Tax issues when living in US, getting paid from Japan
Thread poster: Katalin Horváth McClure

Katalin Horváth McClure  Identity Verified
United States
Local time: 22:46
Member (2002)
English to Hungarian
+ ...
Dec 23, 2002

I want to know what kind of tax forms do I need to get from the Japanese translation agency I am working for. I libe in the US and have been doing some work for an agency in Japan. They are paying me in dollars, transferring the money to my bank account here in the US.

If any of you has been dealing with the tax issues related to this situation, please tell me what form do they need to fill out. If it was a US employer, they would issue a 1099 form, but I don\'t knwo what isthe equivalent for overseas employers.

Thank you

Katalin


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Minoru Kuwahara
Japan
Local time: 11:46
English to Japanese
+ ...
don't know i could help you, but... Jun 13, 2003

I once saw this post of yours some months back, but I didn't know how to respond at that time. Sorry, I'm still unfamiliar with any kinds of proper "forms" you need in U.S. to use for the purpose of indicating tax issues and reporting it to the authority as I myself am living in Japan.

So I don't know if this information helps you in any way, but if I make a response from the point of view of a Japanese resident in Japan working as a freelance translator, when we work for a Japanese translation agency, we are usually deducted *10%* of the agreed payment with the agency we are working for. That's no doubt based on the Japanese national tax system. Therefore, for example, if your agreed payment is 40,000 yen, you are deducted of 4,000 yen as the income tax. If it's 12,300 yen, 1,230 yen is deducted. I think this percentage is generally applied to any kinds of employees at any companies in Japan because they work and get paid "under" those companies. While as the freelancer, we need to file our tax return every year at around February and March. For that, we use the special form provided by the tax office, in which we calculate and indicate the amount of the total payment and the income tax alongside with all expenses, and paste the withholding slips we were mailed from the agencies we worked for within the past one year of period. In short, I myself take time for doing all this in consideration of tax refund for that year, so may many others do.

Stating the above, I have never heard of how Japanese translation companies pay freelance translators living in foreign countries, and importantly how they treat the tax issues. Are they deducted of the income tax from the payment like we all are in a similar way? Is there any specific form in Japan to indicate payments to persons living abroad under the free contract? I really don't know. Besides the Japanese tax system is sometimes too complicated to get the right answers we need to know what we should do. In my case, when I work for the foreign agencies and get paid from abroad, generally I'm get paid of the exact amount of payment I agreed with the agencies based on my rates unless there are the bank commissions, and I treat such payment as the "special benefit" for which I'm not deducted of 10% of the withholding tax. I don't know if this is good or not because the higher such amount is, the lesser the tax return is (almost nothing!). If I'm dedcueted of the tax firstly, I would expect the tax return would be sure to be higher. Thinking about it, I naturally wonder if you may have a similar form in U.S. and clarified of how you treat your payments from abroad.

Maybe some of you living abroad and working for the Japanese agencies in Japan may have more clear ideas about this issue.

Sorry for the messy way of writing, but the tax system can be complicated enough to get clarified truly.

HTH

-MK


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KabaVan  Identity Verified
Local time: 19:46
Japanese to English
+ ...
Tax Issues in Canada and the US Jun 13, 2003

I am in a similar type of situation as Katalin, but I am in Canada.

I have been wondering about the same types of issues, and at this point I believe I'm going to be declaring the income from Japan as self-employed income.

There are a series of criteria that we have to satisfy from our version of the IRS, the ccra. Perhaps there is a similar set of criteria you can find in the US, as there are often many parallels in the systems of our respective countries.

http://www.ccra-adrc.gc.ca/E/pub/tg/rc4110ed/rc4110ed.html


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Minoru Kuwahara
Japan
Local time: 11:46
English to Japanese
+ ...
it seems to depend Jun 16, 2003

Thanks, KabaVan, for the link. I think we all have to think about this aspect wherever you may live if you are freelancing on the globe.

As I said, I'm totally unfamiliar with the tax forms you find in the U.S., so I don't know if there is any general rule applicable to tax payers there, but I suppose perhaps the form you may use depends on whether you are categorized as an employee of the agencies you work with or a self-employed. That, in the case of Japan, is basically treated on the equal level as far as the tax rate is concerned.

-MK


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Minoru Kuwahara
Japan
Local time: 11:46
English to Japanese
+ ...
National Tax Agency JAPAN Jun 16, 2003

Now I just tried visiting the website of the National Tax Agency JAPAN to find the "Income Tax Guide for Foreigner", which apparently is designed for foreign national residents in Japan, but I wonder if this gives you some kind of necessary information.

Sorry, I don't have time to read it through myself for now, so I hope you would take a look at it and know if it atcually helps you or gives you some idea.

http://www.taxanser.nta.go.jp/gaikoku301.htm


-MK

[Edited at 2003-06-21 08:54]


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mmsaito  Identity Verified
Local time: 11:46
Japanese to English
+ ...
Use Gensenchoushu-hyo (Tax Withholding Certificate) Jun 22, 2003

Hi, Katalin,

My reply may be too late for 2002 tax return because you must have submitted the form (1040) before April 15, 2003. I had a similar situation when I lived in US and worked for a US company.

Line 21 "other income" in form 1040, you should add your income from Japan. Gensenchoushu-hyo from your agent in Japan would serve as 1099 and you have to attach it to the form. Even though you received in $, your Tax Withholding Certificate may be in JPY. Therefore, you need to calculate $ amount of your income based on the figure shown in the certificate. In the calculation, you have to use the official rate for the year published by IRS. Visit US Embassy in Japan to get the rate.

Also use form 1116 (Foreign Tax Credit) to avoid double taxation, you may be credited a certain amount. If you did not receive the certificate from the agent, I do not think there is a way to include your Japan income in your tax return. Be sure to receive Gensenchoushu-hyo for your future income.

Cheers,

Muneo Saito


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Minoru Kuwahara
Japan
Local time: 11:46
English to Japanese
+ ...
seems not complicated Jun 26, 2003

I think Mr.Saito gives us a clear instruction as above. I would like to thank him for such a useful information, though that's not directly applied to me in my case. It should be more or less useful for Ms.Katalin if she is reading this post or for any ones in the same situation.



-MK


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