Forms “J/USA-6” and “USA/J-6”: what is the difference? (U.S.-Japan totalization treaty)

A brief follow-up to the comments from the other day, for U.S. citizens only. Notice there are two different forms:

J/USA-6

and

USA/J-6

If you want to be excluded from the social insurance of Japan, or you want to be excluded from the self-employment tax you are required to pay on your self-employed Japan earnings back to America (the IRS), you need to “certify” that you are covered by either the Japanese or Uncle Sammy.

This is under the U.S.-Japan totalization treaty, effective October 1, 2005 (over four years now).

You obtain the J/USA-6 if you:

are covered in Japan. This means, almost as a rule, kokumin kenko hoken and kokumin nenkin, or shakai hoken. (There are oddball smaller ones that might qualify). Under the treaty, you make no social insurance payments to the U.S.

If you just work for an employer who hired you here, and do no “side work” or “under the table” work on your own, then you are probably secure not getting a J/USA-6.

You obtain the “USA/J-6” if you:

– are transferred here by your employer from America for a period of 5 years or less; or

– you yourself move your (self-employed) business activity to Japan for a period of 5 years or less. (Be ready to show you were doing the same work back home as here. Plus were paying self-employment tax on it); and

– you cover yourself for health insurance by private insurance, and agree not to use the Japanese system. (Who knows what that means in the end, but it sounds scary.)

Contrary to what freechoice.jp (“Choicers”) are putting out, you are not required to obtain private insurance from America. You are required to obtain insurance from the Japanese. It’s that if you elect not to be in the Japanese program, you must certify under “USA/J-6” and follow those rules. This also means you will be paying self-employment tax at 15.3% on your Japan earnings, of course, as soon as you make $400 or more in a tax year. Or your American employer who sent you here will be taking out the 7.65% social security (“FICA”) tax, and paying the other 7.65% themselves.

Note: Self-employment income is potentially excludible for income tax purposes with the foreign earned income exclusion. But it’s not excludible from self-employment tax without your “J/USA-6” certification (first one, above).