Hi all. I am hoping to get some help on how exactly to keep track of taxes now that US citizens can open a NISA account with IBSJ. I want to keep this post simple to read, so I'm going to list relevant information below:
– Currently I hold everything in a single ETF (VT) in Vanguard.
– I manually record purchases, sales, dividends, exchange rates etc. so that I can manually calculate the cost basis and pay tax to Japan.
– Japan's tax rate is higher than the US, so I have never owed anything to the US.
– I file US taxes using the FTC, not the FEIE, so that I can receive the refundable portion of the US Child Tax Credit.
– I pay someone to file the FTC for me so I don't screw it up.
– Recently, I set up an IBSJ account, and I am currently applying for a NISA account.
– I will purchase and hold a single ETF (VT) in the Seicho portion of the new NISA.
– I'm planning to transfer my VT holdings with Vanguard in-kind to my IBSJ general account. I do not plan to return to the US and feel this would simplify things.
– I will then hold my current VT assets in a general IBSJ brokerage account.
– I'm going to buy VT in the IBSJ NISA account with salary, but will sell some VT from my general IBSJ brokerage account each year to top off the Seicho portion if I am unable to max it with salary.
– So, I'll hold VT in an IBSJ general brokerage account, and VT in an IBSJ NISA account.
My question is: What do I need to do to properly track and pay taxes now?
My initial thought is just that I need to keep separate records for the IBSJ general brokerage account and IBSJ NISA account. Then, I'd pay Japan tax on the brokerage account, and the US tax on the NISA account.
But, as with almost everything related to taxes, I'm guessing it might not be that simple?
For example, because VT is being held in both the brokerage account and the NISA account, does the cost basis for VT need to combine both accounts? Does the US see each account as separate cost basis, or as a single cost basis held in two different accounts? How would that work with paying Japanese taxes on one portion and not the other? Also, dividends paid out of the Seicho portion of the new NISA will then go to the general brokerage account since it's not reinvested like a mutual fund. When calculating this, do I just keep the NISA cost basis the same, and increase the general brokerage's account basis where the dividend was paid out to? I feel like I could come up with a lot of questions but hoping this just illustrates the confusion I have right now!
I'm hoping someone might be able to shed some light on how this process should go.
Thank you for any information or advice!
by redfinadvice