Year-End U.S. Tax Planning Checklist for Japanese Expats: 12 Things to Do Before December 31 (2026)

Fewer than three months are left in 2026. Most individuals figure U.S. income tax on a calendar-year basis, so most year-end planning moves stop counting for 2026 once December 31 passes. A few do not: IRA and HSA contributions for 2026 can still be made until April 15, 2027.

This checklist is for Japanese expats, locally hired employees, and green card holders who file Form 1040 as U.S. tax residents. It covers 12 items to review before year-end, using 2026 limits published by the IRS, and links to our existing articles for the details. It also covers items that matter only if you have ties to both countries, such as recording Japanese account balances at the right exchange rate.

Key points

• 401(k) and 403(b) contributions come out of your paycheck, so any increase has to happen through your remaining 2026 paychecks. The 2026 limit is $24,500 (plus $8,000 if 50 or older, or $11,250 if age 60 to 63).
• IRA (limit $7,500, or $8,600 if 50 or older) and HSA (self-only $4,400 / family $8,750) contributions for 2026 can be made until April 15, 2027.
• Tax-loss harvesting must be done by year-end, and you should not buy substantially identical securities within 30 days before or after the loss sale (the wash sale rule).
• Charitable deductions changed in 2026. Non-itemizers can now deduct up to $1,000 ($2,000 married filing jointly) of cash gifts, while itemizers can deduct only the part of their gifts above 0.5% of AGI.
• Japanese accounts: record each account’s December 31 and highest 2026 balances, converted at the Treasury’s year-end rate (FBAR and Form 8938).

2026 limits and deadlines at a glance

Here are the main numbers this checklist uses. All amounts are for 2026.

Item	2026 amount	Deadline
401(k), 403(b), 457, TSP employee deferrals	$24,500	Paychecks paid in 2026
Catch-up contributions to those plans	$8,000 if 50 or older ($11,250 if age 60 to 63)	Paychecks paid in 2026
IRA (traditional and Roth combined)	$7,500 ($8,600 if 50 or older)	April 15, 2027
HSA	Self-only $4,400 / family $8,750 (plus $1,000 if 55 or older)	April 15, 2027
Health FSA	Salary reduction limit $3,400; carryover up to $680 if the plan allows	End of the plan year (check your employer’s plan)
Gift tax annual exclusion	$19,000 per recipient ($194,000 to a spouse who is not a U.S. citizen)	December 31, 2026
Cash charitable deduction for non-itemizers	$1,000 ($2,000 married filing jointly)	December 31, 2026
Fourth-quarter estimated tax	—	January 15, 2027

1. Adjust 401(k) or 403(b) deferrals through your remaining paychecks

Employee contributions to a 401(k) or 403(b) (elective deferrals) are made by payroll deduction. The 2026 limit is $24,500, plus an $8,000 catch-up at 50 or older, or $11,250 at age 60 to 63. To contribute more, change your election in your employer’s payroll system so it applies to the paychecks left in 2026. Processing times vary, so do it early.

• Changed jobs this year? The limit generally applies to the total of your deferrals to all plans you participate in. Check what you contributed at your previous employer.
• Went over the limit? You need to notify the plan administrator by April 15 of the following year to have the excess deferral distributed to you.
• Watch your take-home pay. A large December increase shrinks that paycheck; plan it alongside living costs and transfers to Japan.

2. IRA and HSA: you have until April 15, 2027

You can contribute to an IRA for a year at any time during that year or by the due date of your return for that year, not including extensions. IRS Publication 590-A notes that for most people this means April 15, so the deadline for 2026 contributions is April 15, 2027. If you contribute between January 1 and April 15, tell the IRA provider which year the contribution is for; otherwise, the provider can treat it as a current-year contribution.

The 2026 IRA limit is $7,500 across traditional and Roth IRAs ($8,600 if 50 or older), capped at your taxable compensation. There is no age limit on contributions. For workers covered by a workplace plan, the traditional IRA deduction phases out at $81,000 to $91,000 (single) and $129,000 to $149,000 (joint). Roth IRA eligibility phases out at $153,000 to $168,000 (single) and $242,000 to $252,000 (joint).

An HSA is available if you are covered by a high-deductible health plan (HDHP). The 2026 limits are $4,400 for self-only coverage and $8,750 for family coverage, plus $1,000 if you are 55 or older. Starting January 1, 2026, bronze and catastrophic plans are treated as HSA-compatible. Like an IRA, you can make 2026 HSA contributions until April 15, 2027.

3. Use up your health FSA balance

A health FSA (flexible spending arrangement) offered by your employer is generally “use-or-lose”: money left at the end of the plan year is forfeited. Your employer’s plan may offer one of two relief options:

• Carryover: for plan years beginning in 2026, up to $680 can carry over to the next plan year.
• Grace period: up to two months and 15 days after the plan year ends to spend the prior year’s balance.

Under IRS Notice 2013-71, a plan with a carryover cannot also offer a grace period. Ask HR which option your plan has, if any, and schedule eligible expenses such as glasses or dental work in time. Our HSA and FSA guide lists common eligible expenses.

4. Harvest losses, and respect the wash sale rule

Selling investments that are down before year-end locks in a loss that can offset this year’s capital gains. If losses exceed gains, you can deduct up to $3,000 ($1,500 if married filing separately) against other income, and carry the rest forward to later years.

The trap is the wash sale rule. If you sell at a loss and, within 30 days before or after the sale, buy substantially identical stock or securities (including inside your IRA or Roth IRA), you cannot deduct the loss that year; it is added to the basis of the new shares. Check that dividend reinvestment is not buying the same fund. See our articles on the wash sale rule and capital loss carryovers.

U.S. tax residents report worldwide income, so gains and losses in a Japanese brokerage account also go on your U.S. return.

5 and 6. Make charitable gifts by December 31, and check the gift tax annual exclusion

Charitable contributions are generally deductible in the year you make them. A check counts in the year it is mailed, and a credit card gift in the year you charge it, not when you pay the bill.

The rules changed for 2026. Non-itemizers can now deduct up to $1,000 ($2,000 married filing jointly) of cash contributions to eligible charities; noncash gifts and gifts to donor-advised funds do not qualify. Itemizers can deduct only the part of their charitable contributions above 0.5% of adjusted gross income (AGI), and taxpayers above the top-bracket threshold also have total itemized deductions reduced. Keep a bank record or written communication for every cash gift, and a written acknowledgment from the charity for any gift of $250 or more. Japan’s furusato nozei is not a U.S. charitable deduction; see our furusato nozei article.

For gifts to family, the 2026 annual exclusion is $19,000 per recipient, and in the U.S. the donor is generally responsible for any gift tax. Tuition or medical expenses you pay for someone and gifts to a U.S. citizen spouse are not taxable gifts; for a spouse who is not a U.S. citizen, the annual exclusion is $194,000. If the recipient lives in Japan, Japanese gift tax may also apply: in Japan the recipient pays, with an annual basic exemption of 1.1 million yen under the calendar-year method. See our cross-border gifting article.

7 and 8. Avoid underpayment penalties with estimates and Form W-4

If withholding will not cover your tax, you may need quarterly estimated payments. For 2026 you generally must pay estimated tax if you expect to owe at least $1,000 after withholding and refundable credits, and your withholding and credits will be less than the smaller of 90% of your 2026 tax or 100% of your 2025 tax. If your 2025 AGI was more than $150,000 ($75,000 married filing separately), use 110% instead of 100%.

The fourth-quarter payment is due January 15, 2027, unless you file your 2026 return by February 1, 2027, and pay the entire balance with it. Watch this if you have income without withholding, such as Japanese rent, dividends, or a large stock sale.

You can also raise withholding for the rest of the year with a new Form W-4. Under the Form 2210 instructions, withholding is treated as paid one-fourth on each due date unless you show otherwise, so extra withholding in November and December also covers earlier quarters. The IRS Tax Withholding Estimator can help. See our Form W-4 guide and estimated tax guide.

9 to 12. Japan-side items: balances, exchange rates, and Japanese income

If you have accounts or income in Japan, gather these records at year-end.

What to record	Used for	Notes
December 31 balance of each Japanese account	Form 8938	Single filers living in the U.S. file if over $50,000 at year-end or over $75,000 at any time ($100,000 / $150,000 married filing jointly)
Highest balance of each account during 2026	FBAR (FinCEN Form 114)	Required if the combined value exceeded $10,000 at any time during the year
Treasury exchange rate for December 31	Converting yen for FBAR and Form 8938	Use the Treasury Reporting Rates of Exchange (published quarterly)
Japanese salary, rent, dividends, interest, and Japanese tax paid	Form 1040 and the foreign tax credit	U.S. tax residents report worldwide income; double tax is relieved through Form 1116 and related rules

The FBAR is due April 15, with an automatic extension to October 15 that you do not need to request. Convert each account’s maximum value at the Treasury rate for the last day of the calendar year and round up to the next whole dollar. Form 8938 also uses the Treasury Bureau of the Fiscal Service rate for the last day of the tax year. If you live in Japan, the Form 8938 thresholds are higher: over $200,000 at year-end or $300,000 at any time for single filers, and $400,000 / $600,000 for joint filers.

Japanese income belongs on your U.S. return even if Japan already taxed it. The foreign tax credit (Form 1116) is the usual relief, so keep the Japanese statements that show tax paid. See our foreign tax credit guide.

Worked example: maxing out a 401(k) before year-end

Example: A, a 45-year-old single expat in New York paid twice a month, has put $15,000 into a 401(k) through October, with four paychecks left. At the current $750 per paycheck, the year’s total would be $15,000 + $750 × 4 = $18,000.

• To reach the $24,500 limit, A needs $24,500 − $15,000 = $9,500 more.
• Spread over four paychecks, that is $9,500 ÷ 4 = $2,375 per paycheck.
• The increase over the current pace is $24,500 − $18,000 = $6,500.
• Assuming a 24% federal marginal rate, that lowers federal income tax by $6,500 × 24% = $1,560 (state and city tax not included).

Now suppose A’s Japanese savings account held 8 million yen on December 31. If the Treasury’s year-end rate were 150 yen per dollar, that is 8,000,000 ÷ 150 = about $53,333, which alone exceeds the $50,000 year-end Form 8938 threshold for a single filer living in the U.S. and the $10,000 FBAR threshold. Use the actual Treasury rate once published.

FAQ

Can I still contribute to an IRA for 2026 after December 31?

Yes, until the return due date without extensions: April 15, 2027. Tell the provider the contribution is for 2026.

What happens if I cannot spend my FSA balance?

It is generally forfeited, unless your plan offers a carryover (up to $680 for plan years beginning in 2026) or a grace period (up to two months and 15 days). A plan cannot offer both.

I missed an estimated payment. Does raising my withholding in December help?

Yes. Withholding is treated as paid one-fourth on each due date unless you show otherwise, so extra withholding late in the year also counts toward earlier quarters.

What exchange rate do I use for my Japanese account balances?

Both the FBAR and Form 8938 use the U.S. Treasury’s rate for the last day of the year. If none is available, use another verifiable rate and identify its source.

Can I buy the same stock back right after harvesting a loss?

Not within 30 days before or after the sale if it is substantially identical; that is a wash sale and the loss is not deductible that year. Purchases inside an IRA or Roth IRA count too.

At CLT NY INC., an IRS Enrolled Agent helps Japanese expats and green card holders with year-end tax planning, Form 1040 filing, and FBAR and Form 8938 reporting, in Japanese or English. Contact us.

Related articles

• U.S. Tax Return Documents Checklist for Japanese Expats and Permanent Residents
• The Wash Sale Rule: A Comprehensive Guide for Successful Year-End Tax Loss Harvesting
• Smart Tax Savings on US Medical Expenses: Mastering HSA & FSA, Preventing Forfeitures, and Covering Contact Lenses & Glasses
• Mastering Form W-4: A Comprehensive Guide for Japanese Nationals on Adjusting U.S. Tax Withholding
• The Freelancer’s Complete Guide to Estimated Tax: Calculation Methods and Penalty Avoidance Strategies
• How to Report Japanese Rental Income and Dividends on TurboTax: A Step-by-Step Guide to the Foreign Tax Credit

Sources: IRS, “401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500” (IR-2025-111); IRS, Retirement topics: 401(k) and profit-sharing plan contribution limits; IRS, Retirement topics: IRA contribution limits; IRS Publication 590-A; IRS Rev. Proc. 2025-19; IRS Publication 969; IRS, Tax inflation adjustments for tax year 2026 (IR-2025-103); IRS Notice 2013-71; IRS Instructions for Schedule D; IRS, Working Families Tax Cuts; IRS Publication 505 (2026); IRS Publication 526; IRS Topic No. 506; IRS, Frequently asked questions on gift taxes; IRS Form 1040-ES (2026); IRS Instructions for Form 2210; IRS Tax Withholding Estimator; IRS, Report of Foreign Bank and Financial Accounts (FBAR); FinCEN, Reporting Maximum Account Value; IRS Instructions for Form 8938; U.S. Treasury, Treasury Reporting Rates of Exchange; IRS, Taxation of resident aliens; IRS Topic No. 856; National Tax Agency of Japan, Tax Answer No. 4402. Information as of October 2026. This article provides general information and is not individual tax advice.