Can I have a side business online while living in Japan on a work visa?

[andy44]

I’m an American living in Japan on a work visa. I’m employed full time at a Japanese company. I file taxes in the US but I don’t make enough to pay anything. As of right now, I am thinking I will be staying in Japan long term. I have a Japanese partner of 3.5 years, but unfortunately we can’t get married because we’re LGBT. So I remain on a work visa for the time being.

Lately I’ve been concerned about retirement. As an American, it seems difficult if not impossible to build wealth or invest in retirement here in Japan, because taxes are so much stricter for us compared to other foreigners. For example, (from my understanding) no iDeco and being advised not to invest in the Japanese stock market for anything except for individual stocks.

However, without a U.S. income, my understanding is that I also wouldn’t be able to have any sort of US based IRA or other private retirement fund in back home either.

So my question is, am I even allowed to have a U.S. income while simultaneously having a Japanese income and living in Japan? Is it allowed to start an online side hustle using my American address to get some sort of US income and start an IRA? For example, I have a blog about Japanese learning that gets decent traffic. Am I allowed to monetize this in some way or pursue other paid content creation opportunities? How about a Patreon? Things like this.

If that is allowed, how would taxes look for that? I assume I’d need to declare foreign income in Japan too? Or maybe not if I never brought it into Japan?

Or is my only option for retirement wealth building to invest in the US stock market using a regular non tax advantaged brokerage account?

Sorry if this isn’t the correct place to post this. I’m just starting to learn about finance and wealth building in general, and I’m feeling so overwhelmed because it seems like none of the regular rules apply to an American in Japan.

 

[jandolphrohnson]

@andy44

am I even allowed to have a U.S. income while simultaneously having a Japanese income and living in Japan? Is it allowed to start an online business using my American address to get some sort of US income and start a retirement fund?

This is work, you would need permission, and immigration will usually decide whether to grant that permission by asking your main employer whether it's going to interfere with your job.

If that is allowed, how would taxes look for that? I assume I’d need to declare foreign income in Japan too?

In Japan it's taxable income (there's some possibility to avoid taxes if you've been in Japan less than 5 of the last 10 years, but you're presumably already outside that range or will be soon), and you have to declare and pay tax on it. The US has its own complex tax rules for citizens that I don't pretend to understand.

Or is my only option for retirement wealth building to invest in the US stock market using a regular non tax advantaged brokerage account?

That's a real and pretty good option, frankly. Most businesses fail, Japanese tax rates are not that high, and Japan has relatively good social insurance for medical costs etc..

 

[revstockton]

@jandolphrohnson

there's some possibility to avoid taxes if you've been in Japan less than 5 of the last 10 years

Sorry... I don't think I follow.

Given that the OP would be performing the work... how would he be able to avoid taxes on it? Or were you thinking of some sort of passive investment kind of set-up?

 

[jandolphrohnson]

@revstockton Good point. I wasn't really thinking through that part at all, just dismissing it because it's not an option for OP anyway.

 

[rogueebear]

@revstockton

Given that the OP would be performing the work... how would he be able to avoid taxes on it?

I guess it’s possible for income yielded for work conducted while a NPR’s person is physically outside japan, for it to be foreign sourced income.

 

[albinoguitman]

@andy44

So my question is, am I even allowed to have a U.S. income while simultaneously having a Japanese income and living in Japan?

Yes, but since you mentioned "passive income" and now "income", it depends on what you actually mean by "income". Income is a very wide term for tax purposes, so for example all of these are considered "income" but they all receive very different tax treatment: a job that pays a fixed monthly salary, contracting that pays per hour, having your own company that pays you, real estate income from renting out, realized gains from stock investment, revenue from advertising (e.g. from a personal website or youtube), etc. Some of those change depending on your visa and the time you've been here as well.

I am guessing the answers each are assuming something different, and without knowing more details it'd be impossible to accurately help you here. The three first examples (fixed salary, contracting, founder) might need immigration involvement, and are also not what would usually be considered "passive income", while the rest might not. I don't know all the details but I know that you really need to narrow down the question to get a meaningful answer.

 

[andy44]

@albinoguitman Hi! That’s a really good point, thank you very much. In the end, I suppose what I actually mean is a online side hustle. I’ve edited the original post to be more clear, but I’ll add the clarification here too.

Everything I have the skills for falls under some type of content creation. I already have a blog that gets decent traffic that I could monetize, and I’ve done freelance writing in the past. If I wanted to, for example, monetize my blog in some way, or run a Patreon page while continuing to work and live in Japan, is that allowed? Would I need to go through immigration and my company to get permission for something like that?

My original idea was to use my U.S. address and generate a small amount of income so that I could open an IRA account, but after reading the comment responses it looks like that wouldn’t be possible. But I am still curious about the general possibility of doing online work like this while living here.

 

[albinoguitman]

@andy44 I don't know about the USA side of things, luckily I'm not from there so I don't have the problems I've heard my American friends have. For good or for bad, those specific examples I haven't checked them out in-depth, but here is my opinion:

I think running ads or having associated links on an online blog might fall on the "online" (A.K.A. it'd count as "Japan" if you reside here, since it's not tied to the land of the US, as rent income would be) and so you'd need to declare that as misc income in Japan every March (maybe also in the US, as I said I don't know that side of things). I also think this would not be considered a job and you wouldn't need neither permission from your company nor immigration.

A Patreon seems similar, I don't know that field but you'd need to find out if it's considered donations, gifts, or sales (e.g. if you do rewards) or a combination. Would probably also be "online" and need to be declared in Japan from the beginning.

Freelancing writing would definitely count as a "side job" so please look at what other comments are saying.

These are all guesses and not at all financial or legal advice, I'd strongly suggest hiring 1h consultation with an accountant first to clarify the income side of things, and maybe with an immigration lawyer if needed.

 

[mellie]

@andy44 You do have some options as an American living in Japan when it comes to investing. Interactive Brokers is well-known. SMBC Nikko and I think Nomura allow US citizens to trade US-based ETFs. You can trade SPY (1557), which is an S&P500 ETF, from Japan, and not have US withholding taxes.

If your SO is a Japanese citizen, there's nothing preventing your SO from investing...just sayin'.

Building wealth in Japan is no different from anywhere else. The only difference is that US citizens have a few more hurdles to clear first.

 

[andy44]

@mellie Thank you! This is helpful. I knew about interactive brokers, but not any of the other options.

 

[babydoll]

@andy44 Following

 

[southronlady]

@andy44 You need to check your work contract, and also talk with immigration.

Income earned while being physically in Japan is not foreign income, you need to declare it and pay taxes for it. Passive income (e.g. rent income) might be foreign income and depending on your residency status, you might not need to declare it. But it's pretty unlikely if you live here permanently.

 

[solongdeceased]

@andy44 got to ask the employer… chances are they wont allow it, but in that case you might be able to argue…
i usually convince employers with offering to quit the side job when they pay me that salary… its not wxactly like my own business of course, but it works…
you also have to be careful that you dont work outside your visa category…
sometimes immigration might ask questions when you work outside of your occupation, too…