# Moved back to the US in 2016



## japanusaexpat (Jan 25, 2017)

Hi all,

This is my first post and I am happy to join the community! 

I am preparing my US taxes for 2016 right now and had a few questions if anyone can please help?

I lived and worked in Japan as a Japanese employee paid in Japanese yen for about two years from early 2014 to February 2016. I moved back to the US in March 2016 and joined a US company paid in US dollars and am still working there now.

Here's my situation in a nutshell:

 Filing as single with no dependents, US citizen.
 Japan income from 2016 January - February. Income tax, unemployment insurance, medical insurance, residence tax was withheld from paycheck.
 Moving and job search expenses in 2016 March of roughly ~$3K total.
 US income for rest of 2016.
 Withdrew all money out of my Japan company's 401k in 2016 July into Japan bank account; did not need to pay tax to Japan on this.
 Did NOT withdraw money put into Japan national pension/social security.
 Paid municipal taxes to Japan in 2016 July overseas from Japan bank account.
 Transferred money from Japan bank account to US account in 2016 December. Now, the account has less than $10K in it.

Now, my questions:

 Do I qualify for the FEIE or the FTC? Note that the taxes I paid to Japan in 2016 are roughly 30% of my Japan income in 2016.
 How do I deal with my Japan 401k distribution on my tax return?
 Should I claim the standard deduction of $6.3K? Or moving and job search expenses can be deducted?
 I am going to prepare taxes online. Would TaxAct Plus work or is H&R Block Deluxe required?


----------



## Bevdeforges (Nov 16, 2007)

> Do I qualify for the FEIE or the FTC? Note that the taxes I paid to Japan in 2016 are roughly 30% of my Japan income in 2016.
> How do I deal with my Japan 401k distribution on my tax return?
> Should I claim the standard deduction of $6.3K? Or moving and job search expenses can be deducted?
> I am going to prepare taxes online. Would TaxAct Plus work or is H&R Block Deluxe required?


You should qualify for the FEIE as long as you were in Japan for the 12 months immediately preceding your return. Presumably you filed using the FEIE when you filed for 2015 (you did file for 2015, didn't you?).

If by "Japan 401K" you mean a Japanese deferred tax retirement account that works similarly to how the US 401K works, then you may have to check the US-Japan tax treaty. But in general, you probably aren't allowed to deduct your contributions from your reported earned income and may well have to have reported any employer contribution. The US is remarkably loathe to recognize foreign retirement savings plans, even when they function just like the US equivalent. But as long as you've reported the employer contributions (which you can probably do as "earned income" and thus subject to the FEIE) and any earnings on the account (interest mainly) then your distribution is nothing more than withdrawing money from a foreign bank account - i.e. not income, just a transfer of capital.

Check Pub. 54, but I think your expenses in moving back to the US are deductible against your US income. As far as std. deduction vs. itemized, you'll have to run the numbers. Any itemized deductions relating to your Japanese income have to be adjusted for when figuring the FEIE. And in any event, you would need to come up with more in itemized deductions than the standard deduction amount to make it worthwhile. 

Depending on your income level, you may want to check the IRS Free File site to see if you can get a freebie on the tax preparation fees. If you go the paid tax prep route, take a look at the "product comparisons" on the various providers' websites. That should indicate what forms and what types of income are covered - but just having foreign source income or the FEIE or FTC doesn't normally require anything above the "basic" package - just be sure you use one that allows you to file a regular 1040 rather than the A or EZ version of the form.
Cheers,
Bev


----------



## japanusaexpat (Jan 25, 2017)

Thank you Bev!! I am still quite young and 2016 taxes are kind of overwhelming.

1. Yes, I was in Japan more than 12 months before my return. I did file using the FEIE in 2015 and didn't need to pay anything to the IRS. Is using the FEIE better than the FTC (also see point 3 below)? Also, my tax software is asking whether my "tax home" was located in a foreign country for form 2555, but I'm not sure what to answer?
2. Hmm, it is like a US 401k except my Japanese company contributed to it every month since I joined in 2014, separate and in addition to my paycheck. There was no money contributed from me. I didn't report this in 2015 (even if I did I would not need to pay any taxes to the US), but if I report the money my company put in Jan/Feb 2016 as "earned income" am I safe?
3. I think it is eligible by Pub 54. However, it seems that the sum of my 2016 Japan taxes paid (FTC) + moving expenses + job search expenses + other credits/deductions is less than $6.3k. Does that mean standard deduction is better?
4. Got it thanks! Will rethink once I know answers to questions to decide which forms I need.


----------



## japanusaexpat (Jan 25, 2017)

I got the answer for #3, so please disregard.
3. The FTC is a credit, which is entirely different from deductions. Since the moving and job search deductions are less than $6.3K (and these are the only deductions I will take in 2016), I should take the standard deduction.

I still hope someone cane give me answers for #1 and #2!


----------



## Bevdeforges (Nov 16, 2007)

> 1. Yes, I was in Japan more than 12 months before my return. I did file using the FEIE in 2015 and didn't need to pay anything to the IRS. Is using the FEIE better than the FTC (also see point 3 below)? Also, my tax software is asking whether my "tax home" was located in a foreign country for form 2555, but I'm not sure what to answer?


For the purposes of the 2555, yes, your tax home was in a foreign country for the dates you indicate on the form. (They ask when your foreign residence began and ended.) 



> 2. Hmm, it is like a US 401k except my Japanese company contributed to it every month since I joined in 2014, separate and in addition to my paycheck. There was no money contributed from me. I didn't report this in 2015 (even if I did I would not need to pay any taxes to the US), but if I report the money my company put in Jan/Feb 2016 as "earned income" am I safe?


Frankly, I would tend to just leave this out altogether. You could take the position that this was a standard retirement pension, not a retirement savings plan, and that your employer contribution was merely part of your benefits while employed. It is very likely not a significant amount that is likely to draw any IRS attention. If by some odd chance you should be asked about it, you deal with it when it comes up. (Two or three years of pension contributions isn't going to create a huge tax bill for you, even with interest.) I'm betting it will never come up.
Cheers,
Bev


----------



## japanusaexpat (Jan 25, 2017)

Thank you, Bev!!

With this my questions are answered and I feel confident to file taxes this year!


----------

