cflenders wrote: ↑Wed Feb 17, 2021 6:43 am
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More info: Dividends and interest earned in USA accounts that will stay in the USA. I am a permanent resident. I have not yet filed my taxes in the USA.
Question:
What are the steps to reporting foreign dividends and interest on the Japan tax filing? Since I will be paying taxes on these dividends and interest in the USA but haven't done so yet, how do I calculate and input those amounts into the Japan tax filing?
For Japan, I count US taxes paid in the year that they are actually paid--not towards the tax year that they are due for. To my knowledge, this is perfectly okay with the tax office, just be consistent.
A somewhat similar question is dividends paid in early January that are marked as 'prior year'. I've asked the local tax office which tax year to count these in, and the reply was 'be consistent'. (so I count them in the year when they are paid, not the year they were paid for.)
An exception is taxes withheld at source (for non-US stocks, i.e., ADRs). For example, I held RDS/A for a while, and 15% was automatically withheld from each dividend payment. Since this was listed on my account statements right next to the balance of the dividend paid, I did claim this in the same tax year that that dividend was paid.
***
As for this: "...captainspoke has a detailed system for applying the exchange rate in effect on each day of dividend receipt but I only report the total dividends received using my US 1099 forms and the average exchange rate for the year and that seems to have worked out okay so far."
I can only give my experience, and what I was told to do by the tax office. And this came out during an audit, when 3-4 guys from the international section of the tax office were telling me what I had done wrong...
So this was not a casual Q&A consultation where there might be some doubt about what a single tax person across the table was telling you.
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I had been lumping things together and using the IRS's average yen/dollar exchange rate for the year concerned. They were quite clear that it had to be done as tokyowart has described my 'system'--list each dividend payment, converted to yen on the date received, total at the bottom. They also referred me to this website to find the TTM rates:
http://www.murc-kawasesouba.jp/fx/past_3month.php (scroll down and you can select any date back to 1990). EDIT: if that site doesn't provide a rate, due to a holiday, keep stepping
back until you come to an active day and use that TTM rate.
I use a simple spreadsheet for this, and I'm used to doing it, so it's not much trouble. On the positive side, it's also nice to lay it out and see exactly what happened, vs. just looking at the total. It also helps to update this sheet a couple times thru the year, rather than leaving it all till January.
** I'm a meticulous records keeper, and pretty much expect to be audited again someday.
