U.S. Tax Guide

Tax Guides!  How fun!  

Download our handy tax guides here (Updated March 31st, 2020):                    **IMPORTANT** Check FAQ below regarding Schedule B

2019 Tax-Year Packet for 1st-Year U.S. JETs
2019 Tax-Year Packet for 2nd through 5th-Year U.S. JETs

2018 Tax-Year Packet for 1st-Year U.S. JETs
2018 Tax-Year Packet for 2nd through 5th-Year U.S. JETs

2017 Tax-Year Packet for 1st-Year U.S. JETs
2017 Tax-Year Packet for 2nd through 5th-Year U.S. JETskumamonstudy

2016 Tax-Year Packet for 1st-Year U.S. JETs
2016 Tax-Year Packet for 2nd through 5th-Year U.S. JETs

2015 Tax-Year Packet for 1st-Year U.S. JETs
2015 Tax-Year Packet for 2nd through 5th-Year U.S. JETs

2014 Tax-Year Packet for 1st-Year U.S. JETs
2014 Tax-Year Packet for 2nd through 5th-Year U.S. JETs

Tax guides for 2008 to 2013 can be found on the archived version of this site.

Frequently Asked Tax Questions

Misc.

**IMPORTANT**
I checked the following link about Schedule B (https://www.irs.gov/forms-pubs/about-schedule-b-form-1040) and it says you have to file if “You had a financial interest in, or signature authority over, a financial account in a foreign country or you received a distribution from, or were a grantor of, or transferor to, a foreign trust.”
It’s not mentioned in the tax guides, but does that mean we have to file Schedule B?
Yes, you are absolutely correct! A thousand apologies for missing this little detail. Please file Schedule B, in addition to all the forms mentioned in the tax guides.
Here are some details from Schedule B which applies to JETs with a financial account in Japan:
      •  Schedule B Line 7a–Question 1.

Check the “Yes” box if at any time during 2019 you had a financial interest in or signature authority over a financial account located in a foreign country.  Check the “Yes” box even if you aren’t required to file FinCEN Form 114.

      • Line 7a–Question 2.

See FinCEN Form 114 and its instructions at www.fincen.gov to determine whether you must file the form. Check the “Yes” box if you are required to file the form. Check the “No” box if you aren’t required to file the form.

Is there an extension to file due to COVID-19?

Yes, there is. 

The deadlines to FILE and PAY federal income taxes are extended to July 15, 2020. See the following link for more details:

https://www.irs.gov/filing

What happened to Form 2555-EZ?

Sadly, the IRS has discontinued the usage of Form 2555-EZ. This is one big reason for the added wait for this year’s 2019 Tax guides.

See the following link for proof (I wish it weren’t true…):

https://www.irs.gov/forms-pubs/form-2555-ez-will-not-be-used-after-2018-17-apr-2019

What happened to the Japanese Income Taxes supplement for 1st-year U.S. ALTs?

Again, wish we had better news. Starting for 2020 incoming JETs, the provision in the US-Japan tax treaty which excluded U.S. ALTs from paying Japanese income taxes for a max of 2 years, appears to have been dissolved. However, if you already filed the necessary forms to obliterate your tax burden, either in 2018 or 2019, then enjoy being the last of us who get to enjoy the extra $$

What happened to the whole health insurance debacle, where you have to file an extra form and potentially pay if you don’t have health insurance throughout the year?

Starting from the 2019 tax year, there will no longer be an individual shared responsibility payment. Meaning, you don’t have to pay and/or file the extra paper work (Goodbye, Form 8965).

See the following link for more information: https://www.irs.gov/affordable-care-act/individuals-and-families/aca-individual-shared-responsibility-provision-calculating-the-payment

First Year JETs

My parents claimed me as a dependent.  How will this affect the way I file? Will I still be a candidate for the foreign earned income exclusion?

You will still need to file the same forms (Forms 8822, 4868, 2555 and 1040), and yes, you will still be eligible for the foreign earned income exclusion (see Form 2555).

The main differences in the way you file will arise on Form 1040. If someone else claimed you as a dependent, then you must check the box stating “someone can claim you as a dependent.” This means that Line 9 will be different from the Form 1040 example we provided. Please see Form 1040 Instructions for more details.

Is there any sort of confirmation from the IRS that they received Form 8822? What about other forms?

You will not receive any confirmation from the IRS regarding receipt of Form 8822 (Change of Address form) or any other tax forms. You may receive a notice if the information is incorrect or insufficient.

Are figures to be written in yen on the tax forms (Forms 2555, 1040, 4868)?

No. All figures entered on US tax forms should be in US dollars.  Change the yen amounts to dollars using the Fed’s annual foreign exchange rates:

http://www.federalreserve.gov/Releases/G5A/Current/

Do we factor in how much we paid for social insurance (from the gensen choshuhyo) when we list our Japanese income?

No, it is sufficient to just list your net salary (#3 on the example).

Does the gensen choshuhyo we submit have to be the original?

No, a copy of the original will be sufficient.

Do I have to file state taxes if I didn’t work in the US last year?

This will vary depending upon your state. Try contacting the state’s tax agency if you’re having trouble finding information about a specific state. Most state tax agencies have email inquiry services through which you can ask questions.

Do I have to enter exact amounts (dollars and cents) on the tax forms? Is it okay to round?

Yes, round away! According to the 1040 instructions, “You can round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3. If you have to add two or more amounts to figure the amount to enter on a line, include cents when adding the amounts and round off only the total.”

I didn’t make ANY money in the US last year. Do I still need to file?

Yes. You need to file and report your foreign-earned income. The numbers on your 1040 will be different than those on the example 1040. The main difference will be on Line 1, where you will report only your Japanese income (the same number you put on Line 7a. These two numbers will cancel each other out and give you a total income of “0” on Line 7b.

Despite all the times I told my parents not to file a tax return for me, they did. I have not filed my Form 2555 yet, and the lady at the IRS told me to file an Amended 1040 (Form 1040X). The problem is that since our Japan income is excluded, there is no net change in my adjusted gross income. I’m not sure how to represent my Japan income on the 1040X. Can you help me figure this out?

Try filling out a normal Form 1040 and Form 2555 according to the tax packet and attach these with a brief explanation to your 1040X. This way you will be able to show and explain the amended 1040.

Is total gross income the wages from my W-2 from my previous job, plus what I earned in Japan?

Yes, your total gross income (or “total income” on the 1040) is the sum of your W-2 total income and your total income in Japan. This is entered on Line 7b of the 1040.

Do you know if this needs to be post marked by the 15th or at the IRS by October 15th?

It is recommended that you send it to arrive by October 15th, though it is likely that no penalties will be assessed unless you owe taxes (in which case interest will begin to accrue following the April 15th deadline).

Do we need to file the 8822 Change of Address Form in order to receive the automatic extension until June 15th?

In order to receive the two-month extension to June 15th (this is granted to tax-payers living abroad at the time of the April 15th deadline), you are supposed to attach a statement to your Form 1040 stating and showing that you are living abroad. Submitting the 8822 Change of Address Form in advance sort of works as proof that you are residing abroad. You may be able to receive the two-month extension without submitting the 8822, but either way the IRS recommends that tax-payers who change their address submit the 8822 so that the IRS will have a correct address to send forms and such in the future.

Do you recommend certain types of envelopes to use when sending the forms?

A regular manila envelope should be fine. Since the tax return does contain private information, though, it may be best to send it by non-standard post.


Second through Fifth-Year JETs & Leaving JETs

Should I be looking to get a Statement of Earnings from my BOE/school before I leave?

Yes, make sure you get a Statement of Earnings (Gensen Choshu Hyo) and take it home with you.

I returned to the US on two occasions last year for more than 35 days total and don’t have enough days (330 needed) to qualify for the physical presence test.  What can I do?

The cool thing about the Form 2555 is that the Physical Presence Test (the 330 day rule thingy) doesn’t have to be for the one year period from Jan 1 – Dec 31, 2019. The one year period just has to start or end during 2019. So when you enter the dates on your form, enter dates that will give you at least 330 days (in Japan) in a one year period that begins or ends in 2019. For example, you could take out a December trip home and list the dates something like Dec 1, 2018 – Nov 30, 2019. If this doesn’t give you 330 days, then you’ll have to try dates around your other trip home. This will give you fewer days in the qualifying period that fall within 2019. However, because the exclusion is for up to $105,900, as long as you have more than 180 days or so in the qualifying period for 2019, you should still get the full exclusion.

On Form 2555 do I qualify for the exemption under the Bona Fide Resident Test or the Physical Presence Test?

You may qualify for the Bona Fide Resident Test, but the qualifications for this test are vague and difficult to understand. You will qualify for the Physical Presence Test like you did last year, so we recommend you use this qualification and not bother with the Bona Fide Resident Test.

I left Japan last year. Do I need to include my Japanese income when I file this year? If so, how do I do so? 

Yes, you need to include all your income, both foreign and domestic-earned. You can include your Japanese income by using the Form 2555 again. You will still more than likely qualify for the Physical Presence Test and the foreign earned income exclusion. In order to qualify for this, you must have been physically present in a foreign country or countries for at least 330 full days during (1) 2017 or (2) any other period of 12 months in a row starting or ending in 2019. Set the dates so that they either start or end in 2019 and include 330 days that you were present in Japan. For example: August 2018 to July 2019. You will need to attach a copy of your gensen choshuhyo (statement of earnings). Contact your former BOE/school if you no longer have this for the tax year in question.

You should also file the 8822 (Change of Address) form again to inform the IRS of your address change. This can be filed at any time during the year. You will not need to file the 4868 extension request form, though you may do so if you want an extension.