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Do I Have To Pay USA Tax (UK national living in Japan)

Discussion in 'Business & Tax Advice' started by rollthedice, Jan 25, 2011.

  1. rollthedice

    rollthedice Newbie

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    I'm a UK national with UK domicile status and technically UK residency status, although I've lived in Japan for the last two years so should be qualifying for UK non-residency soon.

    I'm making about $10,000 a month in CPA offers with a affiliate company based in the USA.

    Up until now the payments have been made into my UK paypal account. Now however, by setting up HSBC Premier I have a USA bank account. My CPA payments get transferred directly into this account and then I keep about 30% of the money in there, and the rest I forward onto my HSBC Premier account in Japan.

    I don't have a USA address, I'm not a USA citizen, I don't have a social security number etc... Therefore, do I have to pay tax to the USA IRS on the money earnt?
     
  2. Slaughtlander

    Slaughtlander Registered Member

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    I would like to know this as well, just for curiosity reasons.
     
  3. Whisker

    Whisker Moderator Staff Member Moderator Premium Member

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    Ask a lawyer.
     
  4. xfactornos

    xfactornos Regular Member

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    How did you get a bank account in the states without a SS#. Im not a lawyer or anything but I wouldnt think you would have to pay the USA tax. Im not sure though.
     
  5. rollthedice

    rollthedice Newbie

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    xfactornos - It's through HSBC Premier. Once you qualify for an account in one country (there are certain requirements like minimum balance) you can apply for accounts in other countries.

    For me, I qualified through HSBC Premier in Japan, then converted my HSBC UK account to Premier and then got the UK team to help me set up HSBC Premier USA. In the end it was very simple.

    I'm actually in the USA (on holiday...) at the moment and may well consult a lawyer while I'm here. However, it would be good for anyone with experience in this matter to give me their 2 cent...
     
  6. DRiedl

    DRiedl Registered Member

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    I have a question very similar, I live in the US, but work for a Canada based company, so i am wondering if i need to claim that on my US taxes when i turn in my info from my US based companies.

    Also to OP... goto the IRS website and do some research. They might have the answers to your questions.

    that is for the Internal Revenue Service, which controls all tax related stuff in the US. Give it a go.

    Can a MOD please add the link to their site, since I am not allowed to post a link to it?
     
  7. wrangler

    wrangler Regular Member

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    No you don't. The affiliate company may need you to complete a declaration form which they provide to the US IRS which basically is your declaration that you are not a US citizen nor do you live in the US< therefore the revenue is not subject to US IRS withholding.
     
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  8. rollthedice

    rollthedice Newbie

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    Wranger - thanks. That's my thinking as well. It's common sense right? I don't live in the USA nor was I born there so for tax purposes I am non-dom and non-resident.

    Still might get to lawyering advise none the less. The amount is significant that 'people' might take notice. I don't want to be accused of money laundering as I am moving large amount of money between countries. Also, I understand that any money transfer over $10,000 is automatically reported to a USA government body. Can't remember which one but whoever deals with that sort of thing. This is why when I transfer to Japan I always keep it below $10,000. However, the CPA pays me in multiples of $10,000. So If I make $15,000 in a month, I get two payments of $10,000 and $5,000 each so at least one of transactions is flagged somewhere.

    Thinking about it, maybe an account might be better than a lawyer as I don't think the problem is tax anymore. I'll have to think and read some more....
     
  9. wrangler

    wrangler Regular Member

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    W-8BEN is the form where you declare your exemption, and it's the affilliate company who are responsible for ensuring they have this (or a W4) from you, and provide it to the IRS. Google W-8BEN (good entry at wikipedia), and ask your affilliate company. It's very painless.
     
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  10. Infiniti

    Infiniti Newbie

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    I don't think you'll have to pay US Income tax but if you want free legal advice, maybe you should ask your question in a forum designed for that purpose? Freeadvice comes to mind.
     
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  11. cookie48

    cookie48 Jr. VIP Jr. VIP Premium Member

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    Having US bank acc doesnt mean that you are US resident. You pay taxes in country of your tax residence, Japan or UK in this case.
     
  12. teeniegenie

    teeniegenie Supreme Member

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    Infiniti - you get what you pay for, especially w/legal advice!
     
  13. turbophile

    turbophile BANNED BANNED

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    I'm a Canadian citizen living in Canada, but I have my business entity set up in the US.I have to file taxes in the US. I was given a EIN with witch the IRS tracks my business and income and such.I imagine you would have to do the same..
     
  14. teeniegenie

    teeniegenie Supreme Member

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    Turbo - your situation is totally different. You're the owner of the U.S.-based business. Therefore, the business has to pay US income taxes. The OP of this thread has no ties to the US and therefore is not subject to US income taxes.
     
  15. rollthedice

    rollthedice Newbie

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    Turbo - Thanks for your input but I would agree with teeniegenie on this one.

    I only have a bank account which receives money in the USA. Nothing more. Most importantly I don't have a USA address since my bank account is registered with my Japanese address. I did get some basic free tax advise from a lawyer a few months ago and what I was told was that by having a USA address (easy to get through a various well known and reputable services something I almost did...), this could be seen by the IRS as operating a USA based business. Not having an American address is critical.

    Ultimately, what I am trying to do with this is not pay tax anywhere or only pay nominal tax. I've been doing some reading on the subject and although I've yet to get formal, paid, professional tax advise this post was a precursor for that to get people's opinion on my plan before I went ahead and laid down some cash on a lawyer / accountant.

    By becoming a non resident of the UK, I won't have to pay tax on any money I earn outside of the UK. Since all my money will be in an American or Japanese bank, once I get non residency status it's goodbye UK tax man.

    Then the only question which is left is should I be paying tax on my earnings to the Japanese government, assuming that I definitely don't have to pay USA tax?

    I'm not sure about this currently, but it could be argued that I am not operating a business in Japan, just receiving money from my USA bank (this could be my trust fund...how are they to know?!) it is not unlikely that I am free from all taxation responsibilities :)

    I say all, but this is not entirely true as I do have to pay city tax in Tokyo which is not small and I am happy to pay because I love living there - not a complete tax avoider! But I may well soon be free of paying any income tax AND most importantly, not breaking any laws in the process.

    The key to all of this is that I am a UK national. It's accepted wisdom that for a USA citizen, complete income tax avoidance is pretty much impossible without breaking laws and the only real way you can do it if to give up your USA domicile status (different from residency...from a tax perspective you can still be domicile even if you are a non-resident) and pretty much never go back to the USA. Sure there is the offshore route as well as setting up in tax havens but from the little I've read, the American gov have really done an excellent job of tying up every loophole. Sorry guys! For a UK national it's certainly not easy but not impossible either. As a UK non-resident I am not taxed on income made outside the UK. If I was non-dom as well as non-resident, I wouldn't be taxed on income made from within the UK although it would take at least 10-15 years to get non-dom status for me and something I really don't want to do.

    We see how things go but in the end I think it's going to come down to mind finding someone who understands UK or Japanese tax laws and how money received from abroad is perceived by the Japanese authorities.
     
    Last edited: Jan 26, 2011
  16. jazzc

    jazzc Moderator Staff Member Moderator Jr. VIP

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    Read this document from FATF.
    http://www.fatf-gafi.org/dataoecd/7/40/34849567.PDF
    FATF is an international organization that tells banks and governments what to do. They actually bend over to comply in fear of blacklisting.

    This part is of interest to you:
     
  17. Ziloo

    Ziloo Junior Member

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    I'm in pretty much the same boat as you, except I have moved from the UK to a nearby EU country. I have simply registered a company in the Seychelles, with a Swiss bank account, and everything goes through there smoothly.
     
  18. argitpm

    argitpm Newbie

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    Hi Ziloo and rollthedice,

    I want to do something similar to you. I live in Argentina and have a freelance business opportunity with an UK company which will pay me by wire to my bank account. For this purpose I am planning to open a bank account in the US so they can transfer the money there.

    I was told that the money sent from the UK company may be subject to the UK withholding tax. Is this so?
     
  19. rendesr

    rendesr Junior Member

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    You'll have to pay Japanese income tax, which is lower than the UK tax rate, but it will still be approximately 30% of your income.

    Two certainties in life, are death and taxes, and some advice is that you should always pay your taxes.
     
  20. charlietree

    charlietree Registered Member

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    YA the US IRS right now is going after more and more people. Its smart to pay your taxes...although I do not believe it relates in this case because you are never touching US soil...also, why are you so worried about it...the IRS has enough problems with people in the States not paying their taxes to come after a foreigner. If the company you are making money through files your income according to whatever country your money gets sent to then you will pay that countries taxes plus whatever taxes in your home country.