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I've searched a few queries, but didn't find many people in a situation quite matching mine.

Starting in October, I will work full-time for a company in Japan, and I will also put in some part-time remote work for a small company in the US (my current full-time employer). I have some general understanding that I can apply foreign earned income exclusion and foreign tax credit to the amount I earn from the Japanese company, but I'm not sure how things will work out for the US company. Neither is my boss (again, small company; his wife manages payroll).

I'm sure there are a lot of people here who have done something similar. Even if you can just post a link with a good starting point, I would appreciate any advice for how my employer and I should prepare for this and handle taxes and payroll.

Thanks in advance!

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    Unless things have changed significantly in the last decade or so (when I last worked abroad which is why this is not an answer), your Japanese income will be taxed by Japan. Then your combined US & Japanese income will be taxed by the US. However, you can take a credit for the tax you paid to Japan, by filing Form 1116: irs.gov/individuals/international-taxpayers/foreign-tax-credit You can probably take a deduction for living expenses, and if you use the per diem amounts (based on gov't employee rates) they can be well over actual expenses.
    – jamesqf
    Aug 10, 2019 at 17:40

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A few points:

First, the foreign income exclusion is not available to you in 2019; to qualify, your "tax home" must be outside the US for the full year.

Second, to qualify for the exclusion in 2020 (and thereafter), you will have to make sure you have moved your "tax home" to Japan - for example, it probably won't be available if you are on a temporary assignment, etc. It's not entirely intuitive, so do some research (or, even better, do what other expats sometimes do - consult a local CPA who specializes in dealing with US expats).

Third, the nationality of your employer is irrelevant to the exclusion. You can work abroad for a US company without affecting your entitlement to the exclusion.

Finally, don't forget your state tax (if applicable) - for 2019 you may be a part year resident, so that has to be taken into account as well.

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  • Thanks, Jack! This definitely isn't a short-term move, so I shouldn't have trouble moving my tax home. I'll probably take your advice and consult a CPA for that first year, to learn the ins and outs of this new tax situation. This year will definitely be my most complicated to date for tax purposes. Maybe I'll try timing any future moves to align with the beginning of the year, haha.
    – Nick O.
    Aug 10, 2019 at 18:41

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