Vivinavi : Hawaii : (United States) Hawaii

• SJDummy
• mail
• 2022/06/27 (Mon) 09:25
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The article on the following website may be of interest to you. In particular, I think it is important to note the difference between the income reporting year and the foreign tax credit year.

http://office-m2.jp/qa/1034.html

• tax man
• 2022/06/27 (Mon) 13:48
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I believe that you have been receiving rental income
from your investment property and have been reporting it
to the Japanese tax office.

If you sell the property and make a profit, you will incur capital gains
taxes in the U.S., but since you are a resident of Japan,
you will not file a tax return in the U.S.
so you will have to pay taxes in the U.S. Since you are a Japanese resident, you will not receive a U.S. tax return, so the capital gain will be withheld by escrow at the time of sale and paid to the IRS
.

Then, as a resident of Japan, you will file a tax return in Japan
for the gain from the sale of the Hawaii property, and you will receive a
foreign tax credit for the capital gain tax withheld in the US. （ You will receive a refund ）

Specifically, we recommend that you contact an escrow company in the U.S. to receive the documents, and in Japan
consult with your tax advisor or local tax office to handle the transaction.

• 日本へ報告
• 2022/06/28 (Tue) 15:54
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If I rent or vacation rentals, does this mean that I also have to report to the Japanese tax office once a year? We are planning to rent a vacation in the future, but we probably won't make a profit due to property taxes and management fees, but do we still have to report to Japan?
Are there any penalties for not reporting?

• 日本へ報告
• 2022/06/28 (Tue) 21:18
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I paid taxes in the U.S. and
did not report my rental income to Japan because I made very little money.
Is there any penalty ？?

• tax man
• 2022/06/29 (Wed) 21:44
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Suppose there is a Japanese person living and working in the U.S. on a work visa or permanent resident status.
Suppose that person has a house in Japan
and rents it out to earn rental income.
Of course, he does not have a certificate of residence, so in that case,
the real estate company acting as an intermediary would withhold taxes from the rent and pay them in Japan
.

As you probably know, in the U.S., if you
reside in the U.S., you are required to report your worldwide income in the U.S.
However, especially between Japan and the U.S.,
double taxation of the same income has been abolished, so that income paid in Japan is
paid back in the form of Foreign Paid Tax
.

Conversely,
a Japanese person residing in Japan who has investment property in the U.S. and earns
income will have to file a return in Japan for
income tax withheld in the U.S.

However, the problem is that there is a "practical problem"
whether the tax must be paid in two countries as per the rules, even if no tax is due.

In other words, the question is why
you have to go through the
time-consuming procedure of filing the same income again in another country and getting back the tax paid in the other country, when you have already paid the tax in one country?

A system similar to this is the "FBAR" tax return that you have been asking about recently, where if you have more than $10,000 in a bank account
in Japan, you have to file in the US
and several people
repeat the question every year. Some people are repeatedly asked about it every year.

In other words, there is a similar question as to why we have to file
in the U.S. ？ for deposits in an After Tax bank account ）
for which income tax is paid （ on salary earned while in Japan.



What you need to understand is that the Regulations state that you must
report your rental income in Japan in the U.S. and that you must
strictly speaking report income from investment properties you own in the U.S. if you live in Japan. Strictly speaking, the "Regulations" state that you must file a tax return.

As an example, if you were to ask a highway patrol officer in the U.S.
about the speed limit on a highway, he or she would probably say
65 mph. But as you can see everyone is actually driving
under 65 mph and almost always over
the speed limit. But if you ask, the answer is 65 mph.

In other words, there is a difference between the rule itself and the actual situation, which means that
unless you are doing something illegal like tax evasion, you should
decide at your own discretion whether or not to file a tax return.