RetireJapan

Hi, I'm new here and I wanted to know if its possible to lower my taxable income.

I recently decided to double my income, and having done this before, I'm scared of the extra income tax I'll have to pay, the high health insurance premium I'll have next year and the higher residence payment I'll get next year.

I live in Yokohama Naka-ku. I work a morning job that pays 250,000 and then a evening job that also pays 250,000. Both jobs take the 10% out. but next year, if I continue at both jobs, I'll be bumped up to the 20% tax bracket.

I just started the second job, so, this year won't exceed the 3.3 million. But 2021 will. Is there anyway to reduce my taxable income?

I also work Saturdays on my side-job, which is registered with the tax office. (I don't know if that info matters.)

(I did exactly the same thing 4 years ago, and the year after went from 3 million yen to 5.9 million, I was a student and the income tax, resident tax and health insurance bill killed me!

So I was just wondering if its possible to legally pay less taxes. And what can I do now to prepare for next year.

Thanks for your help,
Rachel

Welcome to the forum! Not a tax expert, but hopefully others can chime in too

Congrats on increasing your income. It's a nice problem to have

A lot depends on what kind of work you are doing (employed or self-employed), what kind of pension you pay, etc.

You may be able to open an iDeCo account and invest pre-tax income. This means your taxable income would be lower. If you are self-employed, there are a couple of saving schemes you can use which also use pre-tax income.

If you are self-employed, you can probably claim a lot of business expenses. Japan is fairly relaxed about this.

If you buy certain types of insurance you can reduce your taxable income slightly. You can use furusato nozei to get 'free' stuff by redirecting your local inhabitant taxes.

Anyone else?

Income tax shouldn't really be a problem, as your income is taxed in brackets, so moving up a bracket will mean you only pay extra tax on any amount in the higher bracket, not on the total amount earned. However insurance and pension payments will go up ... but I highly doubt there is any way to lower your tax burden enough to go back to a lower tax bracket after doubling your income.

Furusato nozei could also help a little.
I know some others here disagree, but I am happy enough to 'pre-pay' local tax and get paid back in meat, fruit, beer, rice etc (the luxurious life I lead!)

beanhead wrote: ↑Wed Apr 14, 2021 5:48 am I know some others here disagree

I don't think anyone disagrees. I was pushing the opportunity cost argument, but I think the system is pretty fun, and assuming my residence tax deduction is applied in June I'll definitely be using it again!

adamu wrote: ↑Wed Apr 14, 2021 5:53 am
I don't think anyone disagrees. I was pushing the opportunity cost argument, but I think the system is pretty fun, and assuming my residence tax deduction is applied in June I'll definitely be using it again!

Good stuff. I have done it for 2 years. It seems to work with admirable efficiency.
And...'free stuff'!