# US or Japan for tax



## mkjapan

I just started working with a US company which allows me to work remotely.
I have dual US & Japanese citizenship and have been living in Japan for past 16 years, working there for past 14 years. 

With this new job I may move to the US for part of the year. 

I'm wondering which country would be most beneficial to be paid in with regards to tax.

Does anyone have similar a similar situation that has been resolved?

Btw, I will be way below the 80K limit for having to pay taxes in the US if I choose
Japan as the country to get paid in.

Thank you


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## Rube

I have no idea which is better but if you paid in America and had a blank for a year in Japan when you came back wouldn't you pay dirt cheap for insurance and so forth?


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## larabell

mkjapan said:


> I'm wondering which country would be most beneficial to be paid in with regards to tax.


I'm not entirely sure that matters. US tax law says that earned income for US tax purposes is based on where the work is performed -- not where the money is paid. If you were talking investment income, it might be a different story. But if you're living in the US and working for money, the money you receive as a result is taxable as US-source even if the money is eventually paid in Japan.

As for the 80K exclusion, that also depends on where you live, not where the money is paid. You have to be physically outside of the US for a minimum period before you are even eligible and even if you qualify for the year you depart and/or return, only the part of your income that was earned outside the US (ie: paid for work you did while living outside the US) is covered by the exclusion. Since both the US and Japan consider earned income to have been sourced wherever you were when you performed the work, the exclusion probably won't work out any differently, either.

I have no idea how Japan taxes their citizens who are living abroad, not being Japanese. But you should be able to find out if you visit your local tax office and ask them. Then, if I were you, I'd run through the numbers each way to see which works out better. There might be some funny loophole you can take advantage of -- but the bit about working in one place and getting paid in another is a trick the tax folks figured out long ago.

One thing you probably should do -- ask your employer if they can provide a tax consultant to answer your questions and possibly even prepare the forms. Having to do two tax returns every year is a pain...


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## mutsugo

I thought Japan does not allow dual citizenship.
Am I wrong?



mkjapan said:


> I just started working with a US company which allows me to work remotely.
> I have dual US & Japanese citizenship and have been living in Japan for past 16 years, working there for past 14 years.
> 
> With this new job I may move to the US for part of the year.
> 
> I'm wondering which country would be most beneficial to be paid in with regards to tax.
> 
> Does anyone have similar a similar situation that has been resolved?
> 
> Btw, I will be way below the 80K limit for having to pay taxes in the US if I choose
> Japan as the country to get paid in.
> 
> Thank you


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## Bevdeforges

It really doesn't matter which country you are paid in. What matters is where you are considered "tax resident."

As a US citizen, you ALWAYS have to file US taxes. You are only eligible for the FEIE (exclusion of up to $92K via form 2555) if you meet the requirements of either the bona fide resident or physical presence tests. One requires that you are resident outside the US for one full calendar year, and the other requires that you remain physically outside the US for 12 consecutive months. If you "move to" the US for "part of the year" you may well jeopardize your eligibility for either test and wind up having to offset Japanese taxes paid against your US tax requirement.
Cheers,
Bev


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