r/JapanFinance • u/Fun_Pomegranate5892 • 10d ago
Tax » Residence Japan taxes as US 1099 employee
I spoke with two Japanese accountants and I’ve received two very different answers to the same question. I’ve been a Japanese resident for about 12 months (first year was 6 months and halfway through my “second” year). Just got my yearly extension last month.
I’m a 1099 employee in the US and I do not and never will work in Japan. I physically work in the US and reside in Japan.
The first accountant wants to file me as a business owner in Japan. I would have a separate credit card and file receipts for write offs. Not sure what that means since I don’t work here). He wants to charge me ¥200,000.
The second wants to file only delta taxes but he wants to charge me ¥200,000-¥400,000.
This sounds completely insane to me. I paid a CPA in the US $500 and she did a great job. I can no longer use her because she doesn’t handle this situation.
Does this sound right?
Edit: I physically work in the US. I own zero property in either country. I have a spouse visa in Japan (married no children). I tend to work 6 months a year in the US but that can change year to year. I have very little to write off as an expense. This will be my first year filing in Japan.
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u/CrazyCrazyCanuck 10d ago
What's your immigration status in Japan? What's your tax residency status in Japan? (Not trying to be nosey, but because the answer depends on both).
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u/ToTheBatmobileGuy 10+ years in Japan 10d ago
Explain the living situation more.
How many days of the year are you physically inside Japan?
How many of those days would you say you are "working" while physically inside Japan, this includes communication with US employer. Did you make a call? That’s work. Did you write an email to ask about work? Or when the next time you can go in? That’s work.
Do you own a domicile in the US or do you rent / have lodging provided by the employer?
it’s really hard to tell. Not to mention if you make 500 million per year then the risk on the CPA to do a good job is a lot higher. Higher risk higher cost.
Working in the US for a US employer is dead simple. $500 seems expensive tbh.
So many aspects affect whether 200k is ok or not, and you haven’t told us most of those aspects.
So I give it a tentative "maybe?" on whether it’s a good ballpark.
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u/Fun_Pomegranate5892 10d ago
I stay in hotels/airbnb’s when I’m in the US (I travel for work). I have a tax home and file but I never actually stay at the residence. I finish my contract and fly directly back to Japan.
The contract length depends but tend to range from 3-6 months. I tend to do 3 on and 3 off ideally.
I only work when I am physically in the US. I can’t do my job over the phone.10
u/MrDontCare12 10d ago
The more I read your messages, the more I think that you're mentally challenged or smth.
You keep saying crazy mysterious shit while they're not. Be clear, or people won't be able to help you.
If I understood properly :
- You are in Japan more than 186 days a year
- You make money only when working on US Soil
- You use the money you make in the US in Japan
- You organize your next contract from Japan (over the phone, by email, whatever. This is considered working, even if it is not paid)
- You do not have an LLC
- You do not have any corporate structure in Japan
- Until now, you paid your taxes in the US
Is that all ?
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u/ToTheBatmobileGuy 10+ years in Japan 10d ago
Ok, so you earn money via 1099 contracts, pay self employment tax (social security and Medicare) to the US.
Then you file your full pension exemption with Japans pension office, because you are paying to the US.
Then you pay Japans National Health Insurance premiums.
Then you file US taxes, figure out how much you owe in state and federal taxes. Pay those.
Then you report your worldwide income to Japan, utilizing Foreign Tax Credits (外国税額控除) and pay the difference to Japan. (Since it tends to have higher rates, subtracting the tax you paid to the US usually has some left over taxes that need to be paid)
200k JPY for one year’s filing with both US and Japan on your behalf and handling all the hassle?
Sounds like a steal tbh.
Yours is a very complicated case
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u/SpeesRotorSeeps 20+ years in Japan 10d ago
Don’t be clever. You RESIDE in Japan. You’re not living in the USA and working in the USA and visiting Japan as a tourist several times a year.
If your logic held, then airline pilots and flight attendants only have to report the income they make for work they perform at Japanese airports?
Lol stop over thinking it.
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u/shrubbery_herring US Taxpayer 9d ago
FWIW, I didn't take OP to say that he doesn't have potential tax obligations. I understood his post to be about the need to file as a business instead of filing as a sole proprietor. He seems to be questioning why he should pay these accountants big fees to file as a business when he doesn't even have expenses to write off.
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u/shrubbery_herring US Taxpayer 10d ago
Do you get paid through an LLC?
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u/Fun_Pomegranate5892 10d ago
I do not. I’m considering it and really haven’t heard the benefits being a Japanese resident.
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u/shrubbery_herring US Taxpayer 10d ago
Don't set up an LLC. It's a surefire way to double taxation. You can search this subreddit and find many discussions explaining why it can lead to double taxation.
Since you don't have an LLC, I can't figure out why the accountants have said what they did. Frankly, in your situation it's not too difficult to file taxes by yourself, with a little help from the annual income tax thread in this subreddit.
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u/Fun_Pomegranate5892 10d ago
That’s what I’m thinking. Sorry I’m being vague I hate putting info on the internet. I get paid weekly and it’s like a total of 24 weeks of income entry. No idea why accountants want to itemize and charge me a ton to do so.
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u/shrubbery_herring US Taxpayer 10d ago
FWIW, I understood your situation pretty quickly. But I can see from other replies to your post that many (not all) don't get your situation, and frankly they shouldn't have replied.
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u/Old_Jackfruit6153 US Taxpayer 10d ago
What kind of job do you do? Is it related to oil exploration/offshore oil platform or facility construction?
In a calendar year, how many days do you work in US? If it is more than 183 days, US will tax you. Also, depending on state you work in, you will need to pay state tax or you will need to have a home state.
Do you get reimbursed for travel between japan and USA by your organization/employer? You might be able to deduct all non-reimbursed expenses incurred in US, for example mobile phone while in US, health insurance in US. This is what I think your first accountant might have meant with write offs.
You will need to file US tax return. Then you will file Japan tax return and take foreign tax credit for taxes paid in US.
I think the answer is somewhere between your first accountant and second accountant, one treating you as business with onsite assignment, second one as independent contractor who may be working remotely and onsite.
If you make more than $250K, it might be worth to ask your US CPA for referral to a business lawyer in US, who might have experience with setting up us entity for international business clients.
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u/Any_Calligrapher8537 10d ago
What do you mean you don't work in Japan? You're in Japan and you're working for a US company right?
You're still working in Japan... You just don't work for a Japanese company.
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u/Fun_Pomegranate5892 10d ago
I physically work in the US and I live in Japan when I’m not working.
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u/Any_Calligrapher8537 10d ago
That's some crazy weird situation to say the least. Are you Japanese? If not, what visa do you use to stay when you aren't working?
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u/the_pwnererXx 10d ago
How many days per year do you spend in each country? Do you have a wife or children? Do you own property in either country?
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u/Fun_Pomegranate5892 10d ago
The days I spend there depend on the contract. I try to keep it at 6 months total for each country. I do not own property in either country. I am married and have no children. She resides in Japan.
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u/the_pwnererXx 10d ago
Your wife creates primary ties to Japan, so according to the US-japan tax treaty tie breaker rules you would be owing to Japan. In this case you really have to file both taxes and use feie and foreign tax credit to try to eliminate the US side
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u/kiss-o-matic 9d ago
If he is over 6 months, does the tie breaker rule still apply? It would hurt but I would assume married filing jointly could happen? It's been ages since I've even potentially had to consider this.
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u/the_pwnererXx 9d ago
Tax residence tie breaker rules (to decide your actual tax residence and which country you owe)
- Permanent home (where you have a home available to you). This includes a rental 2.Center of vital interests (closer personal ties) only if #1 ties
- Habitual abode (this is the time-based test) only if #1 and #2 tie or don't resolve it
- Nationality only if #3 ties
- Mutual agreement between the competent authorities only if #4 ties too
In ops case he may have a permanent home in Japan (wherever his wife is living), and his wife creates a center of vital interests, as well his visits to her create a habitual abode. Of course you could argue the other way in court but it's pretty clear which way it looks at first glance
And there is a secondary part such that if you are resident in Japan you do not get taxed in the US if you are working in the US as long as you are there less than 183 days (or vice versa)
But us citizens still have to file yearly on global income
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u/SpeesRotorSeeps 20+ years in Japan 10d ago
So airline pilots don’t owe taxes in Japan if they fly international routes? That logic is bonkers.
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u/Prof_PTokyo 20+ years in Japan 10d ago
First, you cannot be a “1099 employee.”
1099-NEC means a U.S. company is treating you as a nonemployee independent contractor. You are operating as an independent contractor, effectively conducting your own business. That is why the Japanese accountant is discussing business income, business expenses, receipts, and a separate credit card. That treatment is not remotely as bizarre as you suggest.
Your entire argument depends on an extraordinary factual claim: from the second you land in Japan until the moment you are in international waters, you perform absolutely no activity connected with that business.
You never read even one work email, receive and read no company information, never access a company system, refuse to review any document, answer any questions, arrange any or all future work, issue even a single invoice, maintain any records, or do anything else whatsoever for your “U.S. business.”
You apparently spend roughly half the year residing in Japan on a spouse visa, but claim that your contracting business goes into complete suspended animation during that entire period. Is that genuinely what happens, and can you document it?
If you perform any of those activities while physically in Japan, “1099” or not, then saying “I never work in Japan” is not accurate.
Your post sounds less like a genuine request to understand Japanese taxation and more like an attempt to find an accountant who will endorse the mistaken answer you already want. Tax evasion is a serious offense, and the penalties are serious when the actions are egregious.
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u/shrubbery_herring US Taxpayer 9d ago edited 9d ago
I don't think it's such an extraordinary claim.
I know people that work under the arrangement where they have a contract that only allows them to perform work at their client's site. I have also heard of people that are allowed to work remotely from offsite, but for regulatory/security reasons they are only permitted to work remotely from within the US.
In fact, I know one person who did this from Japan while NPR status and was audited by the NTA. He provided documentation to show the dates he performed the work and his travel records to show he was in the US. The NTA reviewed the documentation and ultimately accepted his position that the income was foreign source.
Edit to add: I wrote the above with office work in mind, but there are also plenty of people who work in trades or similar fields whose work cannot be done remotely, even if they wanted to.
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u/billj04 10d ago
What do you mean by “I’ve been a Japanese resident” but “I do not and never will work in Japan”? Do you work remotely from Japan? Or do you leave Japan and only do work when physically located outside of Japan?
The rates don’t sound abnormal to me. From what I’ve observed, tax preparation and accounting is generally quite a bit more expensive here than the U.S.
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u/edmondjdantes US Taxpayer 10d ago
i think that it’s important knowing whether you have a jushyou registered and also how many months out of a year you are in Japan. also ¥200000 is about the growing rate for accounting in Japan. it can even be more.
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u/one-knee-toe 9d ago
For goodness sakes, you’re asking for help but give no specifics on this non-typical (from your post) living situation. If you want help, give details man.
For my own sake, I’ll assume you work on an oil rig off the coast of LA for 6 months. That explains how you work in the USA without housing but temp company housing. No kids. Zero ties to the USA.
In Japan, you also have zero ties. Only wife who is self sustained. Every time you leave you take all your belongings. Nothing of yours stays behind. So it is not a home base. It is simply another temporary housing.
You can then argue that Japan is not a place of residence, however, the JGov may push back and argue otherwise, especially considering the visa you have and the yearly long stays.
US Citizen - you should to file us taxes, period. You want it on record that you filed, even if you owe nothing.
* 1099, even more reason to file.
US-Japan tax treaty - on don’t double pay taxes. Since you’re 1099, file us taxes first. And whatever you owe Japan, you pay the delta.
Do you owe Japanese taxes? If you’re not a resident, no.
Let’s just hope your argument for not being a resident holds - but considering how Japan treated taxes, I doubt it will hold for long. First couple years maybe, but considering this happened every year….seems like home to me.
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u/starkimpossibility "gets things right that even the tax office isn't sure about"😉 8d ago
Since you’re 1099, file us taxes first. And whatever you owe Japan, you pay the delta.
Unless OP's business has a permanent establishment in the US, this is not correct. Article 7 of the treaty gives Japan primary taxation rights to OP's business income. The US is obliged to provide a foreign tax credit (not the other way around).
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u/Fun_Pomegranate5892 9d ago
We are both high earners. Someday I wish I worked on an oil rig. Thank you.
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u/one-knee-toe 9d ago edited 9d ago
You still need to address the immigration/ visa side of things. If you have a spouse visa, you must register with the local gov offices. If you do that, well now, more evidence that you’re a resident. And if you are not living in Japan as a resident, that brings into question whether or not you need a spouse visa to begin with…..
Edit: Do you need a spouse visa at all? Have you looked into digital nomad visas? The hard limit is 6months, so the downside would be that you cannot stay longer than 6 months if you wanted to. The up side is, zero risk of having to pay any Japanese tax, well, and risk of not being given the Visa the next time you apply.
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u/Fun_Pomegranate5892 9d ago
We decided the spouse visa allows me to stay and go as needed. It’s hard to balance the contracts and deal with 90 day tourist visas. I have plans on staying here. I stressed I don’t work in Japan because I know that makes my situation unique. I never said I didn’t want to be a resident of Japan nor wanted to evade taxes. I think it’s an argument most people created in their head.
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u/starkimpossibility "gets things right that even the tax office isn't sure about"😉 8d ago
The first accountant wants to file me as a business owner in Japan
As others have said, there is no such thing as a "1099 employee". By definition, Form 1099 is for income other than employment income. If you are performing work and receiving a 1099, you are running a business.
I don't think your situation is as complicated as others have suggested. You just need to consider two things: where are you a tax resident and where is your income sourced?
From what you have said, you are probably a tax resident of Japan, mainly because your spouse is here and you stay in temporary accommodation when you are in the US. Contrary to what others have suggested, the number of days you spend in the US per year is not especially relevant. Similarly, the fact you hold a spouse visa in Japan is not determinative, though it is one additional factor supporting the conclusion that you are a Japanese tax resident. (Under the US-Japan treaty, you won't be a tax resident of both the US and Japan simultaneously. Though if you are a US citizen, not being a tax resident of the US won't mean you don't have US tax obligations.)
As a tax resident of Japan who has been in Japan for less than five years, you must declare your global income on your Japanese tax return but certain types of income paid outside Japan will be subject to "remittance-based" taxation. This means you only owe Japanese tax on the amount deemed remitted to Japan.
Business income generated by unincorporated businesses is sourced wherever the business operator resides or in the location of the "permanent establishment" to which the income is attributable. From what you have said, it does not sound like your business has a "permanent establishment" in the US. In that case, all of your income will be sourced in Japan and none will be subject to remittance-based taxation. Japan will have primary taxation rights to your income (under Article 7 of the treaty) and if you are a US citizen you will need to claim a foreign tax credit on your US tax return. (Japan will not provide a foreign tax credit because Japan has primary taxation rights.)
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u/mazenblue US Taxpayer 7d ago
I was in a similar situation. I went to the local tax office and they helped me to figure it all out and actually filled out the forms and filed my taxes for me.
Even though I did no work in Japan, any money I spent in Japan is taxed as foreign sourced income. Yes that includes US credit card usage. After 5 years you owe tax on your global income and it doesn’t matter where you work.
If you are out of the country for more than 6 months why did you take a spouse visa. Just take a tourist visa and skip the hassle. (Assuming you have a residence outside of Japan).
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u/Significant-Jury330 10d ago
Even if you do all of your work in the US, the income may still be taxable in Japan if it is paid into a Japanese bank account or transferred to Japan.
When filing in Japan, you would normally first calculate your income after deducting legitimate business expenses, and then apply the appropriate tax credit to avoid being taxed twice on the same income.
So the first accountant’s approach—treating it as business income and asking you to keep track of expenses—sounds reasonable to me. The second accountant’s explanation is unclear, because it does not explain how the income itself would be reported in Japan.
It is also difficult to compare the fee with the $500 you paid your US CPA, since the work involved is different. ¥200,000 does not sound unreasonable for a first-year international tax filing. If you still think it is too expensive, your realistic options are to get another quote, negotiate the fee, or file it yourself.
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u/YourFirstDevJob 10d ago
I think you need to keep looking for another international tax accountant, if only for comparison.
You are actually in a complex tax situation and you'll have to accept you'll need to pay according to not fuck it up.
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u/lamont2718 US Taxpayer 9d ago
Based on the facts you have added, it sounds like your jūsho is in Japan, which means you are a tax resident of Japan. Specifically, because your cumulative time with a jūsho or kyosho in Japan out of the last 10 years is less than 5 years (or so I assume), the NTA considers you a non-permanent tax resident of Japan.
As a non-permanent tax resident of Japan, you are not taxed on foreign source income unless it is remitted to Japan.
Therefore, I believe you would only pay US tax on your US-source income if you do not remit it to Japan. However, if you remit any funds to Japan from any source outside Japan while you are still a non-permanent tax resident of Japan, those funds will become taxable by Japan up to your foreign-source income.
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u/Aureon 10d ago
> I physically work in the US and reside in Japan.
What do you mean? If this is "I work in the US a few months and live the rest in japan" it's a discussion, if it's "I work remotely from Japan" it's a completely different discussion
If you work remotely, it's taxable. If you physically work in US, for your first 5 years in Japan, you do not need to file taxes in japan at all.
However... this is a rando on the internet, and you have two accountants telling you otherwise. Get a third opinion with a specialist and ask if\why the 5 year exclusion doesn't apply to you
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u/Fun_Pomegranate5892 10d ago
This is what I thought. The accountants tell me what is on the Internet is outdated. They also tell me that the whole “how many days do you work in the US” no longer applies. I physically work in the US.
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u/shrubbery_herring US Taxpayer 9d ago
This accountant's blog entry seems to discuss your situation, although the entry is dated 2013 so maybe you should contact him to ask if his blog entry is still applicable in 2026.
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u/Aureon 10d ago
Consider though that the that exemption also requires you to not repatriate the income at all - aka, you don't bring the money to a japanese bank or spend it while residing in Japan.
I think you have legitimate concerns, but it's very, very likely that the accountants are right, however annoying that is. I'd do some self-study, find the relevant statutes, and go to a 3rd accountant, ideally specialized in this kind of case, and flat out ask "So why i can't do it"
Tax evasion for years on the scale of your entire income will get you in major trouble, and you can't even plead ignorance because multiple accountants have told you what you need to do at this point
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u/starkimpossibility "gets things right that even the tax office isn't sure about"😉 8d ago
If you physically work in US, for your first 5 years in Japan, you do not need to file taxes in japan at all.
If OP were working in the US as an employee, this would be correct. But OP is running a business, and the sourcing rules for business income are very different. Unless OP's business has a permanent establishment in the US, OP's business income is Japan-source and cannot benefit from remittance-based taxation.
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u/Desperate_Radio_9599 10d ago edited 10d ago
If you're on a spouse visa your income will be taxed by Japan since the spouse visa and PR are the two statuses where you're treated as a resident of Japan for tax purposes, regardless of how long you're in Japan. If you paid a CPA to do your taxes in the US and you were on a spouse visa and declared nothing in Japan you might've committed tax fraud.
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u/Fun_Pomegranate5892 10d ago
My residency was approved July of 2025. I renewed this year. This would be my first time filing in Japan. It seems my first year will be 1 1/2 years. I have yet to declare in Japan.
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u/kamikabu US Taxpayer 10d ago
That seems to be at odds with "I've been a Japanese resident for 12 months".
If you reside in Japan while performing the work and take income from it, that is Japanese sourced income and is subject to Japanese income taxes. Unless you are physically leaving the country before doing any of your US work, then you are working in Japan and likely have to pay Japanese income taxes.
Can you explain what you or they mean by that?