Tax woes
Bottomline: I had been paid by Six Apart KK till November 16th and I **paid **all taxes to Japanese tax revenue on that date. I’ve been paid by Six Apart US from Nov.17th.
I’m struggling my tax data with TurboTax and so far I’ve seen amusing results.
If I enter my Japanese income as “non Form-W2 wages,” and then file the already-paid-taxes as “Foreign Tax Credit,” I need to pay $18,000 more(!). If I skip filing my income, I’ll get $3600 back. AMAZING DIFFERENCE!
To deduct my income in Japan (Foreign Earned Income Exclusion), I need to pass either Bona Fide Residence Test (outside U.S. from Jan 1st to Dec 31st) or Physical Presence Test (330 days in Japan), neither of which I pass.
So the problem is whether I need to file my income in Japan or not, and it depends on whethre I am ”U.S. resident alien” or “U.S. non-resident alien” for 2006 on tax laws. To say I’m a non-resident, I need to pass Substantial Presence Test (SPT), or file Form 8840 to claim my Tax Home is Japan and I had a “closer connection to the Tax Home.”
I’m not sure the exact result of the SPT result.
- 31 days during the current year, and
- 182 days during the 3-year period that include the current year and the 2 years immediately before that, counting:- All the days you were present in the current year, and
- 1/3 of the days you were present in the first year before the current year, and
- 1/6 of the days you were present in the second year before the current year. I guess it’s something like 100 days (2006) and 150 days (2005) and 12 days (2004). So it’s 100 + 150/3 + 12/6 = 152. But I’m not competely sure…. it’s very late now and I’ll check with my passport tomorrow.
Anyway if you, or you know someone who can advice me on this, that’d be really appreciated. It’s a huge difference! (and if I need to pay $18,000 more, I’m going to bankrupt :)