U.S. Tax form 8588 (Foreign Disregarded Entity)

[wsanton]

Retired U.S. citizen, permanent resident in Japan. Been using an online tax service to file U.S. taxes for years. Prices go up occasionally, but this year they hiked the price an additional $300 to file form 8588 (Foreign Disregarded Entity). In 2023 my wife gave a zoom talk for a university in the States and had some earnings from the books she wrote. I don't consider her a foreign business, and in previous years she was never asked to file this form. Does anyone out there know anything about this additional U.S. requirement to report miscellaneous income earned in the States or whether it's actually necessary or not? Many thanks.

[captainspoke]

I'll guess that she gave the zoom talk while here. If that's the case, then I'd call it income that she earned in Japan--which is where she was when the work was be performed. As such, I think japan has first/primary taxation rights on that income. And it doesn't matter where the payer is located, nor where the bank is that the payment was deposited in. The worker--you wife--was here in japan when she was performing the work.

The books are something (work) that she likely performed earlier/elsewhere, and I'm not sure how what I guess are book royalties would be handled.

Good luck!

You might also try reddit: https://www.reddit.com/r/JapanFinance/ There are some pretty sharp people over there.

[wsanton]

Many thanks. I'll give it a shot. It's totally outrageous that the IRS makes is so complicated and expensive just to file a tax return.

Would you happen to know if U.S. citizens are required to report capital gains or dividends that accrue within a NISA account?

[TokyoWart]

Many thanks. I'll give it a shot. It's totally outrageous that the IRS makes is so complicated and expensive just to file a tax return.

Would you happen to know if U.S. citizens are required to report capital gains or dividends that accrue within a NISA account?

I certainly agree with you that this is unnecessarily complicated for US expats. My understanding is that the US does not recognized any special tax status for a NISA account so we report realized capital gains (i.e. only after a sale) and dividends on US taxes.

[captainspoke]

Many thanks. I'll give it a shot. It's totally outrageous that the IRS makes is so complicated and expensive just to file a tax return.

Would you happen to know if U.S. citizens are required to report capital gains or dividends that accrue within a NISA account?

Not only citizens, but green card holders are also subject to tax reporting (and FBAR). And I'm not sure what the process is if you give up that status, what the steps may be. I know you can lose it if you go too long without landing on US soil (trip to Guam will be good).

For Nisa/iDeCo, it gets complicated, and I don't pretend to know the answers. Here's an older thread over on reddit that is a discussion between two knowledgeable people.