Filing

Filing - Living in the US, Returnees to Japan, International tax, Tax planning

What Happens to Tax Filing and Asset Disclosure After Returning to Japan?

Those returning to Japan should be aware of their obligations regarding tax filing and asset disclosure after their return.

About Tax Filing and Asset Disclosure After Returning to Japan

After returning to Japan, you will be obligated to file income tax returns and disclose certain assets. Specifically, you may be required to file an income tax return and disclose assets under certain conditions.

Tax filing deadline

Japan’s tax filing deadline is March 15 each year. Unlike in the U.S., extensions are not allowed unless there are exceptional reasons.

Filing a Report of Overseas Assets

From the year you return to Japan, if the total value of your assets held outside Japan exceeds ¥50 million as of year-end, you are obligated to submit a “Report of Overseas Assets” to the tax office by March 15 of the following year, disclosing the details of those assets. However, this submission is not required for U.S. citizens during their non-permanent resident period.

Filing the Statement of Assets and Liabilities

From the year you return to Japan, if certain conditions are met, you are also obligated to submit a “Statement of Assets and Liabilities” by June 30 of the following year, disclosing all your assets and liabilities, both domestic and overseas.

Where should you claim the foreign tax credit?

The Foreign Tax Credit is a system designed to adjust for and prevent double taxation on the same income between Japan and the U.S. For U.S. citizens or green card holders residing in Japan, Japan, as the country of residence, generally has primary taxing rights. Therefore, you will generally need to claim a credit for taxes paid in Japan on your U.S. tax return.

Point

The treatment of the Foreign Tax Credit between Japan and the U.S. is complex, involving numerous considerations such as calculating the eligible credit amount and determining which country to apply it in. Therefore, we highly recommend consulting with a cross-border tax specialist experienced in both Japanese and U.S. tax matters.