Banking & Taxes in Japan: How to Avoid the Biggest Expats' Headaches
Relocating to Japan from the U.S. has been an incredible journey—but it hasn’t come without challenges. One of the biggest headaches we faced was opening a bank account and figuring out how the financial and tax systems work. In today’s post, I’ll walk you through the common issues many foreigners encounter when it comes to banking and taxes in Japan, and how you can avoid the stress.
1. Opening a Bank Account in Japan
a. My Top Recommendation: SMBC Trust Bank PRESTIA
If you’re new to Japan and want a smooth banking experience, SMBC PRESTIA is a great option. You can open an account online, and you’ll get both a yen (JPY) account and a MultiMoney Foreign Currency account—ideal for anyone who earns or holds money in different currencies.
While there are fewer branches than other major banks, you can use SMBC ATMs across Japan.
b. Major Bank Pitfalls for Foreigners
When we tried to open an account at a major bank (Mitsubishi UFJ), it turned into a nightmare. Their online form didn’t accept Roman letters and required furigana (phonetic Japanese kana).
So we went to the branch with all required documents:
Residence card
My Number card
Personal seal (inkan)
Still, they asked my American husband to fill out the entire application in Japanese. When I (a Japanese native) offered to help, they initially said no. After some back-and-forth, they reluctantly agreed to let him write in romaji—but only as an exception.
We’ve heard similar stories from expats from the U.S., Europe, Asia, and other regions. Paperwork can be overwhelming, and the process is not always foreigner-friendly.
C. Why Japanese Banks Are So Cautious
Strict Identity Verification:
Banks are required by law to verify identities carefully. Foreigners may need to provide additional documents.Global Tax Compliance (FATCA, CRS, etc.):
Due to international tax laws like FATCA (U.S.) and CRS (OECD), Japanese banks must report accounts held by foreigners. This adds an extra layer of compliance, especially for those with overseas financial ties.Legacy Banking Systems:
Many banks still don’t fully support foreign names, middle initials, or Roman letters. Even some ATMs (Mizuho bank! ) —are known to crash occasionally!
2. No Joint Accounts in Japan
Unlike in the U.S., joint bank accounts don’t exist in Japan—not even at SMBC PRESTIA. Each spouse must open and manage a separate account.
Another surprise: if you transfer money to your spouse’s account, it may be treated as a taxable gift (贈与税). This makes basic money management for couples more complicated than expected.
3. Filing Taxes in Japan: What You Need to Know
a. Employees with Income Under ¥20 Million/Year
Your employer will handle your tax paperwork through a year-end adjustment (年末調整). You’ll need to report updates like:
Dependent(s) information
Earthquake or life insurance deductions
Mortgage deductions
Ask HR for the latest forms and instructions every year.
b. Employees with Income Over ¥20 Million/Year
You must file your own tax return (確定申告 / kakutei shinkoku).
Key tips:
Japan doesn’t allow joint tax filing. Each spouse must file separately.
Be sure to list dependents on only one return (not both!).
c. Retirees with Foreign Income
If you're retired and receive U.S. Social Security, it’s taxed in Japan as “miscellaneous income” (雑所得), not employment income.
d. Tax Treaties Matter
Some countries, including the U.S., have a tax treaty with Japan, helping you avoid double taxation. That said, you must still report global income and may need to show supporting documents. Consult your local tax office (税務署) for guidance.
Our Tip:
We hired a Japanese tax accountant. The cost was around ¥20,000 per person, and it was worth every yen.
And for U.S. Citizens and Green Card Holders:
The IRS requires you to file U.S. taxes every year, no matter where you live.
4. Getting a Credit Card in Japan
It’s Tough—Here’s Why
Even with a healthy Japanese bank balance, getting a local credit card is not easy. Many banks require you to fill out the application in Japanese, and some will call you to confirm details—in Japanese.
If you can’t answer fluently, your application may be denied.
Tips:
Stick with your home country credit card and ensure you maintain a valid account
Try Rakuten Card or EPOS Card, which are more foreigner-friendly
Wrap-Up: It’s Tough, But Totally Doable
Japan’s financial system can feel frustrating at first—but with a little knowledge, you’ll be fine.
· Open an account at an expat-friendly bank like SMBC PRESTIA
· Know that joint accounts don’t exist—plan accordingly
· If your income is under ¥20 million/year, HR handles taxes. Over that? Hire a pro.
· Credit cards? Prepare for paperwork—or stick with a debit card.
One More Thing…
Living in a foreign country comes with unexpected bumps. But it also opens the door to new adventures and personal growth. Whether you’re a student, a professional, or a retiree—it’s never too late to try something new.
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