How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Megan C Your Own Question

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12509
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Type Your Finance Question Here...
Megan C is online now
A new question is answered every 9 seconds

Hello, Im a US citizen living in Japan and own a Japanese

Resolved Question:

Hello,

I'm a US citizen living in Japan and own a Japanese LLC with my wife, a Japanese citizen. The LLC is entering some business agreements with US companies and we've been asked for either a W9 or W-8BEN to cover withholding from their end.

What's the correct form given our structure and is there any way to avoid the 30% withholding? Our company doesn't have an EIN or Foreign Tax ID Number.

Thank you.
Submitted: 1 year ago.
Category: Finance
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Thanks for using JustAnswer.com. How are you today?

MyVirtualCPA :

The proper form for a foreign company to give to a US company would be form W-8BEN

Customer:

Hello

MyVirtualCPA :

How are you today?

Customer:

Good thanks!

Customer:

When researching this on the IRS site, there is some mention of "if one of the owners is a US citizen, they should file a separate W9 while the foreign owner files the W8-BEN" or similar.

Customer:

(Poor paraphrasing)

MyVirtualCPA :

Under Article 7 of the US/Japan tax treaty, the profits of your Japanese LLC are taxable in Japan only - unless you are doing business in the US with a permanent establishment situated here

Customer:

Ok, that's a relief

MyVirtualCPA :

Well, for an LLC you are taxed individually - so if this is the case in Japan as well, you will file a W-9 as you are a US Citizen and use your SSN.

MyVirtualCPA :

Now, you being a US citizen, you may have tax obligations because of the "worldwide income" clause...

MyVirtualCPA :

If you cannot exclude under one of the many foreign tax benefits

Customer:

That seems to contradict the "Article 7" statement.

Customer:

I believe Japanese LLC is largely the same as a US LLC in structure/form/laws/etc.

MyVirtualCPA :

Yes, but do you have wages from this business?

Customer:

Yes

MyVirtualCPA :

So, your wages would be separate from the business profits

Customer:

Ah I see.

MyVirtualCPA :

Your business profits would only be taxed in Japan, but any salary you draw would also be subject to tax in the US, unless you qualify for the foreign earned income exclusion or some other benefit

Customer:

Ok, that's normally handled separately when I file my personal income taxes?

Customer:

(in the US)

MyVirtualCPA :

Correct.

Customer:

Gotcha.

MyVirtualCPA :

I would have an expat CPA do your taxes by the way, because you have a lot going on

Customer:

Good advice :)

Customer:

Do you have a recommendation?

MyVirtualCPA :

I can't recommend any professionals, but I would search in LA or New York

Customer:

Ok.

MyVirtualCPA :

LA or New York would be the big centers where you would see someone specializing in expatriate tax

Customer:

About the W8-BEN, what configuration of checkboxes is appropriate for Part II?

MyVirtualCPA :

The W-8BEN would be for your Japanese wife, and she would check the first box and put "Japan" on the dotted line.

MyVirtualCPA :

You would fill out a W-9 for your portion of the business, since you are a US citizen

Customer:

So it sounds like there actually would be withholding for my portion?

MyVirtualCPA :

If you are a US Citizen there's no withholding on the W-9

MyVirtualCPA :

because you are paying tax - you're "in the system" so with a W-9 will come a 1099 and earnings would be reported to the IRS. What the withholding is for, is for situations where someone is foreign, with no other tax obligation to the US. The IRS wants to make sure they get their money

Customer:

That makes sense, but the companies we're dealing with have agreements (and are paying) an LLC, not 2 individuals. Will two separate forms match up with what they need?

MyVirtualCPA :

But the LLC is disregarded for tax purposes in Japan as well?

MyVirtualCPA :

Similar to the US?

Customer:

Taxes are on profits only, yes.

Customer:

If that's the question.

MyVirtualCPA :

Well, fill out W-8BEN and you are going to check box "disregarded entity" for the LLC on the top, and on the bottom, then check 9a and write "Japan" on the dotted line

Customer:

Ok, I apologize for my confusion here.

Customer:

Wikipedia's article on Japanese LLC implies that they aren't quite the same

Customer:

https://en.wikipedia.org/wiki/Godo_kaisha

Customer:

"Under United States tax law, godo gaisha are not classified as corporations, and are therefore eligible to make an entity classification election: a single-member GK may be treated as an extension of its member and a multi-member GK may follow the tax rules for partnerships."

MyVirtualCPA :

So if it's multi-member, check "partnership"

MyVirtualCPA :

if it's single member, check "disregarded entity"

MyVirtualCPA :

on the top

Customer:

Ok, so fill out the form as "Company Name LLC", then select partnership, check 9a and write "Japan"?

MyVirtualCPA :

Yes

Customer:

So there's no need for my wife's individual W8-BEN or my W9?

MyVirtualCPA :

No, because you are doing this at the entity level not the owner level

MyVirtualCPA :

You will handle everything else on the back end on your taxes

Customer:

I can safely ignore the other checkboxes in 9 and 11?

MyVirtualCPA :

Yes, you may

Customer:

Great. Thanks very much for your help!

MyVirtualCPA :

You're welcome. If you would, please rate my response as "excellent" so that I may receive credit for assisting you today

Customer:

Will do. Thanks again!

MyVirtualCPA :

You're welcome

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 12509
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and 5 other Finance Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Megan C replied 1 year ago.
Thanks, Lucas for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you today.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Rakhi Vasavada

    Financial and Legal Consultant

    Satisfied Customers:

    2073
    Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
< Last | Next >
  • http://ww2.justanswer.com/uploads/RA/rakhi.v/2012-7-3_14374_RakhiVasavadaL.64x64.jpeg Rakhi Vasavada's Avatar

    Rakhi Vasavada

    Financial and Legal Consultant

    Satisfied Customers:

    2073
    Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
  • http://ww2.justanswer.com/uploads/BU/BusinessTutor/2012-2-2_115741_Kouki2.64x64.jpg Manal Elkhoshkhany's Avatar

    Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    1890
    More than 5000 online tutoring sessions.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    1755
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JK/jkcpa/2011-1-16_182614_jkcpa.64x64.jpg JKCPA's Avatar

    JKCPA

    CPA

    Satisfied Customers:

    838
    Bachelors degree and CPA with Accounting experience.
  • http://ww2.justanswer.com/uploads/starside8/2010-2-16_55433_DSCN1175.JPG Eric's Avatar

    Eric

    Financial Manager

    Satisfied Customers:

    558
    Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.
  • http://ww2.justanswer.com/uploads/FA/fastfile/2011-12-15_23139_Klein2011small.64x64.jpg R. Klein, EA's Avatar

    R. Klein, EA

    Accountant

    Satisfied Customers:

    397
    Intuit Ask a Tax Expert. QuickBooks Certified Pro Advisor (all editions)
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    324
    NASD Licensed Rep, 1997-2001, Business Attorney