Most Americans working in Japan never file a Japanese return. Their employer runs nenmatsu chōsei in December, the payslip settles up, and the tax year feels finished. It isn’t. The IRS taxes you as a citizen or green-card holder wherever you live, and what that return costs you usually turns on two things: how much Japanese tax you actually paid during the calendar year, and what you’ve been putting into a NISA.
Do I still file a US return while living in Japan?
Yes, every year your gross worldwide income reaches the filing threshold. For 2025 that’s $15,750 if you’re single and under 65, $400 of net self-employment income if you freelance, and just $5 if you’re married to a Japanese national and file separately. Income you later exclude or wipe out with credits still counts toward the threshold.
Both countries use the calendar year, so the gensen chōshūhyō (the withholding slip your employer hands you in January) lines up with the 1040. The deadlines don’t line up with each other:
- 1
16 March 2026: Japanese return for 2025
Only if you have to file a kakutei shinkoku (see below). The usual 15 March falls on a Sunday in 2026.
- 2
15 April 2026: US tax payment due
From abroad you can file later, but you can’t pay later without interest. If you expect to owe, pay by this date.
- 3
15 June 2026: US return due for Americans abroad
Automatic for anyone living outside the US on 15 April. Attach a statement saying you qualify.
- 4
15 October 2026: extended US deadline, and the FBAR
File Form 4868 by 15 June to get here. The FBAR is due 15 April but extends automatically to the same date.
Our US expat tax guide walks through the 1040 itself. The rest of this page is about what’s specific to Japan.
When do I have to file a kakutei shinkoku in Japan as well?
If one employer pays you and withholds on all of it, year-end adjustment usually settles your Japanese tax and you file nothing. The National Tax Agency requires a kakutei shinkoku when your salary is over ¥20 million, when you have more than ¥200,000 of other income (side work, rent, investment income outside a withholding account), or when you had two employers and the second one didn’t adjust. People also file voluntarily to claim medical expenses or the first year of the housing-loan deduction.
We see two cases often. Teachers who pick up private lessons on top of a school contract cross the ¥200,000 line without noticing. And long-term residents who are no longer non-permanent residents owe Japanese tax on their US brokerage dividends, which no Japanese employer knows about.
How much tax does Japan take, and when does the IRS give credit for it?
Japan taxes salary in layers. National income tax runs from 5% to 45% of taxable income. A 2.1% reconstruction surtax is charged on that tax (not on income) through 2037. Then there’s jūminzei, the local inhabitant tax: roughly a flat 10% of the prior year’s income plus a small per-person charge.
| Taxable income (2025) | National income tax rate |
|---|---|
| Up to ¥1,949,000 | 5% |
| ¥1,950,000 to ¥3,299,000 | 10% |
| ¥3,300,000 to ¥6,949,000 | 20% |
| ¥6,950,000 to ¥8,999,000 | 23% |
| ¥9,000,000 to ¥17,999,000 | 33% |
| ¥18,000,000 to ¥39,999,000 | 40% |
| ¥40,000,000 and over | 45% |
Taxable income is what’s left after the employment income deduction (at least ¥650,000 from 2025), your social insurance contributions and the basic deduction, which the 2025 reform raised to between ¥580,000 and ¥950,000 depending on income. Income tax, the surtax and jūminzei are all creditable on Form 1116. Kōsei nenkin and health insurance premiums are not.
The part people get wrong is jūminzei timing. The resident tax you pay from June 2026 is assessed on your 2025 income. Most individuals claim the credit on the cash basis, in the year the tax is paid, so your 2025 US return credits the jūminzei you paid during 2025, which was on your 2024 income. With a steady salary it evens out. It bites in two years: your first full year here, when there’s little or no resident tax yet, and the year after you leave, when a bill on your last Japanese year arrives and still has to be paid.
Foreign tax credit or FEIE: which works in Japan?
Our default for anyone on a steady Japanese salary, and certainly for most people in Tokyo, is the foreign tax credit. Once jūminzei is running at full rate, Japanese income tax plus resident tax is usually more than the US tax on the same pay, even at fairly modest salaries. The credit takes US tax on that salary to zero and the excess carries forward ten years. It also keeps the refundable child tax credit and IRA contributions available, which the exclusion shuts off.
The foreign earned income exclusion (Form 2555) lets you exclude up to $130,000 of 2025 foreign earnings if you meet the bona fide residence or physical presence test. It suits English teachers, ALTs and eikaiwa instructors in their early years, when Japanese tax is small and there’s almost no jūminzei to credit. The housing exclusion can add more for rent and utilities: costs above the $20,800 base, up to a Tokyo limit of $67,700 under IRS Notice 2025-16. Elsewhere in Japan the default limit applies.
Say you teach English in Osaka on ¥3,000,000
Take Emily, a single US citizen who moved to Osaka in August 2024 to teach at an eikaiwa. In 2025 she earns ¥3,000,000, about $20,049 at the IRS rate.
After the ¥980,000 employment income deduction, roughly ¥440,000 of social insurance and an ¥880,000 basic deduction, her taxable income is about ¥700,000. Her income tax with surtax is about ¥35,700. The jūminzei she paid during 2025 covered only her five months of 2024 pay, about ¥12,000. So Japan collected roughly ¥48,000, or $320, in 2025.
On the US side, $20,049 less the $15,750 standard deduction leaves $4,299 taxable and about $430 of tax. The credit covers $320 of it and she owes around $110. With the FEIE she owes $0, and nobody has to track which year’s jūminzei went where. We’d file her on the exclusion. If she later has children we’d look at it again, because the FEIE removes the refundable part of the child tax credit.
Illustrative, rounded figures. Social insurance is estimated.
Say you’re on ¥24,000,000 at a firm in Tokyo
Take Daniel, single, earning ¥24,000,000 in 2025 at a Tokyo bank, about $160,393. Because his salary is over ¥20 million he files a kakutei shinkoku by 16 March 2026, even though his employer withholds.
His employment income deduction hits the ¥1,950,000 cap, social insurance comes to roughly ¥1,670,000, and his basic deduction is ¥580,000. That leaves about ¥19.8 million in the 40% band, for income tax plus surtax of about ¥5,230,000. His 2024 pay was similar, so the jūminzei he paid during 2025 was about ¥2,000,000. Japanese income taxes paid in 2025: about ¥7,230,000, or $48,300.
His US tax before credits is about $27,560. With the foreign tax credit he owes $0 and carries forward roughly $20,700 of unused Japanese tax. With the FEIE, $130,000 is excluded but the remaining $30,000 or so is taxed at his top rates, leaving about $3,500. He could add a credit for the Japanese tax on that slice, but that’s two forms to reach the same zero, and most of the carryforward is gone.
Illustrative, rounded figures. A real return uses his gensen chōshūhyō and his jūminzei notice.
I’m a non-permanent resident in Japan. What does that change?
Japan treats you as a non-permanent resident if you don’t hold Japanese nationality and you’ve lived in Japan for five years or less out of the past ten. During that time Japan taxes your Japan-source income plus any foreign-source income that is paid in Japan or remitted here. Leave your US dividends in a US account and Japan doesn’t tax them.
That’s a Japanese benefit only. The IRS taxes the same dividends in full, with no Japanese tax to credit, which costs you nothing extra because you’d owe the US tax either way. Your pay for work done in Japan is Japan-source whichever country pays it. Dual US–Japanese nationals can’t be non-permanent residents at all. And once you pass five years, Japan taxes your worldwide income, including that US brokerage account, which is often the first year an American here needs a kakutei shinkoku.
Why is my NISA a problem on a US return?
The new NISA that started in 2024 lets you invest up to ¥1.2 million a year in the tsumitate allowance and ¥2.4 million in the growth allowance, with an ¥18 million lifetime cap, all free of Japanese tax. The US gives it no special treatment. Dividends and gains inside a NISA go on your 1040 like any brokerage account.
The bigger issue is what’s inside it. Most NISA money goes into toshin, Japanese investment trusts such as the popular all-country and S&P 500 index funds, or into Tokyo-listed ETFs. For US tax those are Passive Foreign Investment Companies (PFICs). Each one needs Form 8621 every year, and without an election a sale is taxed at the top US rate for every year you held it, plus interest. A monthly tsumitate plan creates a new lot every month.
Before you start a tsumitate NISA
An index fund that’s a model choice for a Japanese investor is one of the worst things an American can hold. If you want the NISA’s Japanese exemption, and your broker will open one for a US person, hold individual Japanese or US shares in it, which aren’t PFICs. If you already own toshin, get them onto Form 8621 now and decide on a mark-to-market election deliberately. Waiting only lengthens the period the default rules reach back over.
What about iDeCo and my company’s DC plan?
This is where the law is honestly unsettled. iDeCo and corporate defined-contribution plans (kigyōgata DC) aren’t US-qualified plans, and there’s no IRS guidance on either. Contributions aren’t deductible on your 1040. Whether the growth is taxed each year, and whether the funds inside are separately reportable PFICs, is where practitioners differ.
Our lean is to treat an employer DC plan as a foreign pension: employer contributions are generally taxable income once vested, growth is deferred until you draw it, and the account goes on the FBAR and Form 8938. iDeCo is funded by you alone, so we’re more cautious there and look at what it holds. If you haven’t opened one, the Japanese deduction is often worth less to an American than it looks, and the money is locked up until 60.
Kōsei nenkin, US Social Security and the dattai ichijikin
The US–Japan totalization agreement stops you paying into two systems on the same wages. Work for a Japanese employer and you pay kōsei nenkin and Japanese health insurance, not US Social Security. If a US employer sends you here for five years or less, you can stay in US Social Security with a certificate of coverage. Self-employed people generally pay into the system of the country they live in.
If you leave Japan with less than ten years of Japanese coverage, you can claim the dattai ichijikin, the lump-sum withdrawal payment, within two years of leaving. It’s currently capped at 60 months of contributions (a 2025 pension law raises the cap, from a date not yet fixed), and Japan withholds 20.42% from it, which you can reclaim through a tax representative. On the US side we treat it as taxable to the extent it exceeds contributions you already paid US tax on, with a credit for the Japanese tax. Before you take it, remember that the totalization agreement can count your Japanese months toward a benefit later, and the lump sum erases them.
What does the US–Japan tax treaty actually do for me?
Less than people hope. Like every US treaty, it has a saving clause that lets the US tax its citizens as if the treaty didn’t exist, and the pensions and social security article is not one of the exceptions. So a kōsei nenkin paid to you in Japan can be taxed by both countries, as can US Social Security if you retire here. Relief comes through credits, not exemption. Where the treaty earns its keep is in listing which Japanese taxes count, jūminzei included, and for green-card holders, who can sometimes use its tie-breaker rule. That has real consequences for the green card, so talk to us first.
Reporting Yūcho and your other Japanese accounts
If your non-US accounts together topped $10,000 at any point in 2025, you file an FBAR. That catches most people in Japan: the Yūcho account you opened on arrival, your salary account, a securities or NISA account, and any account you can sign on. Japanese banks ask US customers for a FATCA self-certification and report them, and Japan’s tax office has a mirror-image form for assets held outside Japan.
| Form | Who files | Threshold |
|---|---|---|
| FBAR (FinCEN 114) | US citizens and green-card holders | Over $10,000 combined at any time in the year |
| Form 8938 | The same people, with the 1040 | $200,000 at year end or $300,000 at any time ($400,000 / $600,000 joint) |
| Kokugai zaisan chōsho | Japanese residents other than non-permanent residents | Over ¥50 million of assets outside Japan on 31 December; due 30 June |
The FBAR guide covers how to count balances and what the penalties look like. For the FBAR, convert yen at the Treasury’s year-end rate, not the yearly average.
Leaving Japan: the exit tax and your last jūminzei bill
Japan’s exit tax, kokugai tenshutsu-ji kazei, applies if you leave holding securities and similar assets worth ¥100 million or more and you’ve lived in Japan for more than five of the last ten years. It taxes the unrealised gain as if you’d sold. Few readers are affected, but those who are need to plan before the move, because the US doesn’t treat that as a sale and the Japanese tax may not line up with any US income.
More people are caught by the ordinary things. Jūminzei for your final year is still owed after you’ve gone, so appoint a tax representative before you leave. And moving back to the US means picking a state again. If you kept ties to California, New York or Virginia while you were away, read our state tax guide, because some states make it hard to show you ever left.
Behind on US filing from Japan?
Plenty of Americans in Japan find out years late, especially dual nationals and people who came on a one-year teaching contract and stayed. If it wasn’t willful, the Streamlined Foreign Offshore Procedures let you file three years of returns and six years of FBARs with no penalty, and on a Japanese salary the tax due is usually small. Our Streamlined guide explains who qualifies.
What we’d do for you
We start with your gensen chōshūhyō and your jūminzei notice, pick the credit or the exclusion on your real numbers rather than by habit, and put every Japanese account on the FBAR. If there’s a NISA or iDeCo, we’ll tell you plainly what it costs to keep and what we’d change. See expat pricing for what’s included.