IMPORTANT NOTE: The information on this page is NOT financial or tax advice and does NOT replace a tax accountant. Some of this information may be incorrect. If you learn something that conflicts with anything on this page, let us know! You are responsible for correctly filing your own taxes. Use this guidance at your own risk.
Taxes are something nobody really enjoys thinking about, yet we all need to do it. It is complicated, even when you understand the language! But you are likely having to face taxes in Japanese with a language barrier on top!
This document will hopefully help bring some clarity to filing taxes in Japan.
WHO Should File Taxes in Japan?
All residents of Japan who are classed as self-employed that were resident in Japan on 1 January immediately following the end of a tax year should file a tax return.
The majority of YWAMers in Japan, who likely do not receive a salary, would be classed as self-employed and should file a tax return.
WHAT Do I Need to Do?
- Find out how much taxable income you have
- Depending on the amount of taxable income, file either an income tax or resident tax return by the deadline
- Make your tax payment by the deadline
- For US Citizens/Green Card holders: use the Foreign Earned Income Exclusion (FEIE) or claim a foreign tax credit in the US to avoid double taxation
WHEN Do I Need to File and Make the Payment?
In Japan, the tax year runs from 1 January to 31 December.
Depending on how you wish to file, these are the dates you can file once the tax year has finished:
- Online via e-Tax: From early January until 15 March (income tax only)
- Post or in-person: 16 February and 15 March
- Income tax: 15 March (It can be extended till 31 May with a 0.9%/year interest rate if over 50% is paid by 15 March. If you chose to pay via direct debit, the payment will be withdrawn on 24 April)
- Resident tax: You can make the full payment by the end of June, or in 4 installments throughout the year (dates depend on the city)
WHERE Do I File?
There are several ways to submit your tax return:
- Online using e-Tax and your MyNumber card (You need an NFC-enabled smartphone.)
- Online using e-Tax with an ID and password (You need to set this up beforehand at your local tax office.)
- By mail to your local tax office
- In person at your local tax office (Many tax offices offer free guidance during tax season, but they can get busy and crowded.)
The easiest way is to submit your tax return online using e-Tax. If you need help, you can use your browser translation tool.
If you do not have a MyNumber card or an ID and password, you can still use e-Tax to complete your tax return online. Then, you can print out the completed tax return and send it by mail or hand it in at your local tax office.
The e-Tax website has a character limit of:
- 10 characters each for family name(s), given name(s), and head of household name
- 11 characters each for furigana for family name(s) and given name(s)
If your name is too long for the e-Tax website, you can cut out your middle name, at least according to one online report. According to the NTA website, you can also add the missing characters by hand.
WHY Should I File My Taxes in Japan?
It should go without saying that filing and paying taxes is a legal requirement for everyone! As YWAMers and Christians, we are called to be a blessing to the people we are called to. Part of this calling is to live as the locals do, submitting to the local authorities.
It may be true that it is very difficult to find correct and up to date information on how non-salaried missionaries should file tax returns. This is a reason for this documentation! The truth is that no matter how vague or complex the taxation rules are, we should all be filing taxes to where we need to.
Besides being a legal obligation for all residents, filing taxes will also allow the local authorities to correctly set health insurance payments, as well as making it easier to gain Permanent Residency in Japan. If you do not have a tax record, this becomes difficult.
Note for US Citizens / Green Card Holders
How to Avoid Double Taxes
If you're a foreign citizen moving to Japan, you'll generally need to only pay taxes to Japan. However, if you're a US citizen or green card holder, you'll still need to file a tax return with the Internal Revenue Service while abroad. Thankfully, there's an agreement in place to stop you from having to pay taxes in both countries.
One way to reduce US taxes is by using the Foreign Earned Income Exclusion (FEIE) while paying income tax in Japan. The FEIE lets you exclude the first $112,000 (for the 2022 tax year) of your foreign earned income from your US taxes. However, you'll need to prove that you're living in Japan, either by spending 330 days of a year out of America or being a resident of Japan for an uninterrupted period covering a whole tax year.
Another option is to pay income tax in Japan and claim it as a foreign tax credit on your US taxes. That would let you claim, dollar-for-dollar, the amount of tax you pay in Japan on your US tax return.
Speak to a tax preparer if you are unsure which option works best for you.
It's Difficult to Claim US Taxes as Credit in Japan
Did you notice how both the strategies above involved paying taxes in Japan? That's because it's hard for us to pay income tax to the US and claim it as a foreign tax credit on your Japanese income tax return. The Japanese foreign tax credit only allows you to claim taxes imposed on foreign income earned while living in Japan as a resident. The support you receive while living in Japan is considered domestic income, so the US taxes levied on it cannot be used as a foreign tax credit on your Japanese taxes.
You might continue to have US income from assets or stocks in US companies, though. If so, you can claim the taxes imposed on that income as a foreign tax credit in Japan. Then, when you file your tax return with the IRS, you can also claim the taxes paid in Japan as a foreign tax credit. Any income resulting from the foreign tax credit is considered Japanese domestic income.