Unpaid taxes for side job

[Tom2]

Hello,

I need some advice.

Ten years ago, I started a side job in addition to my main, full time job. I had every intention of paying taxes properly, so I added my part time annual salary to my main job's salary when filing (through my main job's HR) for taxes. HR didn't contact me to say that I had overstated my salary, so I thought that everything was being taken care of, and I foolishly haven't checked my annual report to confirm. Ten years of doing the same passed and NOW I notice that my main job hasn't in fact been adding my side job's salary when declaring. So I have been only paying income tax for my main job.

I'm going to bite the bullet and pay back taxes. What I'd like to know is:

1) Do I need to lawyer up and/or hire a tax accountant when submitting the paperwork? Can I do it all online via my number?

2) How far back do they go when adding delinquency fees? How much am I likely to pay? (I looked this up, but I can't figure out exactly what charges are applied in my case)

3) Is there any way to reduce charges as it was an honest mistake on my behalf ? ("They all say that!") Am I going to jail?

Any help or advice is truly appreciated.

[Nancy]

HI, I don't have specific information for you but some things that you need to think about are;
-Do you have the income slips from the side job and were they withdrawing some taxes from the pay?
-On the income slip, was the pay considered salary or another category. (if it is salary, then the tax due is quite reasonable, but this year, I had my pay for one place marked in a different category, and there was basically no deduction from it, so anyway, I hope that it was considered salary).
-Will the side job increase your annual salary enough to take you into a new tax bracket? (this would be when you have difficulties I think because it would raise your health insurance, local tax etc.
I just thought that you might want to consider these things.

[captainspoke]

First, do this proactively. Personally, I'd go to the tax office and 'confess', and ask for their help/instructions. You'll of course have to pay any back taxes, with interest, but if you go in and pretty much say what you've posted here, there may either be no (punitive) penalties, or 'only' something like their minimums. Unfortunately, now is the cusp of the tax office's busiest time of year.

For this cycle, 2023, I'd file a return as you should have been doing, declaring the extra income in addition to your regular work. While prepping for that, look for the process/steps to take to amend you past returns. Do the previous three years--2022, 2021, 2020--and if you've still got the paperwork, try to do five, so 2019 and 2018, too.

I'm not sure of the process of amending a return, but it's done pretty regularly/commonly. Hopefully, someone who knows more about that will check in on it. (I'll guess that you have to do them on paper, that eTax is not an available path.)

[Tokyo35]

Would it be true to say that 2nd or 3rd job employers are required to deduct a kind of standard 10%? Or, if not actually required to do so, most of them do.

In 2nd, 3rd and even 4th or 5th jobs I did in the distant past, I remember all year-end salary statements (GEN-SEN-CHO-SHU-SHO) showing that everywhere had deducted something.

With one job, one year the employer said they would NOT deduct anything and that was noticeable for not being the norm.

What are other peoples' experiences?

MC

[captainspoke]

Would it be true to say that 2nd or 3rd job employers are required to deduct a kind of standard 10%? Or, if not actually required to do so, most of them do.

In 2nd, 3rd and even 4th or 5th jobs I did in the distant past, I remember all year-end salary statements (GEN-SEN-CHO-SHU-SHO) showing that everywhere had deducted something.
...

The problem is that the 'standard 10%', or that they deducted something, is likely not enough, and certainly not an accurate way of letting things happen.

Those deductions are more like a token of good faith rather than what would happen with a properly done tax return. When doing your tax return, all those extra bits of income--and the amounts already deducted--will be included so the final calculation is correct.

The year-end statements (the 源泉徴収票) are more like reminders that say, "Here's our minimum responsibility for this, and we've also reported this to the tax office. So please be sure to include these amounts on the tax return that you file."

I had a 'job' this past year as a contest judge. The pay was ¥20,631 and ¥631 was deducted as tax withheld--which will definitely not be correct. Since the context organizer also has my MyNumber, I have no doubt that the tax office will know about this, and if I don't include it, even a casual check would show the error. (And no, I don't want them calling me about undeclared income..!)

[Tokyo35]

...

Those deductions are more like a token of good faith rather than what would happen with a properly done tax return. When doing your tax return, all those extra bits of income--and the amounts already deducted--will be included so the final calculation is correct.

The year-end statements (the 源泉徴収票) are more like reminders that say, "Here's our minimum responsibility for this, and we've also reported this to the tax office. So please be sure to include these amounts on the tax return that you file."

Thanks, Captainspoke for replying. I agree wholeheartedly with you but I guess what I wanted to highlight (but didn't) is that if they had deducted 10% then it would make the process less painful later when adjusting taxes owed since some had been paid.

In fact I am a colleague of the original poster and I encouraged him to join this site and open this thread and he has told me that unfortunately his side job did NOT deduct anything.

MC

[RetireJapan]

Remember if you are doing an annual adjustment through your employer there is a 200,000 yen a year allowance where you don't need to report side income.

If you are over that I recommend just going into a tax office and asking for advice.

I was called in once for not paying my side income taxes and they were super nice about it

https://www.retirejapan.com/blog/summon ... ax-office/

[Tom2]

Thanks everyone for your stories and advice. I'll try to get to the tax office before the final tax filing window.
By my calculations, only last year will just push me into the next tax bracket.
I'm baulking at the prospect of paying 10 years' worth of fees and hope this doesn't bankrupt me.
Would it be beneficial to get help from a lawyer/accountant?

[RetireJapan]

Thanks everyone for your stories and advice. I'll try to get to the tax office before the final tax filing window.
By my calculations, only last year will just push me into the next tax bracket.
I'm baulking at the prospect of paying 10 years' worth of fees and hope this doesn't bankrupt me.
Would it be beneficial to get help from a lawyer/accountant?

Probably not. The tax office in Japan is not particularly adversarial, especially if you go to them yourself. They are largely concerned with getting you filed correctly, not punishing you.

[captainspoke]

...
I'm baulking at the prospect of paying 10 years' worth of fees and hope this doesn't bankrupt me.
Would it be beneficial to get help from a lawyer/accountant?

If they audit someone, AFAIK they initially go back three years. If there's something serious/suspicious, they up it to five.

No lawyer. An accountant could help, but at a cost. In my experience the tax office people are both helpful and not out to shaft you--especially if you come forward on your own about some problem like this. (On the other hand, if they discover something fishy on their own, and then the taxpayer denies/stonewalls everything...)