Filing a tax return isn’t easy at the best of times, but doing it in another country can be particularly challenging. Fortunately, if you work for a company and that’s your sole source of income in Japan, they will take care of everything for you. However, those who are self-employed or have multiple sources of income will have to file a tax return (kakutei shinkoku, 確定申告).
Lisa, who has built up a freelance business as a copywriter and proofreader, has a question about her tax return:
I have received my tax pack from the city office for filing under the Blue Form system, and I’ve collected the tax certificates from the various client companies I work for showing how much I was paid and how much tax was withheld. However, I noticed that one company had split the payment between two certificates. One certificate showed tax withheld and the other didn’t. When I called their accounting department to see if there was a mistake, they said that depending on the category of the work, some isn’t liable to tax. I thought the whole thing was strange, though. Is this going to be an issue when I file my return?
The “Blue Form” that Lisa refers to is a special tax return designed for people who are self-employed or freelancing. Basically, there are two types of tax returns Lisa can chose from: the White Form (shiroiro shinkoku, 白色申告) or the Blue Form (aoiro shinkoku, 青色申告). The blue one is usually preferable because it offers some extra benefits, including special deductions.
Those using a Blue Form can claim a deduction of ¥100,000 on their taxable income in exchange for keeping single-entry records for their business. A simple accounting software package will suffice for this. If you are prepared to go to the trouble of double-entry bookkeeping, you can claim a generous ¥650,000 deduction. Keeping records is also very helpful when it comes to working out how much to claim for business expenses, including office products, travel and meeting expenses, reference materials — and even part of your rent and utilities, if you work from home.
You must apply to go on the Blue Form system at your local tax office, or else you’ll be enrolled in the White Form system by default. Apply by March 15 of the year in which you want to start.
Lisa’s clients have sent her the tax certificates (gensen chōshū, 源泉徴収) that she needs to work out her total income and tax paid. This money is referred to as hōshū （報酬） or remuneration. This is in contrast to income paid as “salary” directly by an employer to staff, which is called kyūyo (給与). It is possible to file a tax return with both types of income. For example, if Lisa was also teaching at an English school part time, this would be paid as “salary.” Expenses can not be claimed for the salary portion of income, however.
The tax certificates are attached to the tax return when it is filed. I had not heard of a company issuing two different tax certificates, so I spoke to a staff member at my local tax office. He confirmed that what the client told Lisa is correct — certain types of work are not taxed. For example, copywriting and proofreading would come under work that is taxed at the source, while developing test materials is not. He added that Lisa should attach both certificates to her tax return in the normal way. Confused? I was. When I asked why this anomaly existed, the tax officer couldn’t offer much more of an explanation than “That’s just the way it is.” When it comes to filing a tax return, sometimes it’s better not to ask.
Finally, the period for filing a tax return is from Feb. 16 to March 15, but since March 15 falls on a weekend this year, you actually have until Monday, March 17. For more information about the Blue Form or filing a tax return, contact your local tax office. And if you could use a helping hand filling it out, note that many city and town offices offer free consultations with tax-office staff around this time of year.
Kiwi Louise George Kittaka has been based in Japan since she was 20. In the ensuing years she has survived PTA duty for three kids in the Japanese education system and singing live on national TV for the NHK “Nodo Jiman” show, among other things. Send comments and questions to firstname.lastname@example.org.