I'm a US citizen, but I'm a permanent resident of Japan. As such, I must report my worldwide income to BOTH countries for taxation. I have tried and tried to find clear, simple written explanations of which country I should pay income tax to first for certain forms of income, and which country will grant me a tax credit. And if I ask around, I get conflicting answers. Why does this have to be so confusing?
Q: Which country has to allow for a tax credit?
Could someone please give me a clear, simple answer for each the following:
1. US Social Security Retirement Benefits
2. Japanese Pension (Nenkin) Retirement Benefits
3. US-source Bank Interest
4. Japanese-source Bank Interest
5. US-source Dividends from Stock or Mutual Funds
6. US-source Capital Gains Distributions from Mutual Funds
7. US-source After-tax Retirement Annuity (ATRA) Income
8. US-source Government (Federal or State) Pension Income
9. US-source IRA and 401k Income
I'd really appreciate answers, and I'm sure they'd be helpful to others, as well.
Thank you.
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https://www.irs.gov/pub/irs-trty/japan.pdf
This is not an answer. It's merely a link to a 23-page government treaty written in legalese. I have looked at this many times before and never been able to understand it, in large part because of the so-called "saving clause" in Article 1, paragraph 4, which makes most of the treaty irrelevant to expats like me.
The reason I asked my question is because there is not a clear, concise answer available in this treaty, in any IRS documents I have looked at, or elsewhere online.
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