How do tax returns in Japan work?

Taxes in Japan are typically straightforward for employees, as employers generally take care of the process. However, for those with non-traditional income sources, such as freelancers, real estate investors or business owners, filing taxes becomes a more involved task. Here’s a breakdown of tax returns in Japan, their differences and when you should file each one.

What Are Tax Returns in Japan?

For many employees in Japan, filing taxes is a simple process. Most employers handle the tax return (確定申告, Kakutei Shinkoku) on behalf of their employees, submitting the tax returns for them each year. This is often referred to as Tax Return A (確定申告Ａ, Kakutei Shinkoku A) and is the simplest type of return.

Tax Return A is typically used by salaried employees who do not have additional sources of income. The process is automatic, and for most individuals, the employer submits the necessary documents to the tax office on their behalf.

However, not everyone is in a traditional employment situation. If your income comes from freelance work, side jobs, or investments, you’ll likely need to file a Tax Return B (確定申告Ｂ, Kakutei Shinkoku B). This is where the tax filing process becomes more complex.

Japan’s National Tax Agency provides forms and more info here.

Tax Return A (簡易申告 A, Kakutei Shinkoku A)

• Who files?: Employees with a single income source and no complicated deductions.
• How it works: Employers typically file taxes for employees, deducting taxes at source.
• What it includes: No need for itemized deductions or complicated paperwork.
• Ideal for: Employees with no additional income or deductions (like freelancers or property owners).

Tax Return B (確定申告 B – Kakutei Shinkoku B)

• Who files?: Freelancers, self-employed individuals, business owners, and anyone with additional income sources (e.g., side jobs, investments).
• How it works: Individuals are responsible for reporting all income, filing taxes themselves, and paying taxes directly to the government.
• What it includes: Requires documentation of income and expenses. You need to provide supporting records for things like business costs, freelance income, and investments.
• Ideal for: Freelancers, business owners, and those with multiple income sources.

Who Needs to File a Tax Return in Japan?

Certain individuals are required to file their own tax returns in Japan, even if they have a permanent address outside the country. These include:

• Multiple employers: If you have more than one job, you must file a tax return.
• Side income above ¥200,000: Real estate investors or individuals earning significant side income need to file.
• Leaving Japan: If you plan to leave Japan before December 31, you must file a tax return for that year.
• No tax withheld: If your employer doesn’t withhold taxes from your salary, you must file a return.
• High income: If your annual income exceeds ¥20,000,000, you are required to file a tax return.

In most of these cases, Tax Return B is needed. Tax Return B is for those with more complex tax situations, such as freelancers, business owners, or investors. If you are unsure, it’s always a good idea to consult with a tax professional or accountant.

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