Guide to US expat taxes in Japan

A comprehensive guide to US expat tax filing for Americans living in Japan, covering dual tax obligations, Japanese tax rules, and how to meet your US reporting requirements.

10 min. read

Are you an American citizen planning to move to Japan and start an exciting new chapter in your life? As you settle into your new home in Japan, it is essential to understand your tax obligations – not just in Japan, but also in the United States. Did you know that Americans abroad are still required to fi le their U.S. tax returns, no matter where they reside? This means that you’ll likely need to fi le both a Japanese tax return and a U.S. tax return. With nearly 60,000 Americans living in Japan, navigating the complexities of dual tax obligations can feel overwhelming. That’s why we’ve created this tax guide – to help you navigate the key tax implications U.S. citizens face while living and working in Japan, just like you.

Overview of Japan’s tax system

Filing date tax return	15 March following the tax year
Tax year	January 1 – December 31
Tax rate	5%-45% national income tax for residents 5%-10% inhabitant’s tax 2.1% special reconstruction tax
Treaty	Yes
Joint filing allowed	No
Double tax relief methods (built-in into Expatfile’s tax software)	Foreign Tax Credit and Foreign Earned Income Exclusion US-Japan tax treaty US-Japan totalization agreement

Understanding your tax fi ling obligations in Japan

When moving to Japan, it is essential to understand your Japanese tax fi ling obligations and how your income is taxed in Japan. Japan classifi es taxpayers into two categories based on residency:

1. Residents (further divided into permanent and non-permanent residents)
2. Non-residents
Each residency status comes with its own rules and tax rates, making it essential to identify your status to comply with the correct tax regulations.

Residents

Residents in Japan are divided into permanent and non-permanent residents.
You are considered a permanent resident if you have lived in Japan for over fi ve years. Permanent residents are taxed on their worldwide income, no matter where it is earned or paid.

You can be considered a non-permanent resident if you live fi ve years or less in Japan. Non-permanent residents are taxed on Japanese-source only, unless they remit foreign-sourced income to Japan. The remitted income must then be reported.
You’re generally considered a resident for Japanese tax purposes when you intend to stay for at least one year and have a Japanese home available. After fi ve years in Japan, you will become a permanent resident. The below two examples illustrate the different Japanese tax rules for non-permanent residents and permanent residents:

Japanese income (15,000)	U.S. income (16,000)
A Paid in Japan	B Paid in the U.S.	C Paid in Japan	D Paid in the U.S.
10,000	5,000	14,000	2,000

Example: non-permanent residents

You remitted 6,000 from the U.S. to Japan during the tax year. The remitted income consists of 2 income sources (B+D).
Japanese sourced income is subject to tax in Japan - does not matter if you remitted the income or not. (A+B).
The U.S. income of 14,000 paid in Japan will be subject to tax in Japan (C).
The 6,000 remitted income to Japan consists of 2 sources (A+B).
The rule is that you fi rst use the Japanese income paid in the U.S. before you report your U.S. income paid in the U.S. (D)
The Japanese income paid abroad of 5,000 (B) should be reported on your tax return.
The remaining 1,000 of remitted income needs to be reported under the U.S. income paid in the U.S. (D).
The remaining 1,000 of non-Japanese income paid abroad (D) should not be reported on your return.

Example: permanent residents

You remitted 6,000 from the US to Japan during the tax year. Same as the previous example.
For non-permanent residents the US income paid in the U.S. of $1,000 which would not have to be reported, now needs to be reported if you are a permanent resident.
All the income no matter where it is paid is subject to Japanese taxes since permanent residents are taxed on their worldwide income.
The total income of 31,000 should be reported in your Japanese tax return.

This does not necessarily mean your income will be taxed twice, as this paragraph focuses solely on the tax implications in Japan.

Should I claim the FTC over the FEIE if I live and work in Japan?

From the table above, you can see that Japan generally has a higher income tax rate than the US. This would simply mean that your Japanese taxes would always offset your US tax bill. If this is the case for you, it is more beneficial to claim the Foreign Tax Credit than the Foreign Earned Income Exclusion. The Foreign earned income exclusion for the tax year 2025 is $130,000.

Let us illustrate with an example:

Mike l in Japan and has a taxable income of $150,000 (Japanese wages).
Japan taxes this income against 25%. Mike paid $37,500 Japanese taxes.
The US would levy 20% US income tax. $30,000.
By using the Foreign Tax Credit, Mike can now use $30,000 of the $37,500 Japanese income taxes paid to offset his US tax bill of $30,000.
Mike does not owe any US tax.
Mike can even carry the unutilized credits of $7,500 to future years (but might never need it).

A big advantage of the Foreign Tax Credit is that there is no maximum amount compared to the Foreign Earned Income Exclusion. It is really a dollar-for-dollar credit. If you pay more taxes in Japan than you would owe in the US, you can take an unlimited credit for the Japanese taxes paid and end up having no US tax bill at all.

Also, this provides more flexibility for later years and expats can claim the child tax credit (refundable credit of $1,700 per child!), which you simply cannot claim when you take the Foreign Earned Income Exclusion.

In summary, it is usually more favorable for US expats in Japan to claim the Foreign Tax Credit as you will always have enough Japanese taxes to use as a credit to fully offset your US tax bill! However, you need to be aware that the Foreign Tax Credit may not help you if you have a relatively low income. The Japanese tax rate starts at 5% and the US tax rate starts at 10%. Reference is made to the table above. If you need help choosing the right tax break, just let our software give you a recommendation. Just log in here and start your return.

Non-resident status
You can be considered a non-resident if you lived in Japan for less than one year and do not have a permanent home in the country. Non-residents are only subject to their own Japanese sourced income while non-Japanese income is generally not subject to Japanese taxes. Additionally, non-residents are typically not eligible for the same tax credits and deductions available to residents.

What is the due date for my Japanese income tax return?

In Japan, the tax year is the same as the calendar year (just like in the United States!). Tax returns in Japan must be filed before March 15 while you have till June 15 for your US return. Generally, extensions in Japan are not available.

Considering that you must file your Japanese tax return before your U.S. expatriate tax return, it makes sense to use your Japanese tax return as the basis for preparing your U.S. expatriate tax return.

Generally, if you work in Japan, you must pay social security contributions locally. Social security is imposed by the Japanese government to fund health insurance, unemployment insurance, pension plans, and more.

Good news for self-employed expats! Self-employed expats can take advantage of the Social Security Agreement between the United States and Japan. This agreement exempts you from self-employment tax in the United States. If you take advantage of the Social Security Agreement, you will only have to pay Social Security contributions to Japan. Read more about self-employment taxes.

Do I need to consider any other Japanese taxes?

As an expat living in Japan, you need to be aware that you are subject to an inhabitant’s tax which is a combination of the prefectural and municipal rates of around 10%. The exact percentages vary depending on where you live in Japan. This has not been included in the table above and needs to be accounted for.

Also, any compensation is taxable in Japan. This also includes non-cash compensation. A couple examples are meal and housing allowances, educational fees, etc.

Gift tax is also levied in Japan. The one receiving the gift is liable for gift taxes.

How can I file a US tax return from Japan?

Before you start preparing your U.S. expatriate tax return, you should use your Japanese tax return or your annual employer statement. This annual statement is called 'Gensen-Choshu-Hyo' and is issued by your Japanese employer. This statement gives you an overview of your annual earnings and the amount of Japanese taxes paid during the tax year, which you eventually need for your US expat tax return.

Filing your US taxes does not have to be intimidating or considered difficult, because we have made it super easy with our DIY tax software designed specifically for expats. Here at Expatfile we make preparing your own US taxes for expats easy, secure and in just 10 minutes!

Are you ready to file your US tax return and be done for the year? Please follow the steps below and get your expat taxes ready:

Log into our DIY tax software for expats and start your return.
Finish our easy-to-understand questionnaire and see what you owe or receive as a refund. No tax expertise needed!
Review your return directly.
E-file your expat tax return yourself with our built-in connection with the IRS.
Get an instant receipt acknowledgement from the IRS (through our software).

Give Expatfile a try and start for free today. You pay at the end and only when satisfied! Have any further questions, do not hesitate to reach out to our customer support team.

This article was reviewed by Suvarna, IRS Enrolled Agent

Last updated: January 14, 2026