UBear wrote: ↑Fri Jan 21, 2022 7:58 am
I have been self employed for a few years now.
Each year I receive a wad of payment slips for the various taxes.
I will believe my income will be considerably less this year than last.
I think I am due to receive this years packs of payment slips for Municipal Tax, Personal Business Tax & Health Insurance in the next few months.
I believe they are payment slips for predicted tax based on last year`s earning.
Is this correct?
And if so, is it a matter of going to the respective departments of each institution to discuss situation to have some adjustments made for this year?
Not exactly. Not predicted tax, but actual taxes owed, except Yotei Nozei (see last item)
Municipal Tax: Actually this consists of two components of the Residents' Taxes; Prefectural Tax (To-Do-Fu-Ken) and Municipal Tax (Shi-Ku-Cho-Son).
These taxes are assessed on your previous year's income, and payable between July of the following year and June of the year after that. So, are paid in arrears.
e.g. You earned taxable income in 2020, which you were assessed on, either though your company's Year End Tax Adjustment (Nenmatsu Chosei) in Dec 2020, or in Tax Filing (Kakutei Shinkoku) in March 2021.
This 2020 Taxable income is reported to the Prefecture and Municipality Tax Offices of the Municipality you are registered in as of 1 January 2021.
You are then assessed for Residents' Taxes on that 2020 Income, and you start paying that tax in arrears from July 2021 to June 2022.
If you are employed by a company, then those taxes due will be divided by 12 and deducted from your Paycheck every month from July 2021 to June 2022.
If you are any other status; self-employed, between jobs, retired, etc., then they will divide those taxes due into 4, and send you Payment Slips; one for the whole amount if you wish to pay it in one shot, and 4 quarterly Payment Slips for you to pay in 4 installments.
So, you have probably now paid half of the 2020 Residents' Taxes, and have half to pay at end January and April.
You earned taxable income in 2021, which you will be assessed on, either though Year End Tax Adjustment (Nenmatsu Chosei) in Dec 2021, or in Tax Filing (Kakutei Shinkoku) in March 2022.
Again, this 2021 Taxable income will be reported to the Prefecture and Municipality Tax Offices of the Municipality you are registered in as of 1 January 2022.
You are then assessed for Residents' Taxes on that 2021 Income, and you start paying that tax in arrears from July 2022 to June 2023.
If you are employed, then those taxes due will be divided by 12 and deducted from your Paycheck every month.
If you are any other status; self-employed, between jobs, retired, etc., then they will divide those taxes due into 4, and send you Payment Slips; one for the whole amount if you wish to pay it in one shot, and 4 quarterly Payment Slips for you to pay in 4 installments.
So, you will pay the 2021 Residents' Taxes, end of July, October 2022, and January and April 2023.
Health Insurance is also assessed on the previous year's income reported to the Municipality Tax Office of residence. I think it is payable from April to March, along with National Pension.
If your income will be considerably less this year than last, then your premiums for Health Insurance should go down from April, and for the Residents' Taxes from July.
If you own a property, then you would also receive slips for the Fixed Asset Tax (Kotei Shisan Zei) payable end of Feb, June, Sep and Dec (out of sync with the Residents' Taxes.
Personal Business Tax, I don't know about. I don't know if it follows the Residents' Taxes schedule or the Fixed Asset Tax schedule, or the months in between, but it too is charged in arrears based on your 2021 business income.
Finally, if you had a big year in the previous year, the National Tax Office might also assess you for Planned Withholding Tax (Yotei Nozei). Rather than having you surprised and unable to pay at the end of next year, they may ask you to pay 2 installments through the year, July and November, to reduce the shock of the tax burden the following April.
It would seem not applicable to you this year, but if you expect a low year next year due to some special one-off income item last year that is not expected to repeat, but you received slips for Yotei Nozei, you can appeal the Yotei Nozei assessment at the National Tax office, and have it reduced or cancelled.