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).

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

  1. I wonder if anyone knows if an American working in Japan with both employment and self-employment income needs two different J/USA-6 forms, one checked “employment” at the top and one checked “self-employment” at the top. So far I only have the “employment” version, but am worried that if I submit that to the IRS with my 1040 to avoid SE tax, the IRS will balk that I don’t have the “self-employment” version. In practice, because I automatically pay National Pension as well as Employment Pension, I am covered in Japan for self-employment as well. But there appears to be two mutually exclusive versions of J/USA-6.

  2. I don’t think you need the two versions, do you? When I gave my information to Shibuya Ward, they certified to my initial entry into the program and used my employer’s name (he had some excuse for not participating in the employer program).

    I sent a copy of that J/USA-6 form in with my return, to explain why I wasn’t paying SE tax.

    I suspect the self-employment version is for people who do not enter the system as an employee. The simple fact is that if you have entered the Japanese program, you are in, right? There isn’t an exit for the self employed, and anyone under shakai hoken would be paying the kokumin nenkin through that. (You don’t pay kokumin nenkin twice if you have self-employment income as well.)

  3. How do I get the J/USA-6 Form? I have been turned down for this form say I do not qualify. I used to work for a Japanese company until I was laid off. Now I work for an American company now paying both US Taxes and Japanese taxes…Live here in Japan now for 30years and I want to continue paying the Japanese taxes but the US side is pulling taxes also…the company I now work for says I need the J/USA-6 form to make me exempt, but the Japanese side says I do not qualify due to my permanent Visa status. They say they only give it to people on a work visa.
    I have already filled out Form 673 and turned it in to my new company but only the J/USA-6 I cannot get. Any advice will be greatly appreciated obtaining the J/USA-6 form

    1. J/USA-6 is exempting you from US social security taxes because you are enrolled in the Japanese system. USA/J-6 exempts you from participation in the Japanese system, because you are in “covered employment” for US social security, and were transferred into Japan. This exemption lasts five years.

      I believe that the Japanese are mistaken if they tell you a J/USA will only issue on a work visa. The form is meant to certify that you are participating in the nenkin system here, and so should not be required to pay into social security back home. It makes no sense why the totalization agreement would not apply to permanent residents in either country, and so I feel the local office must have this wrong.

      I am curious why the US firm, operating in Japan, feels that it’s required to withhold social security from you. Is your job being framed as US-based employment where you “just happen to be” in Japan?

      Form 673 will stop income tax withholding only, and only up to the amount of the foreign earned income exclusion. But it won’t stop social security withholding.

      I would go to a higher level of the Japan Pension Service, with your blue book in hand. Not every person in every organization can be an expert about arcane rules.

  4. I went to the main nenkin office in Nagoya to resolve an issue with my nenkin enrollment last last year (namely that somehow I had enrolled in kokumin kenkou hoken but did not enroll in nenkin). I work remotely for an American company who has zero knowledge about Japan and 2015 was my first year living in Japan so I was asking the gentleman helping me at the nenkin office about J/USA-6 and he had no idea what I was talking about. I also can’t find any information online in Japanese, I suspect the form has a different name in Japanese. Do you have a link to a Japanese government page which covers this form? Now that I recently received my blue book I’m planning to go back to the nenkin office to inquire about this form again but it would be really helpful if I could point them to official documentation in Japanese.

    1. I want to be certain what you are trying to do: tell the US that you are in the Japanese system, or the Japanese that you are paying self-employment tax?

  5. If I do not make enough to pay SS tax in Japan but am covered in Japan under my husband’s work (第3 status) will I be able to obatin a certificate of coverage to be exempt from SS tax in the US?

    1. Probably not. If you work in the United States, and it isn’t your own business that was transferred from Japan, where you show that you were paying into Japan, then you are covered by the United States. The exception would be if you had an employer who sends you to the US and then you would be under that company’s general exemption. A US employer is going to withhold payroll tax from you in the US, unless you really meet an exemption.

      1. THANK YOU so much for the reply. I live in Japan with my japanese husband and kids. I teach some private English lessons to supplement my husbands work income. I am covered by my husbands nenkin. So if I had USA SS that would be dual coverage, ne? Anyway, my biggest hope is that I would be able to get a Certificate of coverage to exempt me from USA self employment /ss taxes. I hope that all makes sense. I know you answered “probably not” on my last post but does this new info change anything?

        1. I would still say, “probably not”. That’s because the technical reading of the agreement concerns a self-employed person “transferring their business” to the other country. So it isn’t a matter of being self-employed in one, and then self-employed in the other. The activity in the one has to transfer over. So for you to make your case, you would have to be teaching private English lessons in the US. You would have to establish that you did this in Japan, and your self employment income is of the same source in the US.

          In the United States, payroll taxes, including federal withholding besides social security, make up about 75% of the tax collections. And despite the “tax cuts!!!” headlines of the political crowd, the administration of the IRS is going in the direction of cracking down on companies and people who are dodging payroll tax withholding. It’s pretty serious. Plenty of “1099 employees” and other dodgers are getting notices. (“1099 employees” are people who are actually employees, whose payments are being misclassified as independent contractor.)

          Japan and the US are 180 degrees different about this money. In Japan, it’s treated like annuity or insurance contributions. In America, it is wholly treated as TAX. So the authorities come for it the same as any federal tax.

  6. Thank you again. So as an american with permanent resident visa in Japan, covered by my husband’s nenkin…i still have to pay self employment tax to the USA on the money I make from teaching private lessons?

    1. Yes. Because you are an American. You can’t come into the US and work without paying social security / self-employment taxes. The exception for a spouse of a Japanese won’t apply outside of Japan.

      1. Thank you again. I guess i am confused. It is probably my fault. It seems strange to pay Self employment tax to the USA if One one works/lives in Japan, and it is a totalization country. It seems like the SSA and other expat websites say one is exempt from US SEtax if in a totalization country. I may just be missing a link in my brain 🙂

        1. Because the US considers self-employment to be “covered employment” wherever it is carried on in the world, an American has to pay self-employment tax unless exempted by totalization. The totalization is NOT “portable” where you can then take it back to America and use it to evade US taxes on self-employment income. The internet machine is not fool-proof, and there is a lot of wishful thinking and especially bullshit on certain websites.

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