Working for US, direct deposit in Japanese Bank Account

[kyondayo]

Hello!

I will be moving to Japan in the up coming year for marriage (with a Japanese citizen).

I will be telecommuting for my current company in the US.

I want to know, is it possible to direct deposit my US pay check into a Japanese bank account and if anyone knows the fees associated with it? I have seen in this thread the rates for transferring money back and forth from Japan to foreign countries, but nothing about direct deposit and fees associated with that.

 

[mdchachi]

According to social security, this is possible. But your company's banking institution may have different rules. Perhaps you could try asking them.
Japan is not listed on the U.S. Defense Dept site here.
And this also indicates it's dependent on the bank you use. For example this one indicates it's possible but that they can't do it.

 

[kyondayo]

Thank you!

So yes, it appears that this should be fine and possible as an international ACH, but no information on if there are fees associated with receiving an international ACH or currency exchange fees when receiving USD into a Japanese bank account.

When we find out more information, we will update this thread

 

[Transformer5]

I telecommute from the UK and use Paypal for foreign income deposits. I can change it into other currencies from my Paypal account and transfer it to my bank account.

When I was in Japan, I looked into opening an account with Citibank which allowed you to have money in it in two currencies. I don't know if they still do that (this was about 10 years ago).

 

[mdchachi]

When I was in Japan, I looked into opening an account with Citibank which allowed you to have money in it in two currencies. I don't know if they still do that (this was about 10 years ago).

They definitely do not because Citibank no longer exists.

 

[kyondayo]

Thanks for your replies!

Without talking to Japanese banks yet, it seems that setting up an account with OFX | International Money Transfers & Currency Exchange and then transferring/exchanging my money to my Japanese bank account might be my cheapest way yet.

Apparently, OFX is often able to help you avoid being charged fees from the receiving bank by transferring your money into one of their (OFX's) local bank accounts in the receiving country. It depends on the receiving bank's fee policies.

 

[johnnyG]

I'd suggest exploring Charles Schwab. You could have your salary deposited with them, and they have one of the best, if not the best VISA cards to use when outside the US--purchases or ATM withdrawals (fee-free). They are also quite familiar with international wire transfers and are high up the food chain, so no exorbitant fees.

But the catch is that you have to open an account with Schwab while still a US resident, before you leave--you cannot do this from abroad.

This is the same for most all US financial accounts due to FATCA rules & regulations. It's just too much of a pain in the compliance butt for US financial institutions to maintain/serve clients outside the US--even US citizens abroad. Schwab is one of the few brokerages that (if you have an existing acct) allow continued, normal use of that acct when you've moved overseas.

It'll be quite a lot of reading, but I'd suggest reviewing the monthly finance threads over here. (scroll down for the search results)

 

[johnnyG]

Also, your initial question is just one part of a constellation of financial issues that you'll likely encounter with your move to Japan. Taxes--both US and Japan, healthcare, pension (& mutual pension agreements), savings & investment, eventual retirement, buying/owning property in either place, bank loans (along w/possible mortgage credits on taxes), condo vs. house, perhaps inheritance, and even something like continuing spousal visa status or applying for permanent residence ( =green card) on down the road.

Altho the finance threads on reddit tend to be better (than other threads there), and there are a lot of various opinions and people posting, compared to jref here, there can be a "wild west" aspect to the talk over there. There's good info, but read critically, and keep an eye on upvotes and who is posting. (Good to do any time!)

Another small board that might touch on some relevant financial issues is Retire Japan - Home

Finally, sorry to be recommending non-jref resources on this forum...! If the mods would prefer this info to stay in a private message or conversation, please let me know.

 

[kyondayo]

It'll be quite a lot of reading, but I'd suggest reviewing the monthly finance threads over here. (scroll down for the search results)

whoa! that thread just started tax hell for me.

i'm reading a lot in here, but haven't found one slightly off topic question... will I have to pay double taxes on my income to Japan and the US? Thats an awful amount of taxes and its hard to believe.

 

[mdchachi]

Finally, sorry to be recommending non-jref resources on this forum...! If the mods would prefer this info to stay in a private message or conversation, please let me know.

How dare you! :roflmao:

i'm reading a lot in here, but haven't found one slightly off topic question... will I have to pay double taxes on my income to Japan and the US? Thats an awful amount of taxes and its hard to believe.

No, tax treaties and laws are in place that prevent double taxation. The main pain in the rear is the work in filling out the forms and filing your tax returns.

 

[johnnyG]

@kyondayo Besides making sure you have a US account set up before you leave, it might be good to talk to a CPA/tax prep person before you leave about your prospective US tax filings and maybe use that person for the first year, maybe two, that you're here.

In general terms, the US requires you to submit a yearly tax return (and pay tax, if that's how the numbers turn out), but the US also allows expats to claim a generous exemption--I think it was just over $101,000 for the 2016 tax year. This is called the Foreign Earned Income Exemption (FEIE) and if you google it, look for IRS form 2555 and its instructions. I think the vast majority of US expats don't make more than $101k, so filing is more like a formality--you very likely won't pay US taxes.

For tax prep, I've used Turbotax (TT), then a CPA for a while (due to owning some limited partnerships--a tax headache), and recently switched back to TT, which works fine.

In your case, you may end up straddling a tax year--in a calendar/tax year both time in the US, and time in Japan, maybe working in each period. The FEIE allows you to claim a partial year (part of that big exemption), but I'm not sure how well TT handles that, which is why an in-person CPA might be good for your first year (or two) that you are here for US tax filing. Once established and past that quirk, you'd be able to do it on your own.

The other thing related to this is deductions that your US employer might make. As a US resident, there's probably SS, some withholding, etc., but once you've established residency in Japan, they should stop doing that. If your employer is experienced with telecommuters overseas, good; but if not, they may need some convincing.

On the Japan side, once you are a resident, your worldwide income is taxable (as are capital gains & dividends), regardless of where it is paid (and regardless of whether it is repatriated to Japan or not). You're a resident here, so you've effectively worked here, or from here.

Blah, blah, blah...

 

[Transformer5]

They definitely do not because Citibank no longer exists.

Ah, I see. Looks like they were taken over by SMBC, in Japan anyway.

Edit: as your link says, which didn't appear in your original post, but did when I quoted it

 

[kyondayo]

@kyondayo

Thank you so much, you've been soooo helpful!

Ok, so your response raised more questions. Because of the tax treaty, I will not have to pay double tax. Based off of what you said, it sounds I should pay Japanese tax and I get a tax exemption for US for expats up to $101,000. But if I make over $101,000 and with the tax treaty to prevent double taxation, do I just pay taxes to Japan either way and file my tax return with the US? Yes, I definitely need an accountant, hahaha.

 

[mdchachi]

Because of the tax treaty, I will not have to pay double tax. Based off of what you said, it sounds I should pay Japanese tax and I get a tax exemption for US for expats up to $101,000. But if I make over $101,000 and with the tax treaty to prevent double taxation, do I just pay taxes to Japan either way and file my tax return with the US? Yes, I definitely need an accountant, hahaha.

The U.S. is one of the few countries that tax their residents who don't even live there. Basically you file your Japan taxes as primary country of residence. And then file in the U.S. Typically you don't end up having a tax bill unless you have significant U.S. income (capital gains etc.) You don't have to pay any Japan taxes on the U.S. income until you become a permanent resident in Japan. I found a good summary: Filing Taxes as an American Expatriate in Japan

I always used Turbo Tax for the U.S. side. Pretty straightforward. Japan side was easy for me because my company paid Deloitte & Touche to handle all of that for us. And I never became permanent resident or had a family at that time.

 

[johnnyG]

I found a good summary: Filing Taxes as an American Expatriate in Japan

That's pretty good. I had forgotten about the five year threshold when you become liable for everything worldwide- and before which you aren't. (Tho it's confusing when he calls that becoming a "permanent resident", since that could be confused with 永住権.)

@kyondayo This stuff is new and different, but it's also something that you'll get used to soon enough. I find filing my tax form in Japan much easier than getting my US return done (except when seeing the bottom line!).