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Tax: employment vs business income?

ADHWGT

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I'm a freelance writer living in Tokyo, about to file my taxes as usual. But after doing some reading on Japanese 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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mdchachi

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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)?
According to the site you listed, the rate is the same because they put both self-employed income and employer income on the same form. Corporate tax rates are much more than individual tax rates from what I saw.

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?
Based on my five minute self-learning on this topic, it probably wouldn't make sense for somebody in your position to declare "blue." You can still take the major deductions you need as that site you cited shows you.

3. Is it at all possible to deduct specific business expenses from regular employment income?
I don't think so. Based on what you said, you're not a regular employee though.

I think you'd be well-served by paying a tax professional to answer your questions, figure out your deductions and fill out the forms for you this year. Based on that example it should be easy for you to do yourself in subsequent years.

Or follow the official instructions and see how it goes:
http://www.nta.go.jp/tetsuzuki/shinkoku/shotoku/tebiki2015/pdf/43.pdf
 

ADHWGT

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I think you'd be well-served by paying a tax professional to answer your questions, figure out your deductions and fill out the forms for you this year. Based on that example it should be easy for you to do yourself in subsequent years.
Thanks for the advice. Judging from the Gaijin Tax site, the filing process seems simple enough that I might try it myself this year and see how it goes. As for the white form and everything else I need (in terms of forms), will that be available at the tax office where I do my filing, or do I have to get it from somewhere else in advance?
 

thomas

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All the forms are available at the tax office. You will just have to bring all your documents, receipts, bills, etc. They have volunteers - in some places even English-speaking - who will guide you step by step through the entire process. Japan must be the only industrialised country where tax officials actually *help* residents saving tax. :D
 
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