Japan's inheritance tax and your US family: the 10-year rule that decides whether Mom's IRA is taxable

The short version. Japan taxes the person who inherits, not the estate — the opposite of the US system. Whether your US parents’ worldwide assets (their IRA, brokerage, house) fall inside Japan’s net depends on your visa and how long you’ve lived here, not their nationality. If you’re on a Table 1 work visa with fewer than 10 of the last 15 years in Japan, you get “Japan-situs-only” treatment and an inherited US IRA is generally outside Japan’s reach. If you hold a spouse visa or permanent residence, you’re in worldwide scope from day one. The basic deduction is ¥30M + ¥6M per statutory heir, rates run 10–55%, and the return is due within 10 months of death. This is orientation, not advice — confirm any real case with a professional.

I’m not a tax lawyer, and I’ve never had to file an inheritance return. This is what I pieced together researching my own US–Japan money situation, cross-checked against PwC, KPMG and Japan’s National Tax Agency (NTA). Treat it as a map, not a verdict.

Why Japan taxes you, not the estate

In the US, the federal estate tax is paid by the estate before anything reaches you — and with a multi-million-dollar exemption, most families never touch it. Japan flips this. Here, each heir is taxed on their own share after the estate is divided. That design difference is why a Japan-resident child of US parents can owe Japanese tax on an American inheritance that would be completely tax-free on the US side.

The rate schedule is steep — one of the highest in the developed world:

Taxable share per heir (JPY)	Rate	Fixed deduction
≤ 10M	10%	0
10M–30M	15%	¥500,000
30M–50M	20%	¥2,000,000
50M–100M	30%	¥7,000,000
100M–200M	40%	¥17,000,000
200M–300M	45%	¥27,000,000
300M–600M	50%	¥42,000,000
> 600M	55%	¥72,000,000

(Source: PwC Worldwide Tax Summaries – Japan.)

The 10-year rule: the one thing that decides scope

Here’s the part nobody explains clearly. Japan sorts heirs into two buckets:

• Unlimited taxpayer — your worldwide assets are in scope, including that US IRA and brokerage account.
• Limited taxpayer — only Japan-situs assets are in scope; foreign assets from a foreign decedent are outside the net.

Which bucket you land in comes down to your visa table and your years of domicile:

Your situation	Bucket	US parents’ assets taxed by Japan?
Table 1 visa (Engineer/Specialist, Skilled Labor, student…), < 10 of last 15 years in Japan	Limited	No — Japan-situs only
Table 1 visa, ≥ 10 of last 15 years in Japan	Unlimited	Yes — worldwide
Table 2 visa (spouse, long-term resident, permanent resident)	Unlimited	Yes — worldwide, from day one

The 2017/18 reform closed the old trick of long-term residents briefly leaving Japan before a big inheritance. Two consequences worth burning into memory:

1. The clock counts actual domicile, not just status. Brief trips abroad don’t reset it.
2. Leaving Japan doesn’t instantly free you. A long-term resident who departed within the past 10 years can still be pulled into worldwide scope.

The basic deduction: where most families land

Before any rate applies, subtract the basic deduction:

¥30,000,000 + (¥6,000,000 × number of statutory heirs)

A US parent leaving a spouse and two children (three statutory heirs) gets a ¥48M deduction — roughly $320,000 at ¥150/$1 (needs verification: current FX rate). If the estate falls below the deduction, there’s no tax and no return required. This is why small and mid-size inheritances often escape entirely, and why the scary 55% headline rate misleads people.

But when it bites, it bites. Illustratively: a Japan-resident sole heir in worldwide scope inheriting ~$500,000 (≈¥75M) from a US parent might see roughly ¥75M − ~¥36M deduction = ~¥39M taxable, landing around ¥5–8M (≈$33,000–53,000) in Japanese inheritance tax. That’s a rough sketch to show the order of magnitude — the real number depends on the statutory-share calculation, so don’t plan around it.

Decision support: what to actually do

If you’re on a work visa (Table 1) with under 10 years here → an inherited US IRA/brokerage from a US-domiciled parent is generally outside Japan’s scope right now. Your exposure grows as you approach the 10-year line. If a large inheritance is foreseeable and you’re at year 8 or 9, that timing is worth a professional conversation before anything happens.

If you’re on a spouse visa or PR → assume worldwide scope today. Model the Japanese tax on your parents’ likely estate now, not after the 10-month clock is already running.

If you’re the US person and your parents are US-domiciled → their US estate tax and your Japanese inheritance tax are two separate systems. Coordinating them (and the treaty credit below) is exactly where a dual-qualified advisor earns their fee.

Whoever you are → don’t guess the IRA base. Japan’s NTA doesn’t recognize the tax-deferred status of IRAs or 401(k)s; an inherited one is just a foreign financial asset. Whether Japan taxes the full face value or only the gain portion is genuinely unsettled in the plain-language sources — get it confirmed.

The 10-month deadline is the real trap

You must file and pay within 10 months of the date of death — even when the assets sit in the US and must be valued in yen. Between grief, an ocean of distance, US probate that can run longer than 10 months, and gathering statements, that window disappears fast. Late filing and late payment carry penalty taxes on top. The practical cost of not knowing this rule isn’t abstract: it’s penalty interest plus a rushed, expensive scramble to value foreign assets under deadline.

The US–Japan treaty and your US-side paperwork

A separate US–Japan Estate, Inheritance & Gift Tax Treaty (in force since 1955, amended 2004) exists to prevent true double taxation. Its main tool is a credit mechanism: Japanese inheritance tax you pay can be credited against US estate tax and vice versa. It does not erase Japan’s right to tax you — it only offsets. Whether Japan’s inheritance tax is also creditable against your US income tax is murkier — the IRS has historically not treated inheritance taxes as creditable income taxes. Verify separately.

On the US side, inheriting can trigger reporting even with no tax due: FBAR if inherited foreign accounts push your total over $10,000, and Form 8938 (FATCA) above the higher expat thresholds (e.g. $200,000 for a single filer abroad). These are reporting forms — missing them carries penalties independent of any tax owed. If you’re already juggling US accounts from Japan, my notes on what to do in your first tax year after leaving the US and keeping a US brokerage after moving to Japan cover the same address-and-reporting headaches an inheritance amplifies. If the assets are retirement accounts, handling a 401(k) or IRA after moving to Japan is the companion piece.

Cross-border inheritance is exactly the situation where I’d stop reading blogs (including this one) and pay a professional who files both US and Japan returns. One place to start is Taxes for Expats, a US–Japan expat tax firm — not the only option, just a concrete starting point. (Full disclosure: that’s a referral link — it gives you $25 off your first filing, and I may receive a small credit if you use it. Compare it against other dual-qualified advisors before committing.)

FAQ

Does Japan tax an inheritance from my US parents if I’m a foreigner here?

It depends on your visa and years in Japan, not their nationality. On a work visa with under 10 of the last 15 years here, foreign assets from a US-domiciled parent are generally outside Japan’s scope. On a spouse visa or PR, you’re in worldwide scope and the inheritance can be taxable — after the ¥30M + ¥6M-per-heir deduction.

Is an inherited US IRA taxable in Japan?

If you’re an unlimited taxpayer (PR/spouse visa, or 10+ years on a work visa), an inherited IRA is treated as an ordinary foreign asset and can be subject to Japanese inheritance tax — Japan ignores its US tax-deferred status. A limited taxpayer inheriting from a US parent generally isn’t taxed on it. Whether the base is the full value or only the gain is unsettled; confirm with a professional.

How long do I have to file?

Ten months from the date of death, and you must pay in that window too — even for US assets valued in yen. US probate can outrun that deadline, so start early. If the estate is below the basic deduction, no return is required at all.

This is my own research and lived experience with US–Japan money, not tax or legal advice. Inheritance cases turn on specific facts — confirm everything against the NTA’s official pages and a qualified cross-border professional before you act.