Japanese Businesses & Investments

Questions covered:

I have interest from Japanese post office and bank accounts. How is the interest reported?

The entries for regular post office accounts will show gross income, along with withholding tax (20.315%). Passbooks for bank accounts usually only show the net, so you must divide by 0.79685. For the United States, report the gross amount as income, then claim the foreign tax credit for the Japanese withholding tax.

I own stocks that are held in a brokerage account in Japan. Am I required to report this to the Internal Revenue Service?

Simply holding the stocks do not generate a tax obligation, but a taxable event occurs (i.e. if you receive dividends or sell stock) you must report this on your tax declaration.

My Japanese spouse has accounts that don’t have my name on them. Am I required to report these?

No. You must report financial accounts on form FBAR which is an informational form - no tax due generated. If you are not a signatory on the account, you do not need to report them. See FinCEN Form 114 (FBAR) Reporting.

I am the owner of a KK (Kabushiki Gaisha) - what does this mean for my U.S tax filing requirement?

This may require the filing of Form 5471 which is submitted with your U.S. tax return.

Please see the following information which may be useful for you.

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