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

[Phillter]

Hi captainspoke! Thank so much for your reply.

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).

Ok cool, I can do that. Would you mind giving a few example lines out of what a spreadsheet like this would look like? I don't plan to be trading very much, mainly just putting money in broad index-funds like VTSAX etc.

Also, super newbie question, but let me double check this: A "distribution" is when you transfer money OUT of one of your funds into your account...correct?

I use the "premier" version of TT, and get it (physical copy/CD) via amazon US, about $60-65 depending on your shipping choice.

Looks like I'll have to start shelling out for TT from now on haha. I'v avoided it for years but this increase in the complications of my taxes means those days are gone I guess! Thanks for the tip

[captainspoke]

For trades. Tho I've listed these as what looks like a column, on the sheet they're column headings--across the top. I organize this by sale date, so column C shows dates in sequence from 1/1 to 12/31.

A No.
B Ticker
C Sale Date
D Purchase Date
E Proceeds
F Cost
G Withholding Tax
H P/L
I Sale Rate
J Cost Rate
K Proceeds
L Cost
M P/L

Note that the purpose here, for your tax return, are two numbers, the totals of two columns--K and L. Those totals are what you need to input for your return. The rest of it just gets you there (and column M is just a numbers check for my own use).

No. is the particular sale, so each row simply gets a number there 1 through X for the number of trades that year.
Ticker is the symbol, and I use that instead of full names.
Sale date should be obvious.
Purchase date, too, but this will of course vary--same tax year or maybe some years in the past.
Columns E, F, G, and H are in dollars, the two important ones are E and F.
Columns I and J are the conversion rates (TTM), dollar/yen rate for the sale date and purchase date. These columns are used in formulas to get the resulting figures in columns K and L. (= yen)
Columns K and L are what you got from the sale (K), and what it cost you--in Yen.
Columns H and M are profit/loss--H in dollars, M in yen.

Totals are at the bottom of each column, tho as I said, it's the totals of K and L that are used when inputing data into your return.

Here are the translations I use in the row just below the english.

株式
売却日
購入日
売却代金
購入代金
源泉金額
株式損益
TTM
TTM
売却代金
購入代金
株式損益

And I don't want to spend too much time on this and get logged out by the system, so I'll stop here.

Questions?

[captainspoke]

The conversion formulas are simple math. For a given row, multiply E times I to get K (proceeds); and do the same for the purchase, F times J to get L (cost). The last column is just the difference of K and L, so I can see at a glance what the gain/loss was in yen.

If the explanation of this makes this seem complicated or challenging, it's really not. Once you've got the sheet set up (the challenging part), it's just plugging in the tickers, dates, and various numbers. Data entry.

I prefer to update these sheets every couple few months. You can then see that everything is working/displaying okay along the way, rather than leaving it all to do sometime in January. Also, I think it's a good thing to see what's happening along the way--it frankly keeps me honest with myself, and keeps up my awareness of what's happening to my account. And also-also, sometimes odd things happen--I've had a stock or two that, instead of dividends paid in cash, have 'paid' in new shares, and confirming the cost basis for those might take an email exchange, or phone call, etc. Better to get that stuff done and out of the way rather than leaving it all for January.

Finally, I think column G is something that I should eliminate. This past year there was nothing there. This column might be a carryover from my dividend sheet, where some ADRs withhold tax at source. (which you can claim as foreign taxes paid)

[captainspoke]

Another note.

On the spreadsheets I put headers with my name in english and japanese, address, contact phone, my My Number, tax ID (taxpayer number, as on the postcard you get), and relevant dates to ID the tax year that the sheet is for.

[Phillter]

captainspoke, you are a gentleman and a scholar! You deserve a promotion to Admiral for the knowledge in this set of posts alone! This is incredible!! I'll be making one of these sheets for sure!

I did have a question: you and others have said that we have to report this income abroad to the Japanese government, but how exactly do you do that? I've never gotten something in the mail telling me to report foreign income or anything before...

Is there a website to go to to fill it out? (Or, more likely, a form we have to fax, haha!)

[adamu]

I don't know anything about this subject but a couple of potentially useful points.

And I don't want to spend too much time on this and get logged out by the system, so I'll stop here.

In general when writing online, it's a good idea to copy/paste your content to a text editor before submitting, for this very reason. Occasionally hitting preview (after copying!) will also keep your session alive. On this forum, you can also check "keep me logged in" when you log in, which prevents your session from expiring.

Is there a website to go to to fill it out? (Or, more likely, a form we have to fax, haha!)

It's part of your tax return. If you have a My Number Card, you can submit it online. If you don't have a My Number Card, you can still fill out everything online, then print it and take it / post it to the tax office. The website: https://www.keisan.nta.go.jp/

[Phillter]

It's part of your tax return. If you have a My Number Card, you can submit it online.

Awesome, thanks adamu! I'm glad that the My Number card is so useful, it's really such a cool thing about living here.

I joined a new company at the start of this year and haven't had a tax return mailed to me yet... When do they usually come?
The only time I've gotten some tax document mailed to me before is when I worked for my previous company, which had a policy where they don't take your kokumin taxes from your paycheck and you have to pay yourself (that was a terrible surprise lol)

Or are you talking about the income report you usually get from your company at the beginning of the year that reports last year's income? (I'm guessing this isn't it...)

[adamu]

Nobody asks you to fill in a tax return, you have to do it of your own initiative.

If 100% of your income is covered by your end of year tax adjustment (年末調整) at your employer and tax-collecting investment accounts (特定口座) and you earn less than 20 million yen, then you don't have to do it. If you have income to declare that's not covered by those, then you do have to do it.

English info: https://www.nta.go.jp/english/taxes/ind ... /12011.htm

But if you've lived in Japan less than 5 years, I think foreign income is not subject to taxation as long as you don't send it to Japan, because you're not a permanent resident for tax purposes. Not sure though, having not looked into it in detail.

[Phillter]

Regarding getting exchange rates for trade calculation and tracking sheets:

In response to captainspoke's post about the following exchange rate site that he uses:

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

I found an API that would allow you to automatically get the exchange rates (as decided by the European Central Bank): https://exchangeratesapi.io/
The rates are SLIGHTLY different than the rates in the link from captainspoke, but they do not appear to vary by much.

Using this API you can go to a URL like the following: (for example, this is for getting the rate of USD to JPY on Feb 6, 2020)

Code: Select all

https://api.exchangeratesapi.io/2020-02-06?base=USD&symbols=USD,JPY

To retrieve the exchange rate (in JSON) on a given date between USD and Yen, based in USD

Now to figure out a good FREE way to connect API calls to Google Sheets. If anyone has any suggestions I'm all ears.

[captainspoke]

Regarding getting exchange rates for trade calculation and tracking sheets:
...

Being able to autofill the exchange rates would be wonderful! I'd never thought of that possibility.

My hesitations would be, (1) the rate is not coming from a japanese bank (tho the difference might be fractional, consistency might outweigh that it is not japanese), and (2) seeing code like that might put them off. If you are ever checked, it might be good to have used something that would allow them (tax office people) to check that your numbers are properly listed. Use the MUFJ link for various dates and they could check any date; using a script would make that more opaque--a tech hurdle.

The link I gave--that site--was what the tax office referred me to some years ago. Likely not the exclusive suggestion, but my guess would be that any alternative would also be one or another japanese bank.

**
One thing not mentioned is that that MUFJ site sometimes does not have rates for japanese holidays. In that case, I've been told to use the next available previous date. I'm not sure how the ECB's trading days/holidays would differ from banks here. This might introduce a bit more difference in the fx rates. When this happens, I've found that I usually need to jump back a single day, a valid f/x rate is given and all is good.

It's not a yearly occurrence, but one oddity was last year's golden week (2019). That was coronation time for the new emperor, and there was a full week of holidays. As I recall, for a couple things I had to move back a number of days, to before that "off" week even started.