Simple Strategy for US Citizen

[ichiokuen]

Thanks a lot. I suppose long term capital gains and short term capital gains are taxed at the same capital gain tax rate and are not labelled seperately (and taxed differently) like they are in the US?

[TokyoWart]

I suppose long term capital gains and short term capital gains are taxed at the same capital gain tax rate and are not labelled seperately (and taxed differently) like they are in the US?

I don’t know for sure because I’ve never had a short term gain or loss in Japan but I don’t see anywhere on my tax forms where one would record how long the position was held.

[ichiokuen]

So for US held stocks, in a US brokerage account, I guess it comes down to how much you are taxed on the US side, then applying the foreign tax credits to your Japan return? Short term holdings are taxed at, I think, 28 percent and long term at 20 percent (in the US).

[TokyoWart]

So for US held stocks, in a US brokerage account, I guess it comes down to how much you are taxed on the US side, then applying the foreign tax credits to your Japan return? Short term holdings are taxed at, I think, 28 percent and long term at 20 percent (in the US).

Just to be clear: on your US return you can mention the 10% Japanese taxes by adding that information to the 1099 form you input in your tax software (it will result in a Form 1116 to claim Foreign Tax Credit on passive income). Your US long-term capital gains and dividends tax rate depends on your income (it can be 0%). Your US short-term capital gains are taxed at your earned income tax bracket.

On my last Japanese return, there was an entry on US taxes paid for US dividends on my 外国所得税額の内訳 alongside taxes I paid to the US on earned income. That form, 外国税額控除に関する明細書, gets complicated and winds up with a number for the foreign tax deduction (外国税額控除) which is much smaller than the taxes paid but there is some effect. That is all separate from the 10% tax as best I can follow my forms.

[ichiokuen]

Thanks!

On my last Japanese return, there was an entry on US taxes paid for US dividends on my 外国所得税額の内訳 alongside taxes I paid to the US on earned income.

I do not see this form anywhere! I will try to find it on the internet. More importantly though, I do not have a form for filing my dividend income from a foreign source. I am trying to use Freee but it seems to be too complicated for their algorithm to tackle.