So I'm a US citizen living in Japan and I plan to be here for at least 3-4 years. I have a job in Japan and am making money in yen so I will be paying Japan taxes. I know I have to file taxes still for the US but my question is I make a tiny bit of money from social media per month thats paid to my US bank account in USD. Its about $30-$100 a month that I make. Its not a lot but I know I still have to report it regardless.
So how will this work? Will I pay both taxes to the US and Japan? Or will I only being actually paying something tax wise to one country? I heard theres some kind of form I need to submit to report that I'm paying taxes in Japan, I just dont know what that form is
I'm an American citizen living abroad in another country, how will taxes go for me? (PLEASE READ DESCRIPTION BEFORE ANSWERING)
byu/Due_Pilot_9382 intax
Posted by Due_Pilot_9382
2 Comments
In a nutshell, thanks to the tax treaty, each country gets first dibs on taxing income from that country. Japanese salary will be taxed in Japan and social media income in the US. On the Japanese side, you’d get a tax credit for the US taxes paid on the social media income and may not owe anything. On the US side, depending on your situation it may be best to use the foreign earned income exclusion to avoid paying US tax on your Japanese salary, or you could use foreign tax credits to offset whatever you paid in tax to Japan on your salary income. I know practically nothing about Japanese taxes, so I can’t offer advice on whether the foreign tax credit or earned income exclusion would be better to avoid double taxation from the US.
Assuming you’d qualify for the foreign income exclusion based on the # of days in Japan. That’d allow you to deduct any income earned from Japan. You’d be taxed on any US earned income only like the social media income. Can’t speak for Japan but they’d likely either tax all your income and give you a credit for the US taxes paid or just tax what was earned in Japan