Self employment tax

[GaijinPunch]

Can anyone point me to an informative site on self-employment taxes in Japan? I'm mainly looking for information on write-offs. Any English googling has come up mainly with self-employed expats filing their foreign taxes. I'm not opposed to the information in Japanese, but my Japanese googling skills aren't so ninja-like. One could perhaps blame it on all the extremely ugly Japanese webpages out there.

[epigene]

You might already know these, but I'll post anyway (hoping there is something you haven't checked yet):

General info:
http://ja.wikipedia.org/wiki/確定申告
http://www.income-tax.jp/kakutei/jigyou/jiei.html

Place that claims to give "easy-to-understand" info:
http://www.tamagoya.ne.jp/tax/tax011.htm

Japan's Taxation Agency site where you can ask questions:
http://www.taxanswer.nta.go.jp/index2.htm

If you are in Japan, you can pay a visit to the local 青色申告協会 that provides consulting service and assistance in filing taxes. These associations are a great help when it comes to details. :relief:

[GaijinPunch]

Thanks, Epigene. Those look useful. The Wikipedia link didn't work though, I suppose due to encoding issues. If you search for Kakutei Shinkoku inside Wikipedia though, you can find it no problem.

One thing that I don't see on any page but have learned through an accountant, is about housing allowances. Why not open an LLC, and rent an apartment as a houjin keiyaku, as opposed to the traditional kojin keiyaku? All rent then becomes a tax writeoff, no?

[epigene]

Hi, GaijinPunch!

My husband and I are self-employed and work out of home. Our business is not big enough to be worth the while of setting up a company, so we file "aoiro-shinkoku."

Even as self-employed persons, we get to write off space used as office (such as the study and part of the living room where we keep our office equipment)--percentage of space proportionate to total space. I don't know how much better write-off you can get as yugen or kabushiki kaisha, but "aoiro" does provide such write-offs (including utilities, etc.). Just to let you know! :relief:

[GaijinPunch]

Thanks for the info, epigene.

As it turns out, I will be postponing my return for a year (I think). My wife keeps changing her mind, w/ our stuff on a container X_X.

Anyways, a colleague of mine has done extensive research. I'm not sure how it would work with both of you working. He suggested to me in to do as I stated above.
1: Open an LLC, or whatever has replaced yuugen gaisha
2: Rent apartment through houjin keiyaku
3: Pay myself through the LLC
4: Live in the apartment.

Rent becomes a write-off, and is legal. This is basically the setup I had before leaving Japan. My company would rent the apartment, let me live there, and deduct anything over my housing allowance from my pay.

Anyways, going to hang out in the sun for another year it seems!

[epigene]

Anyways, going to hang out in the sun for another year it seems!

Oh, I'd love a couple of years in Hawaii!! :bluush:

[GaijinPunch]

Oh, I'd love a couple of years in Hawaii!!

That's what I said. I just finished two, so was ready to go back. It's nice, don't get me wrong, but it's just too slow. Even my wife said the only reason she wants to stay another year is b/c of inaka-boke.

[Pachipro]

epigene is quite correct. I don't know if this will help or even if it's still done, but when we opened up our English school out of our home we had to register with the local government in our city. Since we were working out of the home and were not big, only 100 or so students, there was no reason to go yugen gaisha, incorporate, or go LLC with the hassle and costs of leasing a building and other expenses like utilities and such. Besides the fees are very high for a few letters after your name.

The city accepted our paperwork and gave us the use of a tax accountant, free of charge, for one year. After that we could keep him on or hire another one. He was so good that we kept him on and he gave us wonderful tax write-offs including most of the rent and utilities. He even encouraged us to buy a car that we used mostly for personal use but were able to write alot of it off! We even wrote off many of our trips around Japan. How he did it I don't remember, but he was really good.

Therefore, our taxes were almost non-existant and it was completely legal. Also, since he was so good with the write offs we didn't have to file income taxes for the USA as we didn't net more than $80,000/year according to US law. We paid the accountant more in retainer fees than we paid in taxes!

So, if you are contemplating a small business like epigene has or an English school out of your home, there are many write-offs with a decent accountant.

[GaijinPunch]

Besides the fees are very high for a few letters after your name.

This has changed, apparently. It's quite cheap if I understand correctly.

The idea is to make the corporate entity scratch each year, and you, the employee, working for a profit. I had come to the conclusion that it's better for the company to just rent the apartment outright, after reading somewhere that even for a seishain, having your employer rent your place and allow you to live there is the best route (better than cash). Seems there should be an equally cost-efficient solution for self-employed. I've learned from a colleague (doing the exact same thing, who spent 2 days w/ an accountant) that it is indeed possible. More paper work though, I'm sure.

[thistle]

This topic really interested me, as a friend suggested to me, even
though I am not self-employed, I do teach english in a room in my
house at week-ends, to register as an english school, in order to
get these write-offs. Knowing very little about the subject I have
been trying to find out more. I don't read and write japanese about
4nen sei level, so would have to hire an accountant. So, I don't
know if it would be worth all the bother, depending on how expensive
that would be. I have quite an expensive rent to pay, which I will
have to pay on my own after next year.
Basically my questions are, where do you register, and what kind of
costs are involved in paying an accountant. Also, would I need some
kind of proof or document to show that I do actually have students.
btw, I am in Okinawa.

[mr.sumo.snr]

This topic really interested me, as a friend suggested to me, even
though I am not self-employed, I do teach english in a room in my
house at week-ends, to register as an english school, in order to
get these write-offs.
I really don't think you're going to realize much cost benefit by declaring your extra income - that is unless you're feeling the taxman breathing down your neck.
--

[epigene]

I think whether you should hire an accountant or not depends on your annual income from English teaching at home. If it is small, it may not be worth it.

Since there are many foreigners running English schools and other businesses in Japan, the tax return forms in English is available, and you can get consulting at the local taxation bureau. You should be accompanied by a Japanese-speaking friend just to make sure you understand what is being said.

If the operation is small, you can file "white return" (shiroiro-shinkoku) that offers certain fixed deductions on your income. This is very easy to do, and you can file it yourself (after getting instructions on how to file).

If your income is large enough, you can seek further deductions by filing "blue return" (aoiro-shinkoku), but this is a bit more complicated. This requires that you join the local Blue Return Association (Aoiro Shinkoku-kai), which is easy to do. The Association can provide you information on accountants you can hire. It also offers step-by-step teaching on how to file blue return. (You probably will need a Japanese speaker to help you understand.)

At this point, you can decide whether you need an accountant or whether you will do it yourself. Actually, once you get the hang of it, you can file on your own. My husband does this on his own without hiring an accountant. (Note: We are native Japanese speakers, however.)

When you get to the point of considering incorporating your business, then an accountant will become necessary.

Just my two cents!! :relief: