Filing a Tax Return in Japan

Almost a joy. Almost.

The early 90s would like their website design back, Japan

Last week I submitted a tax return for the first time in Japan.

Well, I submitted a tax return myself for the first time. Last year my wife’s accountant did it for me.

I’d also been in to the tax office to claim some tax write-offs related to the 2011 earthquake, but that wasn’t during tax filing season.

This time I went to the office myself, and I went five days before the deadline. Eeek.

Thankfully the tax office here in Japan is a paragon of what public servants should be: efficient, organized, polite, and professional. Even at the busiest time of the year they managed to get a clueless, unprepared idiot like me through the system in less than ninety minutes.

What you will need to file your taxes at the tax office in Japan:

  1. Your My Number information
  2. Any statements of income (源泉徴収票)
  3. Receipts, etc.
  4. Proof of other earnings/expenses (mortgage, medical expenses, dividends)

This time I was mainly going because I had forgotten to do the paperwork to claim my furusato nozei donation. I figured it was also a good chance to learn more about the system.

As I drove up to the tax office there was a line of stopped cars stretching back 200 metres, waiting to park at the office. I drove past and noticed the signs for the overflow car park (300m away) where I managed to park immediately. A good start.

The genius of the tax office is that they break the waiting into manageable chunks, so it never feels too long. I ended up:

  1. Talking to a reception staff member who told me which queue to join
  2. Queuing to get a number after discussing my situation (there were three ‘types’ of filing)
  3. Sitting and waiting for my number to be called
  4. Sitting in a different area waiting
  5. Having someone look over my paperwork and discuss my case with me
  6. Queuing to do the tax return
  7. Doing the tax return on a computer with someone helping me and one other person
  8. Queuing to print the return
  9. Queuing to hand in the return

​For steps five and seven above, speaking Japanese and knowing a little bit of how the tax return works was very helpful. I had to type stuff into the computer, including the address of organizations that had paid me for stuff. I had to ask for help with reading some of the kanji in the addresses.

On the other hand, the person helping me told me about having to help someone who didn’t speak Japanese earlier in the day, so that is also possible (although I presume it takes longer).

I found it very interesting that they make you do the return yourself on a computer, using the online tax filing system. Presumably this is to encourage people to do it at home in the future and thus reduce crowding at the tax office.

Having done it once with help, I think it would be pretty easy to do it online (you need a My Number card and reader to do an online filing, if you don’t have these you can do it online, then print it out and send it to the tax office by post).

One other advantage of the online system is that it auto-calculates, so you can put stuff in and see what it does to your taxes, then take it off again (see the dividends below).

However, based on what I was told yesterday I probably don’t need to go in to file my taxes in the future, at least as long as I remain a salaried employee.

I learned three things during my visit to the tax office:

  1. ​Three different people told me my income was ‘high’, which was interesting. I was under the impression that it was average for men my age in Japan, and low given my educational background, etc. I certainly don’t consider it ‘high’ ;)​
  2. All the furusato nozei stuff can be done using a simple form you send back to the people that you donated to. I knew about this, just didn’t get round to doing it in time (deadline is January).
  3. Dividends and gains from stocks are taxed in a funny way here. As long as your investments are in a tax-reporting (確定) account, taxes will be done by your broker and you don’t have to file a tax return. You may choose to file a return if you want to carry losses over, etc. In my case, filing a return meant I owed more tax (about 10,000 yen) on my dividends, so I asked them not to include them. What this seems to mean is that in practice dividends are taxed at a lower rate than income, as long as you have them in a tax-reporting account and choose not to file them.

So I learned a lot from visiting the tax office. One thing I learned is that if I have to do this again in the future I will do it early in the filing period (in February) rather than just before the deadline. I also learned I don’t have to do anything to declare my dividends, etc. as long as they are in a tax-reporting account (this also applies to THEO). Finally, I learned that doing a tax-return isn’t that bad. I’ll look into it more in the future and see if there are any good ways to save on taxes as a salaried public servant.

Anyone else do their own tax return? Are there any good resources to learn how to do it? Any other ways to save on taxes? Did I miss anything?

16 Responses

  1. Regarding dividend income, I just read something online (Nagoya tax office) that said that if your dividend income exceeds ¥200,000 per year then you HAVE to file a tax return (and presumably pay more tax on it if you’re in a high tax bracket). Is this true even if you have everything in a kakutei account?

    1. That’s how I assumed it worked, but the guy I spoke to said the kekutei account took care of all tax obligations.
      Might be an oversight, but my dividend income is close to that and I asked several times if I needed to file in the future.
      He said no.

      2. That is maybe in the case you have to declare dividend income from abroad that are not taxed already in Japan and that you need to declare on a final tax return. I assumed if below 200,000 yen it is not required.

  2. I did it this year using the online e-tax portal. It looks like Alta Vista from the 90’s but is highly functional and once you get to know it, pretty easy to use. Once you have filled in all the info it will inform you of the bill for the money you owe (or are owed) so you just print it out and bring it along with all receipts/proof of additional income to the tax office where it is reviewed and stamped on the spot by the people in the tax office who, as you say, are super efficient.and nice.
    As much as I complain about the high taxes here they do make it as painless and efficient as possible I find.

  3. I’ve been doing this for a few years now because my company gives RSU’s and there’s an employee stock purchase program at discount rates.
    I found the website after using it a few times easy regardless of the design and my kanji-reading skills are basically zero… (and you can save your data for the next year so it’s even easier! Just change a few numbers and done). But it gets the thing done and I can send everything via mail.
    Last year I had a nasty surprise waiting for me, I went up in the tax bracket because of my filing… so they dutifully deducted the initial extra amount in April straight from my account (I filled the necessary stuff for them to do that), then the extra ku-tax followed as usual, but then, out of the blue they sent me mail that because you’re now in the new bracket, you owe even more and we’ll deduct it from your account come September thankyouverymuch… grr… 🙂
    Next year I get the card reader and try to do it from home 🙂

  4. I usually go to the tax office to do my taxes every year but this morning I just did them online and I’m just about to go to the post office to send off all the documents. I’m not even going to bother to go there this time because I have a very straightforward claim this time.

  5. Did my own tax returns several weeks back via the online portal, and it was pretty intuitive and painless despite the outdated website design.
    Best part was just printing out all the documents (automatically pre-filled), attaching all relevant documents and off it goes via the nearest post office.
    Compared to that, I personally think that planning for this year’s tax returns is a lot more tricky, as every individual will need to consider a lot of unknowns before concluding with a strategy to minimize taxes.
    One of the most efficient ways is to use an online tax calculator to find out about the various tax deductions, and fully utilizing those up to the legal limits. E.g. dependents, iDeCo, mortgage interest payments, health insurance, hometown donations

  6. Great post! I will have to do that next year. The biggest headache for me is to declare foreign based income. Any advices? Also one specific question: – When income is in Euro or USD or Pound and you need to declare these on your Japanese tax declaration, which exchange rate do you use? I’ve read that it could be the one at the end of the fiscal year or the one at the moment of the creation of these receivables. Can anybody confirm or provide some experience on that subject?

    1. You need to find the exchange rate for the day the income accrued to you. Try to find historical exchange rates from one of the major banks to calculate the exchange rate for the foreign income Japanese banks give bad exchange rates… which is good for calculating foreign income for tax purposes :-).
      Take a screen shot of the exchange rate for the relevant day and then print it out and attach it to your income statement(s) as proof . I used http://www.sbjbank.co.jp/f_x/rate_bf.html and had no problem.

      1. I just want to confirm what EyesWideShut said above, the rate is the one on the day you received the income. If you just took the one at the end of the fiscal year, there would be waay to much margin for arbitrage (either in your favor or the government’s)! The USD/JPY index moved between 99 and 125 over the past 12 months!

      2. You can choose either last working day of December or the last working day of the preceding month. Use TTB or TTS rates according to income or expense. Once you decide which, then stick with that one consistent approach for subsequent tax years. You can use simple cloud based accountancy applications like kashoo.com to create the P&L and balance sheets needed for Blue submission. With all the deductions available, and declaring everything, it can be possible to get most (if not all) of the tax paid in the preceding year back in April. I have no idea why more people don’t do this.

  7. I’ve filed taxes for five years. It’s surprisingly doable.
    The first thing to realize is that the computers they have at the tax office are the same as their website. So if you go to the tax office the first year and remember what they help you do, you can do it yourself at home the second year. Also, if you go to your local tax office, you can either file the papers right then, or you can print them out, take them home and mail them later. If you’re unsure what’s happening, taking them home gives you a chance to take a closer look or compare with a coworker.
    The tax office employees are friendly and helpful, but sometimes they get things wrong, so you should double check everything. In my opinion, U.S. income tax is far more painful (depending on your situation, of course). The challenge for me was understanding the Japanese, especially the first year I filed. The years since have been almost the same, and this year I finished everything in about thirty minutes.
    If you are getting a return, be careful that your name is written correctly. If there are small differences between the name on your tax form and the name on your bank account, the bank transfer will bounce, and you’ll have to go to the tax office a second time to straighten it out. You’ll still get the money, though. (And as we all know, who the heck knows precisely what format your name is supposed to be in, anyway. There are length limits in the form they provide. Do you need your middle name? Who can say…)

    1. When are they going to send the money back to my account? I already filed around January at the tax office.

  8. I’ve been doing my own taxes here for 8 years now and am finally upgrading to the blue form for next year. I track my expenses monthly with a column for each deductible item, so as long as I keep things current, tallying up at the end of the year is relatively painless. Even more so as I keep data from the previous years.
    The big jump from white to blue for me is going to be switching my income stats from cash basis (現金主義) to accrual (発生主義) to get the biggest deduction; all my gensenchoshushos come in cash basis. Any other 青色者s on here?