While we don’t directly prepare U.S. tax returns, we can introduce you to trusted local professionals. Our firm can also provide the necessary Japanese documentation and support needed to claim the Foreign Tax Credit on your U.S. return. If you already have a U.S. accountant, we’re happy to collaborate with them for smooth coordination.

Yes, we provide support for inheritance tax planning, as well as for establishing and managing companies in Japan.
Depending on your specific situation, we can also coordinate with professionals specializing in both U.S. and Japanese tax and legal matters to offer you the best possible advice.

Yes, we offer consultations in English, so your U.S. citizen spouse can feel free to consult with us.
To help us better understand your situation and questions, we would appreciate it if you could prepare a brief memo of your background and questions in advance.

Your first step should be to consult with professionals as early as possible. Advice from U.S. tax accountants, attorneys, and Japanese tax professionals—each offering different perspectives—is essential. Organizing the necessary procedures and creating a to-do list will help ensure a smooth transition back to Japan.

Here are some commonly recommended strategies:

– Sell your U.S. home before returning to Japan.
– Plan any remittances to Japan carefully, considering both tax risks and potential savings
– Consider and execute lifetime gifting strategies using the U.S. Unified Credit.
– Evaluate the timing of any Roth IRA withdrawals.

The right strategy depends on your personal financial and family situation, so we recommend a personalized consultation.

Whether you’re considered a tax resident in Japan is determined by a comprehensive evaluation of various factors, not just the presence of your Juminhyo. These factors include your duration of stay, occupation, primary residence, location of family, and location of assets. Therefore, even if your Juminhyo remains in Japan, you may still be deemed a “non-resident” for Japanese tax purposes if your primary base of life is recognized as being in the U.S.

Your tax residency will depend on factors such as the length and location of your stay in Japan and whether you continue to maintain a base of life in the U.S. Generally, if your stay in Japan is long-term, you are more likely to be considered a tax resident under Japanese tax law.

The “10-year rule” means that, even if you currently live in the U.S., you may still be subject to Japanese gift or inheritance tax if you maintained an address in Japan at any time within the past 10 years.

The application of this rule depends on the nationality and residency status of both the giver/decedent and the recipient/heir, so please consult us directly for details.

First, please understand that the sale date of real estate is based on the “delivery date” (actual transfer of ownership), not the “contract date.”

If you sell your U.S. home after returning to Japan, at least your wife (Japanese national with U.S. permanent residency) will need to file a tax return in Japan. Your husband (U.S. citizen) will also need to file a tax return in Japan if he makes remittances to Japan in the same year as the sale.

Furthermore, to apply the special deduction of ¥30 million for the capital gain on the sale, you’ll need to prove that the U.S. property sold was indeed your primary residence. Therefore, we recommend preparing and keeping supporting documents that demonstrate your residency, such as utility bills and mail from public institutions, before your return.

For inheritance and gift taxes, there’s generally no significant difference in Japanese tax treatment whether you obtain U.S. citizenship or not. If someone who acquired U.S. citizenship and renounced Japanese nationality resides in Japan, they often obtain a status-based visa like “Spouse or Child of Japanese National.” Individuals with such visas are treated similarly to Japanese nationals for inheritance and gift tax purposes. Therefore, the tax implications will be equivalent to those for a Japanese national holding a U.S. permanent resident card.

However, there are differences in income tax treatment.
If you obtain U.S. citizenship, you’ll be treated as a “non-permanent resident” for the first five years of residency in Japan. During this period, foreign-sourced income is generally taxed only if it’s remitted to Japan (remittance-based taxation).
In contrast, if you maintain your U.S. permanent residency while residing in Japan, you’ll be treated as a “permanent resident” from the date you become a Japanese resident, and your worldwide income will be subject to taxation regardless of remittance.

Note that abandoning U.S. permanent residency may trigger the U.S. exit tax, so it’s necessary to confirm and consider the U.S. tax implications beforehand.

Individuals born with both Japanese and U.S. nationalities, often referred to as “dual nationals,” are treated as Japanese nationals under Japanese tax law. Inheritance and gift tax implications are also determined similarly to those for Japanese nationals.

Please note that if you choose U.S. nationality after adulthood and lose your Japanese nationality by your own will, your Japanese nationality is automatically considered lost, even if you haven’t completed the renunciation procedures in Japan. In this case, you will also be treated as a “non-Japanese national (U.S. national)” under Japanese tax law.

Remittances are generally not taxable, as they are simply a transfer of funds.
However, caution is needed if the ownership of the funds differs from the name on the receiving account. For example, if a couple jointly owns funds 50/50 and the entire amount is transferred into the wife’s account, it could be considered a gift and subject to Japanese gift tax.

Under Japanese tax law, ownership of jointly held accounts is determined based on who actually contributed the funds—not simply whose name is on the account. So even with a joint account, each person’s share is based on their actual contribution.
If you live in a community property state such as California, Washington, or New York, additional considerations may apply, so we recommend consulting with a qualified professional..

One approach is to temporarily remit the funds to your wife’s account and then transfer them to your husband’s account once he is able to open one in Japan (which typically takes around six months).
As long as the flow of funds is clearly documented, this can help avoid the risk of gift tax being assessed.

There are differing views on this point between tax accountants and the tax authorities. The tax authorities generally take the position that foreign exchange gains should be recognized, so it’s advisable to plan your remittances based on this premise.

If the source of the remitted funds is clear, such as the sale of a U.S. home, the foreign exchange gain is calculated based on the difference between the sale date and the JPY conversion date. The more complex cases involve funds such as salary savings from your time in the U.S., where it may be difficult to accurately determine when the U.S. dollars were acquired, making exchange gain calculations impractical.

As a countermeasure, options include converting the funds to JPY while still residing in the U.S., or remitting the funds in USD without conversion.

Your husband will be treated as a “non-permanent resident” for five years after becoming a Japanese resident. During this period, only domestic-sourced income and foreign-sourced income remitted to Japan will be subject to declaration and payment in Japan. Therefore, if possible, it’s advisable to cover living expenses during the non-permanent resident period with your wife’s funds.

Note that “remittance” includes not only bank transfers but also services like Wise and deductions from U.S. accounts via card payments in Japan, so caution is needed.

Also, be aware that capital gains from over-the-counter transactions of unlisted securities and capital gains from listed securities acquired during the non-permanent resident period are considered domestic-sourced income and are subject to declaration in Japan.

Here’s how this process typically works:
When you send over ¥1 million in a single remittance from the U.S. to Japan, the receiving bank is obligated to report this information to the tax office by the 10th of the month following the arrival date. Based on this report, if the tax office determines there’s a possibility of undeclared income or a gift requiring further confirmation, they will send a document called an “Inquiry about Overseas Remittances, etc.” to the individual. These inquiries are typically received about a year after the remittance.

If you receive such an inquiry, you should confirm whether there’s any undeclared foreign income or if the remittance qualifies as a gift, and then respond by the specified deadline.

The inquiry is an administrative guidance seeking voluntary information, not a tax audit. Therefore, there’s no direct penalty for not responding. However, neglecting it could lead to a tax audit. So, if you receive an inquiry, it’s highly recommended not to ignore it, but to promptly consult with a specialist (tax accountant) and take appropriate action.

If you are a U.S. citizen or permanent resident living in Japan, you are generally required to file tax returns in both countries. Japan’s income tax filing deadline is March 15, while the U.S. deadline for non-resident taxpayers (including U.S. citizens and green card holders living abroad) is automatically extended to June 15. As a result, most taxpayers file their Japanese return first and then prepare their U.S. return based on that.

The foreign tax credit is typically claimed on the U.S. return. This credit allows you to offset your U.S. tax liability with the amount of tax paid to Japan, helping to avoid double taxation. If your U.S. tax exceeds the foreign tax credit, the remaining balance will need to be paid to the U.S. government.

Japanese tax law does not explicitly address IRA or 401(k) distributions. In practice, they are generally treated similarly to non-qualified retirement pensions, with only the portion representing investment gains being subject to tax.

The tax treatment depends on the withdrawal method:

– If received as an annuity: Taxed as miscellaneous income (other).
– If received as a lump sum: Taxed as temporary income, calculated as

(Total proceeds − cost basis − ¥500,000 special deduction) × 1/2.
This halving of the taxable amount often results in a lower effective tax burden.
A key challenge is determining the taxable gains. U.S. statements typically do not show contribution history, so you’ll need to gather your own records to calculate the principal. For 401(k) plans, employer matching contributions are also generally included in the principal.

For 401(k), employer matching contributions are also generally considered part of the principal, so it’s advisable to confirm these along with your own contributions.

The U.S.-Japan Tax Treaty stipulates that IRA and 401(k) retirement pensions are taxed only in the country of residence at the time of withdrawal. Therefore, ordinarily, taxation would be completed only in Japan.

However, if you hold U.S. citizenship or a U.S. permanent resident card and reside in Japan, the Savings Clause of the U.S.-Japan Tax Treaty applies. This clause allows the U.S. to retain the right to tax its residents and citizens based on U.S. tax law, without applying the treaty’s provisions. Therefore, you will still need to file in the U.S.

As explained in Another answer, the taxable portion in Japan is interpreted as the investment gains portion of the withdrawal amount. For this reason, it is generally more tax-advantageous if taxation is completed solely in Japan.

Therefore, if you hold a U.S. permanent resident card, we recommend withdrawing after abandoning your permanent residency. However, if you fall under the “Covered Expatriate” definition in U.S. tax law, your IRA may be subject to lump-sum taxation upon abandoning your permanent residency, so separate consideration is necessary, taking U.S. tax regulations into account. Please be aware of this point.

For U.S. citizens, filing is required in both Japan and the U.S., and the tax paid in Japan will be credited against your U.S. taxes. Therefore, it’s advisable to plan your withdrawals strategically, considering the applicable U.S. tax rates.

If you reside in Japan and receive Social Security benefits, you must declare the received amount as “miscellaneous income (public pensions, etc.)” on your tax return.
Note that Social Security benefits are considered foreign-sourced income, so U.S. citizens will be subject to remittance-based taxation, meaning tax will be levied on the remitted amount.

Under the provisions of the U.S.-Japan Tax Treaty, these pensions are taxed only in the U.S. and are not subject to taxation in Japan. Therefore, if a U.S. citizen receives such a retirement pension and remits it to Japan, it does not need to be declared on a Japanese tax return.

Income generated from U.S. investment accounts (interest, dividends, capital gains) is generally subject to declaration in Japan. For capital gains in particular, it’s crucial to calculate them by considering exchange rate fluctuations from the acquisition date to the sale date.
Therefore, it’s important to keep records of acquisition information (acquisition date, quantity, price, etc.).

Maturity proceeds from U.S. private insurance (such as life insurance and deferred annuities) are generally taxed as “temporary income” under Japanese tax law.

Yes, they do.
An LLC (Limited Liability Company), even if it elects pass-through taxation in the U.S., is generally treated as a “foreign corporation” under Japanese tax law.
If a Japanese resident operates a business as a sole member of an LLC, that individual is likely to be deemed to have a Permanent Establishment (PE) of the LLC in Japan. Therefore, they will need to file a corporate tax return or declare the business income as sole proprietorship income.

On the other hand, an LPS (Limited Partnership) or LLP (Limited Liability Partnership) is generally treated as an “unincorporated partnership” under Japanese tax law. Therefore, if you receive distributions from such an investment, you will need to classify the income generated in the U.S. (based on the Schedule K-1 issued in the U.S.) into the appropriate Japanese income categories and file a tax return.

Both options have advantages and disadvantages.

Advantages of keeping assets in the U.S.:
– Diversification across U.S. and Japanese markets can reduce risk.
– U.S. financial institutions often offer superior investment opportunities and performance.

Disadvantages:
– Managing overseas assets may be burdensome due to communication with U.S. institutions.
– Japanese tax reporting often requires professional support, which can be costly.
– In the event of inheritance, it may take time to liquidate or transfer assets.
– Heirs may struggle with English documents and complex international procedures.

Considering these factors, many of our clients gradually transfer assets to Japan.
However, the best approach depends on your asset size, investment strategy, and family circumstances. We encourage you to consult with us for personalized advice.