Buying a car by financing it from overseas account by wire transfer

[solo7100]

Yes, of course it’s possible. I’ve bought cars in Japan using an international wire as well as paid a contractor for a major home renovations in amounts well of 5 million yen. As long as the recipients account can accept international wires, it is a simple as sending any other international wire.

Did you ever get a call from the NTA? Bank? Any issues with tax questions when you wired that money over?

I don't see how any tax implications would happen since you are not sending money to yourself...you are sending money to the car dealer/person or directly to the contractor. You don't see a dime of it.

[Beaglehound]

Where have you heard that the NTA will assume any money you send in 2024 comes from 2024 income? Not from anything on this thread unless I have missed it.

In the example you quote where the income is made in 2023 but sent in 2024, there would be no Japanese tax due in your situation. However any overseas income made in 2024 would become taxable here up to the value of the amount sent in 2024, as previously outlined. I don't see the necessity for professional advice in this situation tbh, that's all there is to it.

Also, I believe the rules on this mention remitting cash to Japan, so I would not interpret that as meaning one is off the hook if it isn't sent to yourself.

[Beaglehound]

Another thing, not sure if it's been mentioned in thread so far but double taxation agreement between Japan and USA should minimise your tax exposure here if you go down this route

[solo7100]

Where have you heard that the NTA will assume any money you send in 2024 comes from 2024 income? Not from anything on this thread unless I have missed it.

In the example you quote where the income is made in 2023 but sent in 2024, there would be no Japanese tax due in your situation. However any overseas income made in 2024 would become taxable here up to the value of the amount sent in 2024, as previously outlined. I don't see the necessity for professional advice in this situation tbh, that's all there is to it.

Also, I believe the rules on this mention remitting cash to Japan, so I would not interpret that as meaning one is off the hook if it isn't sent to yourself.

Hmm, I think it was my mis-reading or understanding of what I have been reading over the months. If I remit $50,000 today into my Japanese account, how would they know it's NOT from 2024? They would have to ask me or, somehow, I would have to tell them I guess? If I were a bank and I see a client's account blow up with tons of money, I think I would assume that money came from a taxable event this year. I guess I thought that's how banks work here...?

To quote a previous post:

"A taxable event in the tax year will be taxable if you remit funds to Japan in the same tax year. (first 5 years... If you remit funds to Japan in any form; wire transfers, WISE transfers, ATM withdrawals, purchase car, etc..)"

I guess that is my hold up. How would they know the money coming in is not the same tax year of the taxable event? I reckon they would ask and I would tell them. It just began to seem like the burden of proof would be me having to explain or prove, "No..this money I just sent myself was not from this year's taxable event, but past years..."

Perhaps overthinking, but we are not wealthy people. I need to make sure we are making sure with these amounts of money. Again, totally grateful and appreciative of you all taking time to unwrap this situation/mindset.

Thank you!

[solo7100]

Another thing, not sure if it's been mentioned in thread so far but double taxation agreement between Japan and USA should minimise your tax exposure here if you go down this route

True, I've heard about this too. Seems to be a lot of paperwork, but works out in the end.

[RetireJapan]

7 years of transfers from like $30 to $3000.

If you've been here for 7 years you should be declaring your US income and paying any Japanese taxes due.

As long as you have done this the rest of this thread is irrelevant.

[Tkydon]

Hi Ben and others, thanks so much.

Understood all that has been posted so far, but now I'm deeper in the rabbit hole.

Ok, hopefully an easy example from my muddled brain: (as you will see I am still learning/not privy to all of this tax stuff...hence the appreciation of support here!)

1. I make $10,000 gross in USA from pension income (private, not government).
2. I get taxed at 15%, so in my bank account I see $8500.
3. We sell our house/car/whatever and get $50,000 for it. After taxes, capital gains tax, whatever else are all taken out, we only get $40,000. So in my bank account I see $8500 + $40,000 = $48,500.
4. That all happens in 2023.
5. Now it is 2024 and I want to buy a car for $48,500USD. I go to the dealer, choose the car, and wire transfer $48,500 USD directly to the dealer.

The NTA will call me and ask where that money came from (I've heard that before, Tkydon confirmed it).

However, if you have any income in 2024,

That looks fine. You can transfer that $48,500, but the NTA will assume that $10,000 gross of it is from the 2024 Pension, and you would have to pay income tax on the $10,000 gross - that is if you are not transferring that 2024 as well and already paying Japan Income tax on it.

If so, I tell them the above. But then, from what I understand, they won't believe me and say it is income from 2024? Then 20% is gone? Do they take it from the dealer? Do they question the car dealer?

In the case of Capital Gain, for instance, 20% for Capital Gains will not be assessed on the whole amount, but only on any Capital Gain in the same tax year. As you liquidated everything in 2023 and it was sitting in Cash in your account at the end of 2023 it is Savings, and tax free, except that it makes the $10,000 gross 2024 Income taxable even if you don't remit it to Japan. They assume that $10,000 of the $48,000 is the $10,000 of 2024 Income.

As Beaglehound said, "...that any money sent to Japan includes any overseas income in that year. You can't, for example, argue that the particular money you sent is from under the mattress and not from pension or savings income."

So that's another question: would bringing over or paying with our savings be "income" in the NTA eyes? With the above example, that $48,500 happened in 2023. If we bring it over, for example, this month...they will assume we made $48,500 in one month as income and brought it over/paid with it?

Only $10,000 of it, as that is your actual pension income in 2024. (And any other 2024 Income).

Sorry to keep dragging this, but like Tkydon said I think we'll have to consult a qualified tax person again. We did last year and he said as long as you bring the money in the following year (NOT the same tax year) there will be no problem. The tax office won't bother you.

But from what I hear here, if the NTA sees a huge amount come over or pay for a car...they WILL bother us and ask where the money came from, assume it's income, and we can't argue/show/prove that the money was in fact from last year from last year's activities.

(As a side note: how in the world do people bring big money over here then? I've been doing WISE for about 7 years, but small amounts. Never a problem. For example, I recently transferred $2400 from my US account to my Japanese account. No NTA person contacted me. I never got a call from the bank. Should I have been reporting this on my Japanese tax? That's 7 years of transfers from like $30 to $3000. No way I can go back and calculate all of that. The money I brought over has already been taxed in America...so I am bringing after tax money.)

They will ask, and you can reply. They would assume $38,000 (or more if you remit more) is completely tax free.
Depending on when in 2024 you remit the funds, they will assume part or all of the $10,000 of the total is from 2024 Pension Income, and taxable as Pension Income, but after deducting all Deductions and Allowances, so very low or zero tax rate...

Deductions
Personal Allowance - Y480,000
Dependent Spouse - Y380,000
NHI
Other Dependent relatives - Y380,000 per
Any qualifying Insurance Premiums
Perhaps other Deductions and Allowances

Net Taxable Income will be very low, so very low marginal tax rate.

[solo7100]

7 years of transfers from like $30 to $3000.

If you've been here for 7 years you should be declaring your US income and paying any Japanese taxes due.

As long as you have done this the rest of this thread is irrelevant.

Oh, yes. Actually I receive no income from America as my employment is here in Japan. What it has been, for example, is me buying something for a family member here using my Japanese yen, them paying me into my US account in America, then me sending that money to myself (as in, them paying me back). So not really income, but USD to YEN nonetheless.

And this kinda connects to this thread: how would I, or would I have to, tell the NTA that, "This money is for a book set that my sister wanted from Japan, I bought it with my money here, she paid me in USD in my American account, and the big wire you see to my bank is simply her paying me and me paying me back. It is not income."



Not the same, but different same...or something like that?

[RetireJapan]

I was told that if we live in Japan for less than 5 years

So which is it? Less than five years or seven?

[solo7100]

Oh, sorry. I have been here 7, but the family in question just arrived....so less than 5 for them. In other words, the car purchase/money transferring would be all in their name.

Sorry for intermixing we/I/they/us...it's all about the family member who has come.

That recent example was me concerned that what I myself (7 years in Japan) have been doing for the past 7 years. Does it make sense?

Thanks again,