Tax Guides! How fun!
Download our handy tax guides here (updated 4 April, 2023):
Thank you, Jennifer Grieco, for being so wonderful in assisting us with revising this year’s edition of the tax guide and FAQ on this page! May our eyes and brain recover quickly!
Frequently Asked Tax Questions
Q. I didn’t make ANY money in the US last year. Do I still need to file?
This will depend on your situation and income for the year, as foreign-earned income still counts towards “gross income”. To determine whether you will need to file taxes, refer to Chart A below or Chart B and C from the Instructions for Form 1040.
Chart B contains more information for children and other dependents, and Chart C contains more information for other situations in which you should file taxes.
It is recommended to files taxes if you earned ANY income at all just so you won’t be penalized by the IRS later on.
Q. Can I choose to e-file my taxes instead?
Yes! E-filing is encouraged, though it won’t be quite as easy as an expat. Please carefully read the E-filing page in the guides. Please understand that we cannot field specific questions regarding e-filing.
Q. 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.
Q. When should I file my taxes?
The filing season for tax year 2022 begins on January 23, 2023. The official deadline is April 18. However, JETs who are living in Japan at the time of the deadline are eligible for the automatic extension until June 15. There are additional extensions available if needed (check the tax guides).
If you owe taxes, you should pay at least an estimated amount by April 18 because interest will begin to accrue on April 19. You can calculate the exact amount of taxes owed and claim any excess money back if you overpaid through IRS Form 1040.
Q. Is there an extension to file this year due to COVID-19?
No, there is not.
However, you may be eligible for Coronavirus Tax Relief. See the tax guide and the following link for more details: https://www.irs.gov/coronavirus-tax-relief-and-economic-impact-payments
Q. What happened to Form 2555-EZ?
The IRS has discontinued the usage of Form 2555-EZ starting from 2019 Tax Year. Please use Form 2555.
Q. What happened to the Japanese Income Taxes supplement for 1st-year U.S. ALTs?
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 $$.
Q. 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
Q. Does the Japanese Statement of Earnings, or gensen-choushuu-hyou, we submit have to be the original?
No, a copy of the original will be sufficient.
Q. Do we factor in how much we paid for social insurance (from the gensen-choushuu-hyou) when we list our Japanese income?
No, it is sufficient to just list your gross income.
Q. 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, translated using the yearly average exchange rate. The Internal Revenue Service has no official exchange rate and accepts “any posted exchange rate that is used consistently”. Our guides use the Fed’s annual foreign exchange rates, available here. For 2022, that rate is $1 = ¥131.46.
Q. 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.”
Q. 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
Q. 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-choushuu-hyou) and take it home with you.
Q. 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) doesn’t have to be for the one year period from Jan 1 – Dec 31, 2022. The one year period just has to start or end during 2022. 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 2022. For example, you could take out a December trip home and list the dates something like Dec 1, 2021 – Nov 30, 2022. 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 2022. However, because the exclusion is for up to $112,000, as long as you have more than 180 days or so in the qualifying period for 2022, your Japanese income should still be covered even with the prorated limit you’ll calculate in Part VII of Form 2555.
Q. 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.
Q. 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 will still more than likely qualify for the Physical Presence Test and the foreign earned income exclusion on Form 2555. 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 either (1) calendar year 2022 or (2) any other period of 12 consecutive months starting or ending in 2022. Set the dates so that they either start or end in 2022 and include 330 days that you were present in Japan. For example: August 2021 to July 2022. You will need to attach a copy of your Statement of Earnings (gensen-choushuu-hyou). 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 Form 4868 (Extension to File U.S. Taxes), though you may do so if you want an extension.