Question:
im going to be working in Japan for a year under a work visa. Ill be teaching in a private school. Im a little confused as to whether i need to pay U.S (my country) or Japanese taxes. I heard from a friend that i may not even have to pay taxes, however im a little doubtful of that. Any advise would be appreciated.
Answer:
Yes of course you have to pay taxes. In Japan frequently the employer will already deduct the taxes from your salary before you receive it for your Japanese tax obligations. You may be entitled to a tax refund if over paid at the end of the year called a nenmatsu chousei. For the US you may not owe anything given the ex-pat allowance but you still must file. You are still liable for taxes you make on investments, bank accounts etc that are in the US when you are abroad, and you may still have to file for your state income taxes also. You should read the IRS Publication 54 on tax exemptions for living abroad. Also note if you have a bank account outside the US with over 10,000 you will need to file a
Form TD F 90-22.1 (not with your tax return).
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