US Government Pension Loophole
US Government Pension Loophole
Background: I'm a former city employee who retired before moving to Japan on a spousal visa. I haven't been paying Japan's National Income tax but do pay City tax and Health Insurance to the tune of over 1 million yen/year. I was audited by the equivalent of the IRS last year and was told I owed a little more to the tax system. (no big deal). However, my tax accountant found during his research, that the majority of my income falls into a loophole in the US/Japan treaty, whereby the income from my pension will not be counted in Japan. I've already received a refund from the Japanese city I live in, of close to 3 million yen for the last two years of contributions. Going forward, my pension income will not count against me as income, which takes me down to the point where my wife is able to include me on her Health Insurance at no extra cost. All of this sounds good but I fear that years from now, I find out that all of this is a mistake and I will owe an exorbitant amount of back taxes. Is anyone out there a former US government pensioner who falls into this loophole?