By Jason Letts
Figuring out what you need to do to file your taxes is frustrating. There are so many different forms to send in at different times, and you might get locked up in the slammer if you mess up. I’ll take the Zen approach here and write in as few words as possible. This timetable will tell you when you need to complete the proper forms and send them in, allowing for transit and processing time.
Before we begin, please note that this article does not constitute tax advice. If you feel your situation is peculiar in any way, please consult a tax professional. All forms come with detailed instructions for each line and the address to which they should be sent. For state returns, please also be sure to simultaneously file for extension, exemption, and then your return for any state in which you earned money.
Mid-March: File form 4868 to apply for an extension that will last to Oct. 15. Though you are given an automatic two-month extension for being out of the country, you will need to file for a longer extension with this form. The purpose of this is so that you meet the “physical presence” test of being in another country for 330 days. This form is nine lines long and is very simple.
Though you are filing for an extension, you must estimate and pay any taxes you are responsible for along with this form. If you worked before becoming a JET, that income is taxable if it is high enough. To calculate this, you may want to complete your 1040 now so that you know if you need to pay taxes on income earned outside of JET.
The IRS also asks that you file form 8822, a change of address form. The purpose of this is to verify that you are living out of the country and that your “Tax home,” or the country to which you are obligated to pay taxes, is not America. Write your address in Japan as you would an American address in line 7.
Second-year JETs and beyond, who do not need an extension because they have already been out of the country for 330 days, can file their full return now or at any time before June 15.
April 15: Laugh at your friends back home who have been sweating over their grueling returns.
July: Sweat over your grueling return. The most important part of the timing here is to get it to the IRS after you’ve been in Japan for 330 days but before the extension is up. For Group A people, sending it in during mid-July is fine. Group B & C can safely send it in once August hits.
File Form 2555-EZ to claim exemption from foreign income. You are only exempt from paying taxes on income earned in Japan as long as you tell the U.S. Gov about it with this form. For this form, you will need to do a simple calculation. Find the percentage of the year that you’ve been in Japan and then multiply it with the maximum possible extension (listed for you on line 13). This will give you the amount of income you are exempt from, which will be much higher than the income you’ve earned with JET.
File form 1040. Be sure to write “2555-EZ” on the dotted line next to line 21 along with your JET income. Subtract this amount from the rest of your income to come to your total income for line 22. Appropriately fill out the remainder of the form. Be sure to attach all W-2s, including the statement of earned income for the year that you receive from your Japanese BOE. Make a copy of it before you send it.
That’s it! Wipe your brow and feel relieved that you’ve staved off a trip in the paddy wagon to Shawshank for another year!
Form Links (will be updated when 2009 versions of forms become available):
8822: 2009 form not posted yet
2555-EZ: 2009 form not posted yet
Jason Letts is a second-year JET in northern Hiroshima-ken. In March, he will be releasing the first book in a fantasy-adventure series, entitled Powerless, thereby making him a knowledgeable source for American tax information.