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Visa and Payroll

Tax Return

It is well known to many in the Japanese community that the decision to file a Tax Return as a Non-resident or Resident is based on the 3-year rule and other factors. However, I don't think people who plan to stay in Japan for a short period of time are aware that they are not obligated to pay Social Security and Medicare on a daily salary.


Social and Medicare

Basically, those working for government agencies, A-Visa, non-resident students ， OPT, researchers, etc. F, J, M, Q visa holders are exempt from paying Social and Medicare. H-1B seems to have changed recently to not be exempt.

The E VISA, which is often handled by Japanese expatriates, is not explained in detail by the IRS, as can be seen from the following quote from the IRS website. Since E VISA is mainly used for long term stay and is one of the effective ways to obtain a Green Card, it is likely that the explanation is omitted from the IRS listing.

Thus, to summarize, both the Internal Revenue Code and the Social Security Act allow an exemption from Social Security/Medicare taxes to Thus to summarize, both the Internal Revenue Code and the Social Security Act allow an exemption from Social Security/Medicare taxes to alien students, scholars, teachers, researchers, trainees, physicians, au pairs, summer camp workers, and other nonimmigrants who have entered the United States on F-1, J-1, M-1, Q-1, or Q-2 visas and who are still classified as NONRESIDENT ALIENS under the residency rules of the Internal Revenue Code.

Typically, the H-1B change of status becomes effective on October 1st of each year.


From the perspective of the U.S.-Japan Social Security Agreement

, in order to prevent double payments between the U.S. and Japan, the U.S.-Japan Social Security Agreement provides that an employer who has paid premiums and pensions in Japan may extend their H-1B status up to 5 8 years. <1967> If you are paying premiums and pension in Japan and intend to return to Japan within 5 years ） which has been extended to 8 years, you are exempt from US Social Security and Medicare. From this perspective, those who meet these conditions under the E VISA would be eligible for the waiver. However, for stays of more than 2 or 3 years, the regulations require that you apply to the Japanese government for a document proving your intention to return to Japan within 5 years, and submit the same document to the U.S. government. In my opinion, if you are staying more than 4 or 5 years, it is better to pay the taxes than to struggle to save some taxes, because you can benefit from U.S. pension, insurance, and other benefits.


Refund

At the time of Tax Retrun, we sometimes see people on OPT bringing in their W-2 with Social and Medicare deducted. Some companies treat E VISA as long term resident and pay social and Medicare from the first year. Most American employers are not even aware of the US-Japan Social Security Agreement or the US-Japan Tax Treaty, and may ask you to reimburse them with a tax return, but we do not recommend it because the process is complicated and difficult. Also, if you request a W-2 correction from the company, it is unlikely that they will accept it, as payroll companies charge a lot of money for corrections that carry over from one year to the next. Your best bet is to check with your employer at the time of hire, and check with your company's HR as soon as you become aware of it. Now.


The information provided throughout this column is general and educational information and is not intended to be a solution or legal advice for individual readers. Any questions regarding an individual reader's specific situation should be discussed with us in advance on a consignment agreement.


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