Tax Guide for U.S. JETs

A space for current JETs to share information and ask questions about life and work in Japan.

Tax Guide for U.S. JETs

Postby KumamotoPA_Zane » Thu Jan 21, 2010 10:23 am

Here are two tax guides for U.S. JET from your friendly Kumamoto PAs. The first one is for 1st-year JETs, and the second is for 2nd-5th-year JETs.

If, for some reason, you're having trouble downloading these files from the forums, they're also available on the Kumamoto PAwiki. http://kumamotopa.pbwiki.com/
Attachments
2009 Tax Year Guide (2nd year plus JETs).doc
2009 U.S. tax guide for 2nd-5th-year JETs.
(689 KiB) Downloaded 3304 times
2009 Tax Year Guide (1st year JETs).doc
2009 U.S. tax guide for 1st-year JETs.
(900.5 KiB) Downloaded 8222 times
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Re: Tax Guide for U.S. JETs

Postby ThomasChibaPA » Wed Apr 07, 2010 3:55 pm

Just a tip for filing:

It's easier to sign then send the documents. The other way around is just much more difficult.
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Re: Tax Guide for U.S. JETs

Postby patrick » Wed Apr 07, 2010 4:31 pm

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Re: Tax Guide for U.S. JETs

Postby Scott_KumamotoPA » Mon Jan 31, 2011 1:18 pm

We have updated our tax guides for U.S. JETs. The first one is for 1st-year JETs, and the second is for 2nd-5th-year JETs.
2010 Tax Year Guide (1st year JETs).doc
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2010 Tax Year Guide (2nd-5th year JETs).doc
(859 KiB) Downloaded 751 times


If, for some reason, you're having trouble downloading these files from the forums, they're also available on the Kumamoto PAwiki. http://kumamotopa.pbwiki.com/
The wiki also includes a U.S. tax-filing FAQ and complete sample forms.
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Re: Tax Guide for U.S. JETs

Postby Scott_KumamotoPA » Mon Jan 31, 2011 1:20 pm

Oh, and one note about the 2010 guide:
The 2010 Form 4868 is not yet available through the IRS website. The link on the IRS website and in the tax guide leads to the 2009 form, which can only be used for the 2009 tax year. I contacted the IRS Help Desk and was told that they are currently in the process of updating the form and website for the 2010 tax year.
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Re: Tax Guide for U.S. JETs

Postby Scott_KumamotoPA » Mon Mar 14, 2011 3:40 pm

The 2010 Form 4868 is now available through the IRS website. It can be accessed here:
http://www.irs.gov/pub/irs-pdf/f4868.pdf
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Re: Tax Guide for U.S. JETs

Postby nisenihonjin » Sat Mar 19, 2011 11:46 am

Question: For US taxes, I've come across a "Form 2350" that looks scarily similar to Form 4868, but the JET instructions don't mention Form 2350 anywhere. Can anyone shed some light as to whether we 1st years need to fill this Form 2350 out as well in order to qualify for the physical presence test?
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Re: Tax Guide for U.S. JETs

Postby Deas [Ehime|PA] » Tue Mar 22, 2011 2:22 pm

4 things. 1 answer. 2 questions. 1 note.

1) Nisenihonjin - the form you're referring to, 2350, has a helpful blurb buried in the fine print. The following text is taken from the 3rd page of the PDF. :)
2010 Form 2350 wrote:Use Form 2350 to ask for an extension of time to file your tax return only if you expect to file Form 2555 or 2555-EZ and you need the time to meet either the bona fide residence test or the physical presence test to qualify for the foreign earned income exclusion and/or the foreign housing exclusion or deduction.
All other taxpayers should file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, to request an extension of time to file their return. Note. Do not file Form 2350 more than once for each move overseas. If, after meeting the qualifications for the "bona fide residency test" or the "physical presence test," you remain abroad continuously for the following tax year(s) and require an extension, file Form 4868.


2) I'm seeking clarification for something that may mess with more JETs this year than usual thanks to the Tohoku-Kanto Disaster. It's my understanding that US JETs who are in the US for 35 days or more in one 12 month period cannot use the foreign income exclusion form 2555-EZ. Are they still able to file using the standard 2555 form? Or must they then pay taxes on their Japanese income? This has the potential to affect any JETs who returned to their home countries in the wake of the disaster.

3) Contributions to the Japan Earthquake & Tsunami recovery efforts may be tax deductible.

4) Tax Scam Info. // Are we aware of any scams targeting US JETs this year? I've seen news of them for two or three years running where ALTs would receive a fax asking for info, etc. Anything to watch out for?
Last edited by Deas [Ehime|PA] on Tue Mar 22, 2011 3:02 pm, edited 1 time in total.
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Re: Tax Guide for U.S. JETs

Postby Jen_KyotoPA » Tue Mar 22, 2011 2:58 pm

Deas--

Regarding 2), it seems like they should probably be able to qualify for the physical presence test (being in Japan for 330 days or more in a 365-day period.)

Stealing from last year's Kumamoto Tax Q&A:
"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?
A. The cool thing about the 2555ez form is that the Physical Presence Test (the 330 day rule thingee) doesn't have to be for the one year period from Jan 1 - Dec 31, 2009. The one year period just has to start or end during 2009. So when you enter the dates on Part I, 2(b), enter dates that will give you at least 330 days (in Japan) in a one year period that begins or ends in 2009. For example, you could take out a December trip home and list the dates something like Dec 1, 2008 - Nov 30, 2009. 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 2009 Part IV, Line 14. However, because the exclusion is for up to $91,400, as long as you have more than 180 days or so in the qualifying period for 2009, you should still get the full exclusion…sound confusing? Feel free to email or call with help on this one."

Well, as they say, it sounds a bit complicated. But unless they were gone for a very long time, I think it's likely you'll be able to fudge the dates such that they are not liable for Japanese taxes. I'm not so sure about the form question. Having just looked at the 2555EZ instructions (http://www.irs.gov/pub/irs-pdf/i2555ez.pdf), it looks to me like you'd have no problem as long as you meet one of the residency tests. I didn't see any condition on time spent out of the country in a given tax year.
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Re: Tax Guide for U.S. JETs

Postby Scott_KumamotoPA » Tue Mar 22, 2011 2:59 pm

Yeah, the tax guide itself doesn't mention the 2350, though the GIH does. Sorry about that. Last year (or the year before?) there was a question posted on the forums about the difference between the 2350 and 4868 forms and which form should be used by JETs. I emailed the IRS about it at the time and received the following reply.
Summary of the reply: file Form 4868 to receive a 6-month extension. If 6 months is insufficient, then file Form 2350.

Your Question Was:
I am an overseas taxpayer who expects to qualify for the physical presence test on the 2555ez. However, I have not resided overseas for the necessary 330 days in a 12 month period beginning or ending in 2009. I plan on applying for a filing extension beyond the 2-month automatic extension for residents overseas at the time of the filing deadline. My question is which form I should use to file for this extension. I read the instructions in Publication 54, and it appears to me that both the 4868 and 2350 can be used to apply for an extension. Is this correct? I am planning on using the 4868 to apply for a 6-month extension, which would then give me the necessary 330 days in a 12-month period. Thank you for your help.

The Answer To Your Question Is:
Thank you for your inquiry. We apologize for the delay in our response. Since you stated that the 6 month extension was sufficient, you would use the Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, to request the extension. Generally Form 2350, Application for Extension of Time To File U.S. Income Tax Return, is used to request extensions beyond 6 months. Please refer to the following information.
If you are not able to file your return by the due date, you generally can get an automatic 6-month extension of time to file (but not of time to pay). To get this automatic extension, you must file a Form 4868. You generally cannot get an extension of time to file of more than 6 months. However, if you are outside the United States and meet certain tests, you may be able to get a longer extension.
You can get an extension of time to file your tax return if you need the time to meet either the bona fide residence test or the physical presence test to qualify for either the foreign earned income exclusion or the foreign housing exclusion or deduction. The tests, the exclusions, and the deduction are explained in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, and the instructions for Form 2555, Foreign Earned Income.
You should request an extension if all three of the following apply, you are a U.S. citizen or resident alien, you expect to meet either the bona fide residence test or the physical presence test, but not until after your tax return is due, and your tax home is in a foreign country (or countries) throughout your period of bona fide residence or physical presence, whichever applies.
Generally, if you are granted an extension, it will be to 30 days beyond the date on which you can reasonably expect to qualify under either the bona fide residence test or the physical presence test. However, if you have moving expenses that are for services performed in 2 years, you may be granted an extension to 90 days beyond the close of the year following the year of first arrival in the foreign country.
To obtain an extension, you should file Form 2350 (PDF) with the Internal Revenue Service office specified in the the instructions for Form 2350.
You must file Form 2350 by the due date for filing your return. Generally, if both your tax home and your abode are outside the United States and Puerto Rico on the regular due date of your return and you file on a calendar year basis, the due date for filing your return is June 15. Thank you for using this service.


That said, JETs have gotten by just fine filing either form. The 4868 is much easier to fill out, though.

I'm seeking clarification for something that may mess with more JETs this year than usual thanks to the Tohoku-Kanto Disaster. It's my understanding that US JETs who are in the US for 26 days or more in one 12 month period cannot use the foreign income exclusion form 2555-EZ. Are they still able to file using the standard 2555 form? Or must they then pay taxes on their Japanese income? This has the potential to affect any JETs who returned to their home countries in the wake of the disaster.


In order to pass the Form 2555-EZ Physical Presence Test, you have to be outside the US for at least 330 full days either during the tax year in question or during a 12-month period starting or ending in the tax year. The or during a 12-month period starting or ending in the tax year stipulation is what allows all first-year JETs to have their income excluded even though they weren't residing overseas for the whole tax year. But this can work for 2nd-5th year JETs who made several or longer trips home during the year. Let's say you made two trips home during 2010, August 1-25 and December 15-31. This means you would have spent 42 days in the US (365-42=323 days) and would not qualify for the exemption if it were based on the entire 2010 year. What you'd need to do is enter dates on Line 2b of the 2555-EZ to give you a 12-month period starting or ending in 2010 during which you were outside the US for 330 or more full days. In this case, you could use December 15, 2009-December 14, 2010. This would give you 340 days outside the US during a 12-month period. This does decrees the amount of your foreign earned income exclusion on Part IV of the form, but as long as a sufficient portion of the 12-month period you use on Line 2b is in 2010 your exclusion will still be enough to cover one year of JET remuneration.
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Re: Tax Guide for U.S. JETs

Postby 5aim » Thu Mar 24, 2011 11:26 am

Hey, another question regarding filing taxes for U.S. jets. This year I received two Foreign Earned Income statements. I think what they did is put my salary from January through June on one statement, and then the salary earned from July through December on the second statement. And I paid taxes on my salary from July through December such as a "social insurance" and "income tax." I'm a bit confused about what is going on here... :oops:
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Re: Tax Guide for U.S. JETs

Postby Scott_KumamotoPA » Thu Mar 24, 2011 2:48 pm

It's not a problem to have two statements of earnings. Just make sure to add the remuneration from the two statements together to figure out your wages (1040, Line 7) and total foreign earned income (2555-EZ, Line 17), and include copies of both statements and simple translations of both (see explanation in GIH or tax guide above) when you send the 2555-EZ and 1040.

You can report and receive credit for foreign taxes you have paid by filling in the necessary information on 1040 Line 47 and filling out Form 1116; however, the language in the 1040 Instructions makes it sound like this is optional and receiving this credit may not actually increase your refund if you were in Japan all of 2010 and didn't have any US income. BUT I'm not an accountant or anything, so don't take my word for it. I recommend you read over the 1040 Line 47 and 1116 instructions for this.
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Re: Tax Guide for U.S. JETs

Postby 5aim » Thu Mar 24, 2011 3:26 pm

kumamotoPA_scott wrote:It's not a problem to have two statements of earnings. Just make sure to add the remuneration from the two statements together to figure out your wages (1040, Line 7) and total foreign earned income (2555-EZ, Line 17), and include copies of both statements and simple translations of both (see explanation in GIH or tax guide above) when you send the 2555-EZ and 1040.

You can report and receive credit for foreign taxes you have paid by filling in the necessary information on 1040 Line 47 and filling out Form 1116; however, the language in the 1040 Instructions makes it sound like this is optional and receiving this credit may not actually increase your refund if you were in Japan all of 2010 and didn't have any US income. BUT I'm not an accountant or anything, so don't take my word for it. I recommend you read over the 1040 Line 47 and 1116 instructions for this.


Thanks, Scott! Maybe you answer another question then...so the amount that I report should be the total foreign income before Japan taxes were taken out? Since I had never had taxes taken out until this year I only had one figure to report, but now I have the pre- and post-tax amounts listed on statement #2.

I usually just do the basics, standard deductions, and call it a day, but I'll read the instructions for 1040 and see if it would be helpful to claim credit for the taxes.

Ahh, I suppose that also means I will be getting a bill for local inhabitant's tax this year...
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Re: Tax Guide for U.S. JETs

Postby Scott_KumamotoPA » Thu Mar 24, 2011 3:44 pm

Yep, the amount before taxes are taken out. I stick to the basics with the 1040 as well.

Welcome to the taxpayer hood. Yeah, the previous year's inhabitant's tax bills usually arrive sometime in June. Fortunately, COs will either make the payments for their JETs or include the money for the payment in the remuneration by giving it to the JET in one lump sum or for each month when there is a payment due. So you won't actually be taking home less than you were before.
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Re: Tax Guide for U.S. JETs

Postby sakumu » Tue Mar 29, 2011 1:54 pm

For those of us who don't like numbers and cower under the fear of being audited, could you point us in the direction of tax preparers who cater to JETs?
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