Japanese Gift Tax for Expats Married to Non-US Persons
You won’t owe any Japanese gift tax if you’re receiving gifts under 1.1 million yen annually in Japan. Plus, you can gift up to $190,000 to your non-US citizen spouse without triggering the US gift tax. According to the IRS inflation adjustments for 2025, most American expats married to non-US citizens won’t hit the thresholds that create tax obligations.
Gift taxes can feel overwhelming when dealing with two tax systems, but the reality is more straightforward than it appears. Both countries offer generous exemptions that protect most transfers between spouses. However, knowing both countries’ rules helps you make informed decisions about large transfers and avoid unexpected tax bills.
What Is the Gift Tax Exemption in Japan?
The Japanese gift tax system provides a basic annual exemption of 1.1 million yen per recipient. Any individual can receive up to this amount annually without owing gift tax to Japan.
How Japan’s Gift Tax Works:
Japan uses two taxation systems: the annual taxation system and the settlement at inheritance system. Both allow the same 1.1 million yen basic exemption. The gift recipient, not the donor, is responsible for paying any Japanese gift tax owed.
Special Exemptions for Foreign Nationals:
The scope of the Japanese gift tax depends heavily on your visa status:
- Table 1: Visa Holders (work visas, temporary residents): If you’ve lived in Japan for less than 10 out of the past 15 years, overseas assets may be exempt from Japanese gift tax when received from foreign nationals
- Table 2: Visa Holders (permanent residents, spouses of Japanese nationals): Subject to Japanese gift tax on worldwide assets, including overseas gifts
Significant Changes Since 2021:
Japan revised its gift tax laws in April 2021. Now, overseas assets received by temporary foreigners from foreign donors are excluded from taxable gift assets. If you hold a Table 1 visa and receive money from family abroad, you’re likely exempt from Japanese gift tax on those funds.
What Are the US Gift Tax Rules for Non-Citizen Spouses?
The US gift tax is imposed on the transfer of money, property, or rights to property made to anyone, with the exception of US charities and political organizations. The tax is imposed on the donor—the person making the gift.
Annual Exclusion Limits for 2025:
- Standard annual exclusion: $19,000 per recipient
- Non-citizen spouse exclusion: $190,000 for gifts to a spouse who is not a US citizen
- Lifetime exemption: $13.99 million per person
Why the Different Treatment?
If your spouse is a US citizen, the gift tax exclusion amount is unlimited. However, for non-US citizen spouses—if your spouse is a Japanese citizen—you can gift $190,000 in 2025 without being taxed. Since non-US citizen spouses may not be subject to US estate tax, unlimited transfers could potentially avoid US taxation upon the non-citizen spouse’s death.
How to Use Lifetime Gift Limits to Reduce Taxes
The US tax code includes a lifetime gift-giving limit of $13.99 million. Even if you exceed the annual exclusion, you won’t owe tax until you’ve given away this total amount.
How Lifetime Exemptions Work:
Example: In 2025, if you gift $200,000 to your non-US citizen spouse, the taxable amount is $10,000 ($200,000 – $190,000 annual exclusion). This $10,000 reduces your lifetime exemption from $13.99 million to $13.98 million.
Unlimited Medical and Education Exclusions:
The tax code allows unlimited payments for medical expenses and tuition if paid directly to the service provider:
- Medical expenses: Pay doctors, hospitals, or insurance companies directly
- Education expenses: Pay tuition directly to colleges and universities (room and board, books, and equipment don’t qualify)
These payments don’t count against your annual or lifetime limits.
Will You Owe Taxes on Both Sides?
Most couples won’t face double taxation thanks to exemptions and exclusions, but timing and documentation matter.
Common Scenarios:
Scenario 1: US Citizen Gifts Money to Japanese Spouse
- First $190,000: No US gift tax
- No Japanese gift tax if funds remain overseas and the spouse holds a Table 1 visa
- Potential Japanese gift tax if spouse holds a Table 2 visa and funds enter Japan
Scenario 2: Receiving Family Money from Overseas
- First 1.1 million yen: No Japanese gift tax
- US reporting required if foreign gifts exceed $100,000 annually (Form 3520)
- No US tax on gifts received, just reporting obligations
The US requires reporting large foreign gifts received, but doesn’t tax the recipient. Japan taxes the recipient but offers exemptions based on visa status and asset location.
How Can You Plan Large Transfers Strategically?
If you’re living in Japan and need to make large transfers to a non-US spouse, gift tax can be avoided with careful planning.
Spread Gifts Across Multiple Years
Take advantage of the annual gift tax exclusion, which resets each year:
Example: Instead of gifting $400,000 in one year (which would trigger $210,000 in taxable gifts), spread it over three years:
- Year 1: $190,000 (no tax)
- Year 2: $190,000 (no tax)
- Year 3: $20,000 (no tax)
- Total result: $400,000 transferred with zero gift tax
Property Transfer Planning
For real estate transactions, structure ownership carefully:
- Proportional ownership: Contribute to property purchases in proportion to how title will be held
- Documentation: Keep detailed records showing each spouse’s financial contributions
What Filing Requirements Must You Meet?
Stay compliant with both countries’ reporting requirements.
US Requirements:
- Form 709: Required if gifts to non-citizen spouse exceed $190,000
- Form 3520: Required if foreign gifts received exceed $100,000
- Deadline: April 15 (with automatic extension to June 15 for qualifying expats)
Japanese Requirements:
- Gift tax return: Due between February 1 and March 15 following the year gifts were received
- Required if: Total gifts exceed 1.1 million yen annually
What Common Mistakes Should You Avoid?
Assuming Automatic Exemptions
Don’t assume your visa status automatically exempts you from Japanese gift tax. Rules depend on specific visa types, residency periods, and asset locations.
Ignoring Documentation Requirements
Both countries require proper reporting even when no tax is owed. Missing deadlines can result in penalties regardless of tax liability.
Poor Timing of Large Transfers
Consider both the US and Japanese tax years when planning significant financial moves.
How Greenback Can Help You Handle Both Systems
Gift tax planning across two countries requires expertise in both US and Japanese tax law. Making the wrong assumptions can lead to unexpected tax bills or missed opportunities for legitimate savings.
Next Steps:
- Document your current situation: Gather records of significant gifts or transfers between you and your spouse.
- Determine your Japanese visa status: Confirm whether you hold a Table 1 or Table 2 visa for gift tax purposes.
- Plan upcoming transfers: Consider timing and structuring significant financial moves to optimize tax efficiency.
- Stay current with filings: Ensure both US and Japanese reporting requirements are met.
No matter how late, messy, or complex your return may be, we can help. You’ll have peace of mind, knowing that your taxes were done right.
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Whether you’re years behind or just unsure about the thresholds, our team is ready to help.
This article provides general information and should not be considered specific tax advice. Tax laws change frequently, and individual circumstances vary. Always consult with a qualified tax professional regarding your specific situation.
