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US Taxes for Americans in Japan: FBAR, FEIE, the Treaty and Catching Up (2026 Guide)
Updated: Oct 6
Who this guide is for: Americans in Japan, and Japanese founders selling to the US
Moving to Japan does not end your relationship with the IRS. A US citizen or green-card holder files a US return on worldwide income every year, wherever they live, and reports foreign accounts on top of it. Most of the people who call us from Tokyo, Osaka and Yokohama are not trying to avoid that — they simply never heard it, or heard it years after they moved. This guide lays out the US rules that actually apply in Japan, what the National Tax Agency (NTA) side of the picture means for the US return, and how to catch up if you are behind.
I am an Enrolled Agent, licensed by the US Treasury to represent taxpayers before the IRS from anywhere in the world. We work with four groups in Japan: US citizens and green-card holders working in Japan — corporate transferees, teachers, military families transitioning to civilian life; Japanese-Americans and dual-status families with property, inheritance or a business in Japan; long-term American residents of Japan with Japanese pensions and investment accounts; Americans married to Japanese nationals navigating two tax systems, inheritance reporting and family accounts. This is general information, not individual advice.
The US-Japan tax treaty and totalization: what they do and do not do
The US-Japan income tax treaty is in force; it coordinates pensions, wages, dividends and double-taxation tie-breaks between the IRS and the NTA but does not remove the US citizen's obligation to file a US return on worldwide income.
The US-Japan totalization agreement is in force, so Americans working in Japan generally pay Social Security contributions into only one system — which one depends on the employer, the assignment length and whether they are self-employed.
The single most common misunderstanding we correct: a treaty never removes the obligation to FILE. It changes how specific income types are taxed, and the saving-clause in every US treaty lets the IRS tax its own citizens as if most of the treaty did not exist.
FBAR, FATCA and the accounts you have in Japan
FBAR applies to Japanese accounts at MUFG Bank, Sumitomo Mitsui (SMBC), Mizuho and Japan Post Bank and every other local institution — including accounts a spouse's name shares — once the combined high balance crosses the reporting threshold.
FATCA (Form 8938) is a second, separate report with higher thresholds for people living abroad; missing one and not the other is common and fixable. Both are informational — no tax is due on the form itself — but the penalties for skipping them are the largest in the expat rulebook.
FEIE vs. Foreign Tax Credit in Japan
The Foreign Earned Income Exclusion covers wages earned while a bona fide resident of Japan or physically present abroad long enough; it does not cover US-source income, Japanese pensions, or investment income, and Japan assignments with housing benefits need the housing calculation modeled alongside it.
Japanese income tax at higher earnings is generally comparable to or above US levels, so the Foreign Tax Credit usually carries the return — but employer-paid housing, a common expat benefit, changes the FEIE math materially.
The choice is not permanent, but revoking the exclusion locks you out of it for several years, so the decision should be modeled against your actual mix of wages, self-employment and investment income before the first return is filed.
Businesses, pensions and investments: the forms that surprise people in Japan
A Japanese kabushiki kaisha or godo kaisha owned by an American can trigger Form 5471; Japanese investment trusts and NISA-held funds are generally PFICs, which undercuts the point of Japan's tax-free investment wrappers for Americans.
Japanese pension and retirement arrangements — national pension, employees' pension and iDeCo-type plans — each need a US reporting position; the treaty protects certain pension treatment, but the accounts themselves remain reportable.
Every one of these forms carries an automatic, per-form penalty for non-filing that has nothing to do with whether tax was owed — which is why they matter more than the 1040 itself for many long-term residents.
What the National Tax Agency (NTA) taxes — and how it interacts with your US return
Japan taxes residents on a system where worldwide reach expands the longer and more settled the resident becomes, so a long-term American in Japan should not assume US-source investments stay outside the NTA's view.
Japan has an exit-type tax that can apply when a long-term resident with significant assets leaves the country; whether it reaches a given American's situation depends on current thresholds and must be checked before departure planning.
We are a US firm: we handle the US side in-house and coordinate with your local accountant on the Japan side, rather than pretending to be licensed in both.
Japan-specific patterns we see
Three things come up in Japan cases more than anywhere else:
NISA and iDeCo accounts are pushed hard by Japanese banks as tax-free, and they are — in Japan; the IRS taxes the income and the funds inside are PFICs, so the standard Japanese savings advice is often wrong for an American.
Japanese bank and brokerage practices — accounts opened casually at the post office, family accounts a spouse manages — mean Americans routinely have FBAR-reportable accounts they do not think of as theirs.
Inheritance of Japanese property is the slow-burn case: a family home in Osaka passes to American children, and the US side picks up Form 3520 reporting on the inheritance plus FBARs and a basis analysis when the property is eventually sold.
Behind on US taxes? The streamlined path back
Americans in Japan who have not filed for years generally qualify for the Streamlined Foreign Offshore Procedures — three years of returns, six years of FBARs, a non-willfulness statement and no failure-to-file penalty — as long as the IRS has not already written to them.
The program is designed for exactly this population, and the non-willfulness statement is the part that needs a professional's attention — it is a signed narrative to the IRS, not a checkbox.
Japan cities we serve
We work with clients in Tokyo, Osaka, Yokohama, Nagoya, Fukuoka, Kyoto and Sapporo and everywhere else in Japan, entirely by video call, secure portal and e-signature, on US hours and Japan hours.
Frequently Asked Questions
Do I have to file US taxes if I live in Japan?
Yes. US citizens and green-card holders file on worldwide income every year regardless of where they live; the treaty and the FEIE reduce the tax, not the filing duty.
Do my Japan bank accounts need an FBAR?
FBAR applies to Japanese accounts at MUFG Bank, Sumitomo Mitsui (SMBC), Mizuho and Japan Post Bank and every other local institution — including accounts a spouse's name shares — once the combined high balance crosses the reporting threshold.
Is there a US-Japan tax treaty?
The US-Japan income tax treaty is in force; it coordinates pensions, wages, dividends and double-taxation tie-breaks between the IRS and the NTA but does not remove the US citizen's obligation to file a US return on worldwide income.
Does Japan have a Social Security totalization agreement with the US?
The US-Japan totalization agreement is in force, so Americans working in Japan generally pay Social Security contributions into only one system — which one depends on the employer, the assignment length and whether they are self-employed.
I have not filed in years while living in Japan. What now?
Americans in Japan who have not filed for years generally qualify for the Streamlined Foreign Offshore Procedures — three years of returns, six years of FBARs, a non-willfulness statement and no failure-to-file penalty — as long as the IRS has not already written to them.
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This article is general information, not individual tax advice. Book a free 20-minute review or call, text or WhatsApp us to talk through your own situation.
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