Sent post-taxed money to US + brought it back after abt 6 years = tax implications?

[solo7100]

Greetings,

So I was funding an American based investment for the past 6 years using my salary here in Japan. The money I sent was after Japanese tax was taken out and reported (my employer does it for me).

After about 6 years, I sold shares and brought a part of it back over...equivalent to about 2mil yen. Now it's sitting in my Japanese bank account.

Questions:

1. I sent money, I brought it back. Any tax implications?
2. If so, do I need to file my own taxes for that procedure myself? I have never filed my own taxes here in Japan as my employer has always done it for me on my behalf.
3. If not, I have the equivalent of about 3mil yen still in my US bank account that I still need to bring over. Hoping to get these questions answered before I do.
4. My spouse is not a US citizen (Filipino). If I "gift" her that money into her own bank account and/or open a NISA in her name (so I don't have to mess with US taxes), any negative (or positive) implications about that?

New to investing, taxes, and all this stuff. Living overseas and realizing that after all this time is quite...

Thanks,

[captainspoke]

1. After six years here, you're likely a permanent tax resident, so yes, you'll owe taxes.

2. For something like this--separate from your employer--you'll have to do your own tax filing.

Next, from what you say, you didn't just send money back and forth. You invested it. You'll need to tease out the investment purchase date(s), get the TTM rate for those dates (which will give your cost in yen), and then do the same for the sale date(s) of the investments (get the sale amount in e.g., US$, convert that to yen via the TTM for that date) to get the amount of your proceeds, in yen.

The amount you need to declare (and be taxed on) here, is the difference between your cost (in yen) and your sale (in yen).

**If you sold during 2022, this sale (and any capital gains) should be declared on your 2022 taxes--and the deadline for that is March 15th...! If you sold after the first of the year, in 2023, this will be reported when you file a tax return about a year from now.

Be aware that recent trends in the yen/dollar rate may inflate your capital gain, in yen terms.

So if you bought XYZ when then yen was 80 to the dollar, and you sold last fall when the yen was 138:1, there will be a huge gain just in currency terms--which you will be taxed on.

If you bought 100 shares of XYZ long ago for a dollar each (at 80:1), your cost is 100x80=¥8,000.

But even if the share price of XYZ remained at $1, you've sold shares that are now valued as 100x136=¥13,600. So you have a paper gain, which must be declared, of ¥5,600.

If the share price of XYZ was now $2 when you sold, you get $200, which would be 200x136=¥27,200 ...which is quite a large gain: almost 20,000 yen.

Good luck.

[ClearAsMud]

4. To tack on information about gifting, you are probably aware that American citizens can gift their noncitizen spouses a significant amount of assets tax-free, and it is the donor who is responsible for any tax above that amount. But in Japan, the recipient pays the tax, and gifts to spouses are treated the same as gifts to anyone else: the annual tax-free limit from all sources is 1.1 million yen. So yes, any assets you gift your spouse above that amount will make her liable for Japanese gift tax. But if you've been filing in the US as married filing separately -- thus keeping your NRA spouse out of the US tax system -- NISA, etc., up to the tax-free limit would be a good possibility for her (and thus indirectly for you).

[edit to use "noncitizen" in first sentence.]

[solo7100]

Thank you captain and clear,

Learned a whole bunch of things I didn't know from y'all.

* Is there a difference between a permanent tax resident and a permanent resident? I am not a PR, so how could I be a PR taxed person?
* Looks like I can gift my spouse 1.1mil per year, so that's good.
* I actually sold at a lost. So basically, whatever I took out is just about exactly what I put in...just a little less. If I understand you correctly, captain, if the exchange rate was different when I initially purchased XYZ 6 years ago vs. when I sold it in December of 2022, I could still owe tax, even if I lost money in the states? Would be crazy if I have to pay tax even though I lost money. Not even sure if my understanding is correct.


Another thing I learned...looks like I ain't gonna make the 15th tax date for Japan. My Japanese isn't up to spec and I wouldn't even know where to start or where to go.

So...logical next question: what happens when I miss this year's tax deadline (meaning in 4 days)? Fines? Jail?

Thanks much ahead of time for your help...can't wait for what's next!

[Tkydon]

Thank you captain and clear,

Learned a whole bunch of things I didn't know from y'all.

* Is there a difference between a permanent tax resident and a permanent resident? I am not a PR, so how could I be a PR taxed person?

Yes, Permanent Resident 永住権 for Visa/Immigration and Permanent Resident for Tax Purposes are different.
You are a Permanent Resident for Tax Purposes if you have lived in Japan for more than 5 years in the last 10 years.

* Looks like I can gift my spouse 1.1mil per year, so that's good.
* I actually sold at a lost. So basically, whatever I took out is just about exactly what I put in...just a little less. If I understand you correctly, captain, if the exchange rate was different when I initially purchased XYZ 6 years ago vs. when I sold it in December of 2022, I could still owe tax, even if I lost money in the states? Would be crazy if I have to pay tax even though I lost money. Not even sure if my understanding is correct.

To use captainspoke's example:

If you bought 100 shares of XYZ long ago for a dollar each (at 80:1), your cost is 100x80=¥8,000.

If the share price of XYZ was now $0.90 when you sold, you get a loss of 10c in USD Terms, but 90 x 136=¥12,240 ...which is a gain in Yen terms of Y4,240 yen.

Another thing I learned...looks like I ain't gonna make the 15th tax date for Japan. My Japanese isn't up to spec and I wouldn't even know where to start or where to go.

So...logical next question: what happens when I miss this year's tax deadline (meaning in 4 days)? Fines? Jail?

Thanks much ahead of time for your help...can't wait for what's next!

Locations of the National Tax Offices

https://www.nta.go.jp/about/organization/access/map.htm

Select your location on the map, or enter your address in Japanese

If you go to your local office, they will help you to file.

[Beaglehound]

Other posters have covered the technicalities. On the tax filing, did you get the money last year? I assume so, but just to check…if so, I would head down to your local tax office early next week (with a Japanese speaker if possible) and any paperwork you have. You may be able to file on the spot if you can get organised in time, but if not, you will have indicated good faith and I think the likelihood of fines is low (forget about jail time for something like this, we are not talking large amounts and you are going to do the right thing).

[solo7100]

Thanks to all of you, super helpful indeed!

This whole thread makes me think of the number of times I've traveled back to the states and/or send money to myself via Wise (small amounts like a few hundred)...was I supposed to report every....single.....exchange........I...........did? That seems quite crazy.

I bring 10,000 yen to the states, exchange it and put it in my US bank account in dollars. A two months later, I take out the EXACT amount of USD I put in. I fly back to Japan and, because of the exchange rate change, I get 11,000 instead. I am supposed to run down to the tax office and be like, "Hey..I just got an extra 1,000 yen because...rates." That seems a bit extreme.

Thanks for the links and all, onward the journey goes. Will have to find a way to get to the tax office at some point (won't be this week for sure...ugh)
Thank you!

[solo7100]

4. To tack on information about gifting, you are probably aware that American citizens can gift their noncitizen spouses a significant amount of assets tax-free, and it is the donor who is responsible for any tax above that amount. But in Japan, the recipient pays the tax, and gifts to spouses are treated the same as gifts to anyone else: the annual tax-free limit from all sources is 1.1 million yen. So yes, any assets you gift your spouse above that amount will make her liable for Japanese gift tax. But if you've been filing in the US as married filing separately -- thus keeping your NRA spouse out of the US tax system -- NISA, etc., up to the tax-free limit would be a good possibility for her (and thus indirectly for you).

[edit to use "noncitizen" in first sentence.]

This.

That's the plan moving forward, after everything I've been learning here. Thanks!