she would probably also have to pay US taxes too? Would I have to pay Japanese income taxes on my salary earned completely over here? I'm assuming there's a deduction for foreign taxes in both cases, just not sure how that's divvied up or if there's a more favorable way to go (like filing both in one country and paying the difference/deduction to the other? 

Thanks!


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## lemonbrigade

I've done some reading since posting and I see (right or wrong) that the Japanese government doesn't consider money earned for a foreign company in foreign currency going to a foreign account as taxable. The problem is you might show up as "Unemployed," which has implications for renting, etc. (but though my wife would be employed in Japan.) I don't mind doing a little part-time English tutoring or working a few hours a week at an arubaito just to have a little declarable income on the Japan side so I'm not "unemployed" - is this recommended, or does that make everything worse/more complicated?


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## Bevdeforges

I don't know anything about the Japanese tax system, but in general terms, you're considered to be "working in" whatever country you are located in whilst doing the work for which you're being paid.

Just from the US side of things, I can see a couple "challenges" to what you're planning on doing:

Technically speaking, because you'd be working from Japan, you would be eligible for the Foreign Earned Income Exclusion while residing in Japan, so you could exclude your income from US taxes altogether. (The matter of whether or not you'd owe US Social Security depends on a number of things, including whether or not you were enrolled in and paying into whatever "social security" system Japan has. And yes, there is a US-Japan Social Security treaty.)

You don't get to choose which country you pay tax to. Normally, your primary tax obligation is to the country in which you are resident (or "tax resident" under the laws of the country). As a US citizen (or resident alien) you always have to file a tax return, but you're eligible to make use of the tax treaty provisions to avoid double taxation. However, if you're maintaining a US residence and get State taxes taken out of your pay, just be aware that many states don't make allowance for the FEIE and that state taxes aren't normally covered by the tax treaties. Maintaining a US residence is generally not advisable for this reason, though you can of course maintain a mail drop address.

Also, if your wife is a "resident alien" in the US and leaves the US for more than a year, she risks losing her Green Card. (Whether or not she loses her US tax obligation is a whole different issue.) I know of someone this happened to, and the result is that you may wind up having to apply for a spouse visa for her all over again when and if you decide to move back to the US.

You may want to take a look at this guide to Japanese taxes: Taxes in Japan And take a look at IRS publication 54 for information on the US side of taxes when you're living overseas.
Cheers,
Bev


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## larabell

In Japan (as in most countries), any money you earn as compensation for services (either as an employee or as a contractor) are considered taxable in the country where said services were performed. If you're working remotely and living in Japan, your income is taxable in Japan regardless of where the money is paid or in what currency. The rule about foreign-source income applies to passive income such as rental or investment income and only if the money is never remitted to Japan.


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