Starting point for a US Citizen maintaining a US residence, living in Japan full time

[Phillter]

First off, thank you to everyone who supports this forum. I just discovered it yesterday and have been reading as many posts as I have time for
Saying that, I have yet to find a post that helps for my situation, so I'm making a new post, and standard forum etiquette be damned! Haha.

Here's the vitals:

1. I am a 32yo US Citizen (spouse visa) married to a Japanese National with NO plans to move back to the US. (we are going to be raising our children here, and unless something drastic, like dream-job, etc. comes up, we will remain in Japan)
2. I am maintaining a valid driver's license and US "residence" at my parents' house, and plan to continue that as long as possible.
3. I have an account at a credit union in the US with ~$20,000, along with a debit card to go with it, and a credit card linked to that account.
4. I have a bank account in Japan with ~¥250万 that I would feel comfortable with investing.
5. I have no outstanding debts. (All college debts are paid, no car/house loans, no medical bills, etc.)
6. I have a retirement account (401k I think) from when I used to work in the US...I haven't checked on it in about 5 years...I should really do that...
7. My Japanese is business-level, and I work at an all-Japanese company, so language isn't really a problem, but of course English makes things easier

And my concerns:

1. I have ZERO knowledge of how to invest. In anything. Period. My financial education consisted of "Don't buy things you don't have the money for right now, everything else goes into Savings in the bank.", so I am very good at saving and living within my means, but know nothing other than that.
2. After reading several posts on this fine website, I understand that investing as a US Citizen abroad is a HUGE PITA...Damned if you invest in the US market, damned if you invest in Japan...
3. To go along with that, tax reporting to the US AND to Japan, as well as being potentially double-taxed seems like a HUGE hassle, like wow...I usually prepare my own taxes, and dealing with a simple FEIE form, 2555EZ, is about as far as I care to go with taxes if possible. Maybe it's time to get a pro to do them?
4. The game of messing around with stocks seems tedious to me...I would like to interact with stuff as little as possible (like, just check on things every once in a while, maybe move some funds around, etc)
5. I don't have unlimited free time to read 50 books before I even think about doing anything. I downloaded the Millionaire Teacher book so I'll see about giving that a go. Someone also mentioned that Millionaire Expat was another good one, so maybe I'll look at that one as well!

So...where do I start looking at stuff? Even just simple advice like "Make an account here", "Look at what this term means" etc. would be a GREAT help.

I saw on a couple of more recent posts here that "Schwab" is a good thing to get an account in, if you can still do that as an expat. Or Vanguard...

Like I said, I am starting from square zero here. Along with whatever advice I can get from this post, I am seriously considering asking our great founder, Mr. RetireJapan for a personal help session or 2 just to get me started on the right track.

宜しくお願い致します

[RetireJapan]

Welcome! Read this first: https://jlcollinsnh.com/stock-series/

[Phillter]

Great! Thank you, I'll check it out later tonight.

[TokyoWart]

Welcome!

Just one warning about how you are "maintaining a US residence". The states differ in their approach but many will consider that you never left and they will consider as liable for state tax filing. They higher tax states (California, New York) are more aggressive about this than no-tax states like Nevada so be careful.

Your 401K account is probably still custodianed at your prior employer. There are circumstances under which they can make you move it or cash it out and pay taxes and penalties. In order to move it you'll need an IRA somewhere to roll it into and that will necessitate a US brokerage or bank account. I think someone in your situation is likely to need at least one US brokerage account both for that IRA and for investing.

For dealing with the IRS or simple things like paying an online tax preparation service it really helps to have a US bank account. If you still have one don't close it.

I would second RetireJapan's recommendation to read JL Collins. His very simple investing advice probably gets you 90% of what is possible in retirement investing and the remaining 10% takes a lot more effort.

[Phillter]

Thank you for the reply!

Just one warning about how you are "maintaining a US residence". The states differ in their approach but many will consider that you never left and they will consider as liable for state tax filing. They higher tax states (California, New York) are more aggressive about this than no-tax states like Nevada so be careful.

I used to live in Oregon, and after calling and talking to the Oregon tax office 2 years ago, I learned that if I don't make any money in Oregon, then I don't need to pay any taxes in Oregon. I should probably check again considering how fast tax law changes, but as far as I know I'm in the clear here.

I think someone in your situation is likely to need at least one US brokerage account both for that IRA and for investing.

Alright great! So here's where the lack of knowledge comes in: Do you have any recommendations for a brokerage account? (which I will need to look up exactly what that is after writing this reply )

For dealing with the IRS or simple things like paying an online tax preparation service it really helps to have a US bank account. If you still have one don't close it.

Roger that!

[TokyoWart]

Alright great! So here's where the lack of knowledge comes in: Do you have any recommendations for a brokerage account? (which I will need to look up exactly what that is after writing this reply )

Fidelity, Schwab and TD Ameritrade are all easy to work with once you have the account. Vanguard can be somewhat more difficult sometimes. The problem is establishing one while overseas. I have been able to keep my Fidelity and Schwab accounts since moving to Japan and was able to start a TD Ameritrade account from here a few years ago but I think the last series of posts I've seen here was that TD Ameritrade was no longer allowing people to initiate accounts from Japan.

[Phillter]

Awesome! Thank you so much for the advice TokyoWart; It really really helps me get oriented in this new world. I'll definitely looking into starting an account at one of the places you mentioned and see what I can do...

I wonder if, because I still have a US bank account and stuff, if it will be easier to open the account?

I guess we will see!

[Phillter]

Welcome! Read this first: https://jlcollinsnh.com/stock-series/

RetireJapan, thank you so much for pointing me to that website. John's posts are eye opening and super easy to understand. My plans fell through this weekend so I plowed through all the parts of his stocks series as well as a few of his other random posts.

Do you have a suggestion as to where to go from here?

I'm going to try to open a Vanguard account this week, or at the very least call and see if they will accept me opening an account before I actually do it.

My main concern at this point is if I open an investment account and do stuff in the US, how does the tax reporting work for that, both as an expat reporting US taxes and as a resident of Japan reporting income earned overseas? Is there a good guide somewhere that talks about those problems?

Because so far I've just seen THAT it is difficult to do, but not exactly what I would NEED to do. (And of course taxes are super personal, but just an overview of "you'll need to report this stuff to the US, and you'll need this info to report to Japan", or something along those lines)

And again thank you all so much for opening my eyes to all of this, I really appreciate it!

[Phillter]

A quick update: I was able to open up a Vanguard account today using my US address (the one I am maintaining while living in Japan), with little issue.

I tried giving Vanguard a call to ask them about opening an account, but was told that I could not be helped...so I just decided to go online and try to open one anyway, and it was very easy.

As a hint: I was told by a really helpful guy at customer service that the only reason they ask for your employer information is to make sure there isn't a conflict of interest if you are already working at some financial institution. I just said that I was unemployed, and with no problems I was able to open an account. Contrary to another post here, I was able to add a non-US phone for 2-step verification mails as well. There is also no place where the employer information is saved in your account it looks like, so it looks like it really doesn't matter.

Hope this helps someone on here trying to open a Vanguard account.

TLDR: You CAN open a new Vanguard account if you have a valid SSN and US Address to use for signing up. In the Employer info it doesn't really matter what you put, it's only there to screen out other financial company employees.

[captainspoke]

...My main concern at this point is if I open an investment account and do stuff in the US, how does the tax reporting work for that, both as an expat reporting US taxes and as a resident of Japan reporting income earned overseas? Is there a good guide somewhere that talks about those problems? ...

For tax reporting in japan, you'll need to get a couple spreadsheets going--I use one for trades (gains/losses) and a second to record and keep track of distributions (interest, dividends, quarterly distributions, etc). Once you get the hang of these it's not difficult, but just something that you have to keep up on. A key point is that for anything that happens in US$, you have to convert that to yen on the date that it happened. For conversions I use: http://www.murc-kawasesouba.jp/fx/past_3month.php Note that below the initial calendars (which I never use), there's a place that you can select the exact date you want. Also, use the TTM rate (far right). Distributions are easier, since there's only one date/conversion. For trades you need to do two conversions--one for your date of purchase, and another for the sale date.

For US reporting: I'm not sure about vanguard (it very likely does the same), but my broker allows turbotax to connect to them directly to retrieve 1099 and other tax filing data. This is really slick--it takes something like 25-30 seconds for this, and then those forms are done (reliably and correctly). Note that you do need the version of turbotax that will handle investments, and form 2555 (FEIE). I use the "premier" version of TT, and get it (physical copy/CD) via amazon US, about $60-65 depending on your shipping choice.