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- It's tax time in Japan! 🇯🇵💸
It's tax time in Japan! 🇯🇵💸
Tips for filing your individual income tax like a pro
Michael Wu
March 01, 2024
Japan’s individual tax filing deadline is coming up on March 15, 2024. Japan being Japan, this is a fairly complicated and confusing process (though not as bad as US taxes!). Here are some learnings from my personal tax filing process, with common pitfalls around the online tax filing system.
Table of Contents
Bank Promotions and Tech Job Opportunities in Japan
First some additional Japanese bank promotions! SBI Shinsei Bank is running a inbound foreign currency remittance campaign, offering a bonus between 4000-10000 yen for remitting certain amounts of foreign currency into Japan. You can get this bonus in each of the 3 remaining periods this year.
Tech job opportunities
On the jobs front, apparently the makers of the popular game Palworld, Pocketpair, are desperately hiring after their successful launch. If interested, you can check out their jobs page.
Amazon is hiring a swath of Senior Product Manager roles. This one on the JP Seller Services team owning the Returns Experience does not require Japanese language ability. This one working with 3rd party carriers does require Japanese fluency. It seems like there are many other product roles available, whether or not they require Japanese fluency is role dependent.
Note: none of this is professional tax advice, if desired please seek a tax accountant from this list of English speaking tax accountants in Japan.
Filing basics
Filing deadline
First of the all, the filing deadline is March 15. It is technically possible to file after, but you will face additional penalties for filing or paying late if tax is due.
Getting help!
Individual tax offices are offering in-person support for filing. I personally stopped by the Shibuya office to answer some final questions I had. Basically they encourage you to file electronically through e-Tax while answering any questions you have. You can find more about visiting your local tax office for help on the official NTA website.
I’ve been finding this Reddit master thread for tax return questions immensely helpful for answering all questions. Reminder that they are not professional tax advice, and to seek professional advice if you need it.
Where do I file?
I wrote about e-Tax earlier, but filing taxes is not on the normal e-Tax system but actually this dedicated tax filing corner (確定申告書等作成コーナー)
I had no problems using Chrome for this, even without changing my system language. Given that I moved out of Japan last year, I don’t have a valid My Number card, but I was able to use my previously set up e-Tax ID and password to file.
How do I save my progress?
Weirdly, the filing system doesn’t save your progress to any sort of online account. Instead, you need to save the data to a file on your computer, and then import it again when you want to resume. On most pages of the filing system, there will be a button that says ここまでの入力内容を保存する. Click this, and on the next page click the big download data button. The data will be downloaded with the file extension .data, with a naming scheme like “r5syotoku.data” or something similar. This seems to be the year (Reiwa 5) + the type of return, in this case Shotokuzei (所得税).
Download data button
Later, on the tax filing corner homepage, click the right button to resume filing the return from saved data.
Create a new return or resume from saved data
Furusato Nouzei (ふるさと納税）
If you weren’t aware, Furusato Nouzei is a system to get free gifts when donating money to various municipalities (outside of where you live). This works by first deducting from your income tax, then whatever remaining amount that you donated (up to your personal limit), is credited against the residence tax you pay next year.
This is where I personally messed up, because I moved out of Japan last year, so there’s no residence tax to credit against. So I am only getting the income tax deduction.
If you did not do the one-stop system, you need to import each donation into the filing system, which can be quite annoying. Fortunately, most Furusato sites also support exporting their data to be imported into the filing system! The data is saved as an XML file compatible with the online filing system. Check your Furusato site for details. For Furunavi, it took 2 business days to generate this file, so do this early!
You can input your donations under 所得から差し引かれる金額（所得控除）→ 寄附金控除. There should be a section with the following:
データで交付された証明書等の入力
寄附先等から交付された「xmlデータ」（拡張子が[.xml]のもの）を取り込んで自動計算しますか？
Select はい (Yes), press 次へ進む (Next) and it will prompt you to import your XML data.
Paying taxes
If you do end up owing taxes, there are various options to pay. One is automatic debit from your bank account (振替納税) - however this can only be set up by the tax filing deadline March 15. Reading further, it seems like the transfer amount is set to be the exact amount owed, not taking into account anything you may have paid through other methods, so if you intend to partially pay through other methods, do not select this method.
Various tax payment methods
It seems like with the remainder of the methods, you can split payments however you’d like between them. There are some flows where e-Tax fixes the payment amount to be your total tax amount owed, while there are other flows where you can specify the exact amount to pay, so be careful.
Credit cards
Taxes can be be paid via credit card at the official tax credit card payment site. There are fees associated with credit card payments, around 0.8%, so if you’d earn more points this way, I’d encourage paying via card! Check with your credit card if you’d actually earn points, as several Japanese credit cards prevent you earning points for paying taxes. Foreign credit cards generally do earn points, but you may lose around <1% due to exchange rates, and remember - these are counted as foreign remittances by Japan, taxable if there is foreign source income or if there is capital gain. You can use multiple credit cards by completing the procedure multiple times with different payment amounts.
Internet banking
You can also pay via internet banking. Either you can use e-Tax to set up a direct debit from your bank account, or you can transfer yourself. The system is fairly complicated, read this official instruction manual (Japanese only).
With Direct Debit (ダイレクト納付), you use the main e-Tax software (web or desktop) and register the bank account you want to use. Only certain bank accounts are supported, so be careful. Besides GMO Aozora, I only saw traditional megabanks, trust banks, and regional banks supported.
Self initiated transfers are done through Pay Easy (ペイジー), which not all banks support! Either you have to do it through an ATM supporting Pay Easy, or have a bank account that supports Pay Easy. This is why I signed up for SMBC Olive recently. The other internet bank I know supporting Pay Easy is GMO Aozora. Feel free to use my referral code for SMBC Olive, FF06701-9494410 through this referral link.
You can get the information necessary to do self transfers through the Reception System (受付システム) NOT the regular e-Tax website. In my message box I had a message titled 納付情報登録依頼 which had the information needed for Pay Easy.
Pay Easy tax payment information
Fixing your mistakes after you filed 🤦♂️
What if you realized you made a mistake while filing your return? Not to fear! As long as you are within the tax filing deadline, you can just resubmit your return on the e-filing system (support article).
Foreign tax credits for US Expats
If you’re also a US expat like me, there’s no getting out of filing US taxes as well. As Japan has a tax treaty with the US, you are able to claim either a Foreign Earned Income Exclusion or a Foreign Tax Credit on your Japanese income. Japan’s tax rate is higher than the US, so in most cases it will make sense to take the Foreign Tax Credit instead. For more analysis, you can see this writeup.
Fortunately, the US tax filing deadline is later than Japan’s, and as a expat, you automatically get a 2 month filing extension without requesting anything. So the usual flow is to file your Japanese taxes, and use that amount paid to Japan as the foreign tax you are crediting against what you would owe on that income to the US.
I won’t go into full detail as this can get very complicated, but some basics: the amount you can claim is on taxes you would have paid for that year, regardless of it was paid that year or not. Say I owe Japan taxes for year 2023, but I don’t actually pay it until 2024 - this counts as 2023 foreign tax to the US.
Another thing - residence tax counts (though it gets quite weird because of the delayed nature of residence tax). However, pension and social insurance payments do not count as a foreign income tax as those are partially paid back to you later. This subject gets very complicated, so I would advise more research or asking a professional.
Gift taxes
Japan has a very complicated gift tax system, and I ran into some problems with this last year, where I attempted to claim an exemption for purchasing a house, but was not eligible due to income limits.
Instead, I should have filed the gift tax to be settled at the time of inheritance, as the gift came from my parents. Here is the official NTA page on this. You are asked to submit a copy of your family register, but what if you’re a foreigner and you don’t have a Japanese family register? Thankfully I found the answer in this article (Japanese only), saying that equivalent proof, like birth certificates, or a notarized affidavit of relationship is also proof, which you attach as a supporting document to your return.
Attaching supporting documentation
When it came to actually attaching the supporting document to my return, I found this VERY confusing text with a checkbox. Do I check the checkbox or not to submit extra documents? 🧐
添付書類等の送信（任意入力）
入力された申告書等のほかに一緒に送信する書類がある場合は、次のチェックボックスにチェックをしてください。
このまま送信する方は、チェックを入れないでください。
なお、別途郵送等で書面により提出する必要がある添付書類について、書面による提出に代えて、イメージデータ（ＰＤＦ形式）により提出する場合にも、チェックを入れないでください。イメージデータ（ＰＤＦ形式）による添付書類の提出については、e-Taxで贈与税の申告を行った後の手続になります。
This help article clarified a bit - basically if you are attaching PDF files and not separate written documents, don’t check the box, and after submitting your return, you should have a screen asking you to attach PDF documents.
Conclusions
Ganbatte to everyone filing their taxes this season! There are definitely a lot of complications with tax filing, and I tried to cover some common ones that I ran into, but this article is definitely not exhaustive. Feel free to reach out [email protected] if you have any questions, though the Reddit thread may be more helpful! Remember, you can also support this publication by becoming a paid subscriber or a Patreon.
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