US/JP dual baby in Japan - how to save /invest - and any specialist accountants?

[CapnRex]

I know this is quite specific, but I am pulling my hair out trying to figure this out. I need to contact a professional - but I cannot find a professional that knows both US and Japanese tax systems as well as where to invest. (If you know, please tell me!)

I know there is the Junior NISA which will run out in 2023...not long. I am hoping to find a long term avenue to save and invest for my baby's future without getting screwed over by US or Japan tax systems. Like...I set up an account, add funds to it, and let it sit until she is older and can use the money.

Thinking beyond 2023, are there any specific brokerages/systems/etc. for saving?

Thank you!

[Kanto]

I know this is quite specific, but I am pulling my hair out trying to figure this out. I need to contact a professional - but I cannot find a professional that knows both US and Japanese tax systems as well as where to invest. (If you know, please tell me!)

I know there is the Junior NISA which will run out in 2023...not long. I am hoping to find a long term avenue to save and invest for my baby's future without getting screwed over by US or Japan tax systems. Like...I set up an account, add funds to it, and let it sit until she is older and can use the money.

Thinking beyond 2023, are there any specific brokerages/systems/etc. for saving?

Thank you!

I would investigate a 529 or ESA from an American brokerage.

You could also set up a J-NISA with a domestic bluechip. I believe there is also one single ETF that tracks the S&P500 and is traded as a note on the TSE and is not therefore taxed to high heaven.

ETF- > S&P500 index ETF SPY 1557

[TokyoWart]

The decision to apply for US citizenship for your son/daughter is a big one. It forever limits their options to invest outside of America and requires them to file a US tax return indefinitely in adulthood.

This is true regardless of whether or not you apply. The child is a US citizen until they become an adult and are in a position to reject it. Not registering the birth with the US embassy only limits your ability to claim child tax credits or programs such as the COVID funds which were paid out based on number of dependents.

[TokyoWart]

I know this is quite specific, but I am pulling my hair out trying to figure this out. I need to contact a professional - but I cannot find a professional that knows both US and Japanese tax systems as well as where to invest. (If you know, please tell me!)

I know there is the Junior NISA which will run out in 2023...not long. I am hoping to find a long term avenue to save and invest for my baby's future without getting screwed over by US or Japan tax systems. Like...I set up an account, add funds to it, and let it sit until she is older and can use the money.

Thinking beyond 2023, are there any specific brokerages/systems/etc. for saving?

Thank you!

You can open a Junior NISA for them and it won't create Japanese tax liabilities for them. It will need to be reported to the US when it reaches the threshold for FBAR reporting ($10,000 value) and either the child or you would file a tax return to the US reporting any dividends to the IRS but it is unlikely any tax will need to be paid to the US. Our kids all have Junior NISA accounts and although it takes some paperwork to submit their FBAR and US tax returns each year they have never owed any US taxes.

[Kanto]

The decision to apply for US citizenship for your son/daughter is a big one. It forever limits their options to invest outside of America and requires them to file a US tax return indefinitely in adulthood.

This is true regardless of whether or not you apply. The child is a US citizen until they become an adult and are in a position to reject it. Not registering the birth with the US embassy only limits your ability to claim child tax credits or programs such as the COVID funds which were paid out based on number of dependents.

My apologies! The American system continues to surprise.

[Kanto]

I know this is quite specific, but I am pulling my hair out trying to figure this out. I need to contact a professional - but I cannot find a professional that knows both US and Japanese tax systems as well as where to invest. (If you know, please tell me!)

I know there is the Junior NISA which will run out in 2023...not long. I am hoping to find a long term avenue to save and invest for my baby's future without getting screwed over by US or Japan tax systems. Like...I set up an account, add funds to it, and let it sit until she is older and can use the money.

Thinking beyond 2023, are there any specific brokerages/systems/etc. for saving?

Thank you!

You can open a Junior NISA for them and it won't create Japanese tax liabilities for them. It will need to be reported to the US when it reaches the threshold for FBAR reporting ($10,000 value) and either the child or you would file a tax return to the US reporting any dividends to the IRS but it is unlikely any tax will need to be paid to the US. Our kids all have Junior NISA accounts and although it takes some paperwork to submit their FBAR and US tax returns each year they have never owed any US taxes.

Would that not depend on the investments you chose inside of that J-Nisa?

[TokyoWart]

I know this is quite specific, but I am pulling my hair out trying to figure this out. I need to contact a professional - but I cannot find a professional that knows both US and Japanese tax systems as well as where to invest. (If you know, please tell me!)

I know there is the Junior NISA which will run out in 2023...not long. I am hoping to find a long term avenue to save and invest for my baby's future without getting screwed over by US or Japan tax systems. Like...I set up an account, add funds to it, and let it sit until she is older and can use the money.

Thinking beyond 2023, are there any specific brokerages/systems/etc. for saving?

Thank you!

You can open a Junior NISA for them and it won't create Japanese tax liabilities for them. It will need to be reported to the US when it reaches the threshold for FBAR reporting ($10,000 value) and either the child or you would file a tax return to the US reporting any dividends to the IRS but it is unlikely any tax will need to be paid to the US. Our kids all have Junior NISA accounts and although it takes some paperwork to submit their FBAR and US tax returns each year they have never owed any US taxes.

Would that not depend on the investments you chose inside of that J-Nisa?

The need to report a foreign account is triggered if the sum of foreign accounts ever reach the equivalent of $10,000 or more. If the asset in the NISA paid no dividends (eg a stock like Amazon) there’s no US tax liability and the reporting requirements on tax forms are different and a bit higher than for the FBAR. As you can see it gets (needlessly) complicated. My guess is that there is widespread under-reporting by US citizens living abroad because even tax professionals often don’t understand all the rules.

[CapnRex]

Thank you guys so far.

Apart from the junior NISA, any ideas? That ends in 2 years. What brokerage, etc. would I apply to?

Thank you

[Kanto]

Thank you guys so far.

Apart from the junior NISA, any ideas? That ends in 2 years. What brokerage, etc. would I apply to?

Thank you

It ends in 2023. So you have 3 full years of contributions. 2,400,000 Yen.

After that Japanese citizens/residents have no other options outside of traditional investing schemes. Direct investing in a taxable account is the best option after maxing out the parent's NISA accounts. However, for Americans the usual cautions apply.

The education/insurance savings plans that are popular in Japan net less than low-cost index fund investments.

...

You can investigate US brokers that can help with a 529 or ESA. However, it will be difficult to find one that will work with expats it seems based on what other Americans have mentioned on this forum.