3 ms·
Disclaimer: IANAL, IANATA, this isn't tax advice, etc Foreigners residing in Japan are eligible to participate in furusato nouzei, but Americans might want to
by EE84M3i 4y ago
Disclaimer: IANAL, IANATA, this isn't tax advice, etc
Foreigners residing in Japan are eligible to participate in furusato nouzei, but Americans might want to note the following clause in the section "Tax Must Be the Legal and Actual Foreign Tax Liability" in Publication 514 Foreign Tax Credit for Individuals[1], which states:
>Subsidy received. Tax payments a foreign country returns to you in the form of a subsidy do not qualify for the foreign tax credit.
>The term “subsidy” includes any type of benefit. Some ways of providing a subsidy are refunds, credits, deductions, payments, or discharges of obligations.
Whether or not furusato nouzei falls under this clause seems to be up for some debate, and AFAIK the IRS hasn't made a public determination on it either way. I don't risk it, but I am under the impression there are some that do.
Alternatively, the furusato nouzei portion could be not included in the tax credit? But would it be worthwhile...? Sounds like it depends on the situation and frankly seems like a lot of work to get a few gift baskets.
[1]: https://www.irs.gov/publications/p514#idm139978451112272 https://www.irs.gov/publications/p514#idm139978451112272
- Hello71 4y agois it common to need to take the FTC on residence taxes? my understanding is that US federal income taxes are lower than most foreign taxes, and skimming the Japanese personal income tax brackets, it seems to be slightly higher than US federal income taxes (ignoring deductions).
- YouMeWeThem 4y agoI would imagine most people earning under the Foreign Earned Income Exclusion limit ($112,000 in 2022) are taking that over the FTC, if just to avoid the headache.
- chrischen 4y agoGift baskets is just what you opt for if you don’t want a cash equivalent gift card.
- seanmcdirmid 4y agoOh man, this is so confusing, and affects any American citizen/PR living abroad. In China, there are a bunch of weird kickbacks on your paycheck (e.g. public medical insurance cash benefit) that you have to be careful to document as income on your American tax return. And the whole mess of dealing with social security taxes.