First year tax guide
This page describes the process for filing taxes for first year US Citizens only. JETs from other countries should check their embassy/tax bureau's website for details.
This guide summarizes the US tax information that specifically relates to first year JETs. For complete details, consult the "Forms and Instructions for Overseas Filers" document, which you should have already received from the IRS. If don’t have this book, you can access all the information online at www.irs.gov -- under "forms and publications", search for "Publication 54 (Tax Guide for US Citizens and Resident Aliens Abroad)".
The Internal Revenue Service (IRS) office for US citizens living abroad is located in Austin TX. Send all tax forms (except 8822) to:
Internal Revenue Service Center
Austin, TX 73301-0215
Additionally, the IRS website (www.irs.gov) has a lot of information available to answer many questions. Go to 'Individuals' and then 'International Taxpayers' and you will find a section of FAQ. Also, you can ask general questions about tax law at www.irs.gov/help/page/0 and you can call the IRS automated Information Line at 1-800-829-1040 for specific questions.
- You will likely have income tax obligations to individual states in addition to the Federal taxes discussed here. Questions about state taxes should be directed to the appropriate agencies in your state. A "Google" search for your state is a good place to begin.
- 8822 Change of Address (pdf). File this as soon as possible.
- 4868 Extension of Time to File (pdf). File this by June 15th.
- 1040 Income Tax Return (pdf). File this after 330 total days in Japan.
- Foreign Earned Income Statement (see below). File with Form 1040.
- W-2 US Employers Income Statement. File with Form 1040.
- 2555-EZ Foreign Income Exclusion (pdf). File with Form 1040.
- 8965 Health Coverage Exemption (pdf). File with Form 1040.
- Publication 970 (pdf). File this if you've paid deductible interest on student loans in the last year.
Form 8822 Change of Address
If you have not done so already, inform the IRS of your address in Japan as soon as possible. Do this using Form 8822. Check the box in Line 1 and enter all relevant information in Lines 3-6. In line 7, enter your Japanese address starting with building name and ending with country and postal code. Skip Part 2 and sign in Part 3. Where you send Form 8822 depends on your former mailing address (see 8822 instructions).
Foreign Earned Income Statement
Photocopy the small form that your school or BOE gave you showing how much money you made in your last year of work. It`s called the Gensen Choushuu Hyou(源泉徴収票) in Japanese. If you have not received it yet, ask the accountant in your school or BOE office. This will act like a W-2 for the income you earned in Japan. Indicate your name and your gross income on the photocopy and write “Foreign Earned Income Statement” across the top. It should look like this:
Foreign Earned Income Statement
- Net salary from January to December
- Amount remaining after deducting tax exemptions from 3
- Amount deducted based on Social Insurance and Life Insurance payments
- Amount of income tax paid
- Amount of social insurance paid
Form 4868 Extension of Time to File
Next, file Form 4868 on or before June 15. Form 4868 gives you until October 15 to file the rest of your income tax forms. (The extension is necessary your first year. The income you earn in Japan is exempt from US taxes only after you have physically been outside the country for 330 days.)
Use your Japanese address starting from building name and apt number. In Line 6, it asks you to estimate how much tax you owe. To calculate this figure, you will need to fill out a rough draft of Form 1040 (but do not officially file Form 1040 until later!). Be sure to check the box in Line 8 to indicate that you are a citizen living “out of the country.” If you owe taxes, you must pay at least an estimated amount when you file the 4868! Also, interest will begin to accrue on April 15, so it is a good idea to turn in form 4868 (along with a payment) by April 15 if you owe.
Note: You get an automatic 2-month extension (from April 15 to June 15) to file your income tax return because you live abroad. However, the automatic extension is not enough to allow you to meet the 330-day “Physical Presence Test” for exempting your Japanese income (more below).
This form is used to exempt you from paying US income taxes on the money you earn in Japan.
Part 1 – Almost everyone will fail the “Bona Fide Residence Test,” but pass the “Physical Presence” and “Tax Home” tests. The physical presence test is based on a 365-day period from the time you arrived in Japan.
Part 2 - Fill in your address and employment information; you can write N/A for Employer's US address. Your employer is "other"-- put something like "foreign board of education." Follow the instructions until you get to the part that asks what your tax homes were during the tax year. In this blank, write in ALL addresses at which you were taxed during the last year, including home, college, apartment, Japan, etc. and the dates you lived there. Make sure the whole year is covered. Month to month is enough--you don't need to specify the exact day you moved.
Part 3 - Under Days Present in the US, fill in any time you spent in the US during the 365-day period you specified under the “Physical Presence Test” in Part 1. The date you left the U.S. should be entered in the second column (“Date Left”) of the top row. Write N/A in the first column (“Date Arrived”) of the top row. Enter each trip home in the subsequent rows.
Part 4 - Figure your Foreign Earned Income Exclusion. Where it asks for the number of days in your qualifying period that fall within 2013 (#14), use the 365-day period you entered under “Physical Presence Test” on the previous page. It will be around 150-160.
In Line 17, convert the amount listed on your Foreign Earned Income Statement to USD and enter that figure. The IRS likes everything you do to be outlined explicitly, so draw an asterisk and write, "see foreign earned income statement" at the bottom of the page. Then write a statement along the lines of: “I used the 2013 average Yen/USD exchange rate as reported by the Federal Reserve Bank to calculate the amount reported on line 17. (In 2013 the rate was $1 = 97.60 Yen. website) Finally, sign your name to the note.
You need to file one W-2 from each place you were employed in the U.S. during 2013. Your former employers should send these to you. If you have not received a W-2 from past employers, contact them directly.
Form 8965 Health Coverage Exemption
Form 1040 Income Tax Return
This is the form where you report how much total money you earned in 2013. You will figure out if you get a refund or if you still owe more to Uncle Sam. You cannot file form 1040 EZ, so you are not eligible to E-File. There are a lot of specific questions on the Form 1040 that will be different for each person. What we are explaining here is focused on the specific parts related to living and working overseas. For the rest of the complicated stuff, it’s best to start at the top and work your way through line by line. Consult a certified tax preparer and/or the official IRS instructions (online) to be sure you don't miss something. If you still have confusion, you can call or email the IRS on their site.
Label - Exemptions Enter your name and address information, social security #, and filing status. Claim yourself as an exemption in line 6.
Income - For “wages, salaries, and tips” in line 7, enter the grand total--including all W-2s and your income from Japan. The “Taxable Interest” in 8a includes all interest earned from savings accounts. For many people, everything else is zeroes until you get to line 21. List your Japan-earned income in parentheses on the “Other Income” line, and write “2555-EZ” next to it. Add lines 7 through 20 and then subtract the Japan-earned income amount (this is entered in parenthesis). Enter the total on the next line. This total is the amount of taxable income you earned during 2013.
Adjusted Gross Income - If you paid student loan interest, enter in Line 33 the amount of the “Student Loan Interest Deduction” from the worksheet in publication 970 (available online at www.irs.gov). Finish following the instructions for the rest of that section and turn to the next page. Everything else will be zeros for many JETs.
Page 2 - Everything should be straightforward (tedious, but straightforward) on the second page. By the time you get here, you've dealt with most of the foreign earned stuff and weeded it out. Just work through the lines one by one. You will need to look at the 1040 instructions in order to calculate line 44. The 1040 instructions are available online at www.irs.gov (they are too large to include in this packet).
Sign and date in the box and you should be good to go.
In the box titled “your occupation” enter “English Teacher” (ALT) or “Coordinator for International Relations” (CIR).
Before October 15 and after you have been in Japan for 330 days, sign and date the forms and mail it all to the IRS office in Austin. Your return will include at least Forms 1040, 2555-EZ, and the Foreign Earned Income Statement and will also include W-2s if you were employed before JET.
- Individual cases and circumstances will vary.
Additional procedures will be necessary if:
- You are married and/or have dependants of your own
- Someone else will claim you as a dependant for the 2013 tax year
- You had over $10,000 in foreign bank accounts at any time during 2013
- You earn income from stocks, bonds, real estate or other investments
- Any number of other circumstances
- It is your personal responsibility to file taxes on time.
- This guide is in no way affiliated with the IRS or the US Government. The IRS – not this document - is the final authority on tax-related matters. Much of the information contained here was shamelessly plagiarized from the US Embassy in Tokyo and from ALT Shana West in Kōchi.
- The Federal Reserve Bank average annual exchange rate figure of $1 = ￥97.60 (2013)The current rates can be found at http://www.federalreserve.gov/releases/g5a/current/.
- Please photocopy your forms before you submit them, so you can refer to them next year.
- Please call or email the PAs if you have any questions.
- Credit goes to http://kumamotopa.pbwiki.com/ for the information for this page
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