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How to file taxes when in the US working remote for a company in Japan?
AI accountant’s answer:
If you're working remotely in the US for a Japanese company and are considered a US tax resident, you generally need to report your worldwide income on your US tax return. Here's how you may approach your tax situation: 1. Determine your tax residency status: If you're a US citizen, a Green Card holder, or pass the Substantial Presence Test, you're considered a US tax resident and are subject to US taxation on your worldwide income, regardless of where it was earned. 2. Declare your worldwide income: You'll need to report all your income, including foreign-source income, on your US tax return using Form 1040. Be sure to convert your Japanese income to US dollars using the appropriate yearly average exchange rate. 3. Foreign Earned Income Exclusion: You might be eligible for the Foreign Earned Income Exclusion (FEIE) if you meet the requirements. This exclusion allows you to exclude a certain amount of your foreign earned income from US taxes. To claim that, you'll need to file Form 2555 along with your Form 1040. 4. Foreign tax credits: If you paid taxes on your income in Japan, you may be eligible for the Foreign Tax Credit, which allows you to reduce your US tax liability for taxes paid to a foreign country. To claim the credit, file Form 1116 with your tax return. 5. Social Security and Medicare taxes: As a US tax resident working for a foreign company, you generally don't have to pay US Social Security and Medicare taxes (FICA) on your earnings unless there's a Totalization Agreement between the US and Japan. In this case, you need to pay into the Japanese Social Insurance system. 6. Check US-Japan tax treaty provisions: It's worth reviewing the US-Japan Income Tax Treaty to see if any specific provisions apply to your situation, which could potentially provide tax relief in certain situations. Keep up with your records, maintain good documentation, and consult a tax professional if you need any additional guidance.
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