RetireJapan

Hello, I stumbled on this site after looking at the ideco scheme.

I'd like to know if there is any guidance for individuals earning more than 10,000,0000/Year
I pay the max amounts for insurance/pension and it sucks.
Company insurance so it's not like the cheap kokumin nenkin.

I'd like to somehow take those costs down. If I use ideco paying the max 23,000 yen
how much can I save in tax/insurance.

also any extra advice on saving money from all they take from my paycheck (like 200,000 yen) will be highly appreciated.

regards

Welcome to the forum!

You can see potential tax savings with iDeCo here: http://dc-center.jp/checker/

If you are an employee I'm not sure there is much else that will reduce your taxable income. If you are self-employed or a small business owner there are lots of deductions and a couple of other saving schemes that use pre-tax income.

One thing many people do is invest in real estate and use the depreciation deductions to reduce their income taxes.

Anyone else?

If you want to reduce your taxes, the best solution is to reduce your income.

I am not trolling you, you can reduce your income without losing any of it. For instance, some companies in Japan are willing to pay your rent for you, then deduce it from your salary. The benefit of this is that your salary is then paid pre-tax, meaning that you don't pay any tax on it (you pay your rent, then receive the rest of your salary and pay tax on this portion instead of first receiving your salary, paying taxes, and then paying your rent).

This is much easier to do if you own your own company (and you can do it for a lot of other things too). As an employee, it depends on the good will of your employer.

For pension, once you max our your company insurance and iDeco (bonus point if your employer also matches your contributions), you're basically done. Think about maxing a NISA as well for more tax cuts.

PS: I think there is an extra zero in the income you wrote. If there is none, I would love to know what is your position and industry.

Probably hiring a tax professional is the best way to go. Although that doesn't come cheap either. I didn't do that last year after I got a windfall, did my own tax return for the first time and now I pay so much tax this year I think it was a big mistake (although maybe it'll be favourable for an upcoming visa application, who knows...). If you save more than you pay in consultancy fees then it's worth it. And I'm starting to think depending on the fees, maybe it'll be worth it anyway for peace of mind you've got your taxes in order.

adamu wrote: ↑Wed Jul 25, 2018 12:39 pm Probably hiring a tax professional is the best way to go. Although that doesn't come cheap either. I didn't do that last year after I got a windfall, did my own tax return for the first time and now I pay so much tax this year I think it was a big mistake (although maybe it'll be favourable for an upcoming visa application, who knows...). If you save more than you pay in consultancy fees then it's worth it. And I'm starting to think depending on the fees, maybe it'll be worth it anyway for peace of mind you've got your taxes in order.

Just curious, as I have always been doing my taxes myself so far: can you give an example of how hiring a professional saved you money? I mean, these people just apply the same rules as we do, only more efficiently, right?

I didn't hire a professional, so no. But I mean, maybe they could have helped me put in a bunch of deductions, or recategorise the income to remain in a lower tax bracket, or look at the tokutei accounts (which I didn't touch) and reclaim US dividend tax, etc. etc.

I've looked over the tax deductions in japan and there really isn't that much you can do.

I mean, obviously max out your ideco.

Getting a home loan gives you a big tax break too, but that comes with its own issues. Insurances can also be filed. But you cannot use investment losses against it(you can only use them to offset gains)

Maybe there's some top secret thing a good accountant can do, but japan has a progressive tax code, but it's relatively fair overall without much space for finagling. The breaks that are in there are mostly incentives to do things the gov would like you to(buy a home and get insurance).

The bit about getting your job to pay for your home and reduce salary is an interesting one that could work.

It's worth noting though that the tax office does watch for certain stuff: my previous office decided to stop overseas kenshuu when the tax office decided that they were more of a vacation/reward and thus decided to tax them as such, rather than as a business cost

I think declaring yourself as a company and then being able to deduct business costs is a big win. It's difficult if you're a salaried employee though, probably need to be a contractor or self employed to make that a possibility.

adamu wrote: ↑Thu Jul 26, 2018 11:09 am I think declaring yourself as a company and then being able to deduct business costs is a big win. It's difficult if you're a salaried employee though, probably need to be a contractor or self employed to make that a possibility.

So I haven't done this myself, but a friend set up his own company and employed his wife who waa doing most of the work. Any side hustle would work but I believe they did some importing of baby goods that are very expensive in Japan and sold them privately. This meant that some expenses (up to 15-20万円 a month could go to her as salary, and other items such as pc, internet etc could be marked as a business expense.

Premises is not so cut and dry unless you have a dedicated property to use or can let a whole room of your house/apartment be used for it. (Inspectors will check, so any toys in the work roon could screw you)

Like I said, it's not me who has done it, so i'm light on details of benefits, but if you could channel 20man into the business you could claim rax back on thar amount.

I'd recommend a tax professional though, or someone who is doing the aame thing to advise you.

thanks for all the replies.

I maxed out Nisa, didn't do the ideco.
I filled as an individual business reducing my tax break intensely.
It's easy to do, I used the white form but if you use the blue one you get more deductions.

You need to create a side business that gives you a recurrent income.
I put consulting. So I'm my own consultant managing the stocks portfolio lol...
As well as any other consulting I can think off.

I put a lot of losses and my tax bracket went down.
I also did the furusato nozei and got nice beef out of my taxes.

anything else we can do?