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ADHWGT (Offline)
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Tax: employment vs business income? - 03-01-2016, 04:06 PM

I'm a freelance writer living in Tokyo, about to file my taxes as usual. But after doing some reading on http://gaijintax.com/tax-info/, I've started thinking that I've might have gone about this the wrong way so far. Previously, I've declared my freelance income as regular employment income. But judging from what this Gaijin Tax site says, it seems like I could in theory reduce my tax bill significantly by declaring it as private business income instead, and claim a long list of deductions.

Since this all seems pretty complicated to me, I was wondering if anyone here with knowledge of these things by any chance could clear a couple of things up for me:

1. What is the tax rate for "self-employed" people like me? Is it higher or lower than the standard income tax? Is it the same as the "corporate tax" (which seems to consist of 3, 4 or even 5 different taxes)?

2. I've seen lots of people mention the "white form" and "blue form" for filing business income. But the difference is unclear to me. Are deductions for specific business expenses (in my case, mainly lots of business trips) available using the white form, or would I have to apply for the blue form?

3. Is it at all possible to deduct specific business expenses from regular employment income?

Thanks in advance!
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03-02-2016, 01:00 PM

It would depends on the amount of your income.

This page will help you.

A brief explanation of Japanese tax and social insurance, etc. for foreigners--

Or, Sangetsu will guide you.


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03-05-2016, 02:24 PM

Quote:
Originally Posted by ADHWGT View Post
I'm a freelance writer living in Tokyo, about to file my taxes as usual. But after doing some reading on Japanese Tax Info | GaijinTax.Com, I've started thinking that I've might have gone about this the wrong way so far. Previously, I've declared my freelance income as regular employment income. But judging from what this Gaijin Tax site says, it seems like I could in theory reduce my tax bill significantly by declaring it as private business income instead, and claim a long list of deductions.

Since this all seems pretty complicated to me, I was wondering if anyone here with knowledge of these things by any chance could clear a couple of things up for me:

1. What is the tax rate for "self-employed" people like me? Is it higher or lower than the standard income tax? Is it the same as the "corporate tax" (which seems to consist of 3, 4 or even 5 different taxes)?

2. I've seen lots of people mention the "white form" and "blue form" for filing business income. But the difference is unclear to me. Are deductions for specific business expenses (in my case, mainly lots of business trips) available using the white form, or would I have to apply for the blue form?

3. Is it at all possible to deduct specific business expenses from regular employment income?

Thanks in advance!
To keep things simple, you should simply deduct your expenses from your extra income, and declare the extra income using the blue form, or, if you aren't sure what it is you are doing, better to file as you have been doing, and get off to a fresh start for the next fiscal year.

For myself, I incorporated in Japan, and deduct the usual business expenses incurred by my company. I pay myself a salary, which is also a deductible expense, and then I pay my personal taxes each year.

If you are going to do things right, it would be wise to consult a tax accountant, there are a few who speak English, if that is important. The fee is usually about 20,000 yen, and they will offer to file your taxes for you, but their filing fees are often a bit pricey. On the other hand, it keeps mistakes to a minimum.
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ADHWGT (Offline)
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03-05-2016, 07:17 PM

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Originally Posted by Sangetsu View Post
To keep things simple, you should simply deduct your expenses from your extra income, and declare the extra income using the blue form, or, if you aren't sure what it is you are doing, better to file as you have been doing, and get off to a fresh start for the next fiscal year.
Thanks for the advice. Since it's too late to apply for the blue form before this year's filing deadline (might consider it next year if it seems worth the extra hassle): is there any limit to what expenses I can deduct using the white form vs the blue one?

In my case, it's mainly a number of quite costly business trips that I would like to deduct, plus 50% of rent/utilities (following the example on Gaijin Tax).
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