With holding tax: What is the law?

[sdskinner]

I have a tax question. Does anyone know if an employer in Japan is required to take withholding tax out of your paychecks. By with holding tax I mean income tax, pension(social security) and unemployment tax. I work as an ALT for the local board of education and they have never taken anything at all out of my paychecks. But I have heard that they should be taking it out and also making matching contributions.
So is it voluntary and I would have to request it or are they pulling a fast one. I have worked for them for a total of 7 years both as an hourly employee and with a salary.

Thanks

Sdskinner

[Steve Bildermann]

Taxes in Japan

[FG Lurker]

:arrow: Taxes in Japan

Thanks for that link Steve, it was an interesting read. Now I see why my tax rate seemed to jump suddenly a couple of years ago.

One note is that as of this year (2004 tax year) the 380,000yen "Personal Deduction" listed in section "E" no longer exists. I think rates overall have gone up too.

It also used to be that taxes charged on bonuses were less than those of regular paychecks, but that has also been abolished. I got stuck paying 250,000yen tax on my winter bonus!

Not looking forward to the constant climb in tax rates forecast for the next years. I wouldn't mind so much if the government wasn't run by a bunch of corrupt embezzling bribe-taking bureaucratic slimeballs. I guess it's too much to hope that increased taxes will lower the apathy of a typical Taro Suzuki over the constant government scandals...

Ian

[kamome]

As long as you are paid in Japan, your employer should be automatically withdrawing taxes from your paycheck. If not, you are responsible for filing a tax return in Japan. That sucks, because hiring a licensed tax accountant to do your taxes properly can cost as much as US $1000. If you are an ALT, the Board of Education should be paying your salary. I am very surprised that they aren't automatically deducting appropriate taxes from your paycheck. In effect, they are making you poorer because of the added cost of tax preparation that you will have to bear.

The employer-matching that you mention applies to the Japanese social insurance scheme. Do you even have Japanese health insurance? According to the law, you should be getting it (and paying for it) automatically. If you do, your employer would be deducting that amount from your paycheck and contributing an equal amount.

[FG Lurker]

[...snip...] That sucks, because hiring a licensed tax accountant to do your taxes properly can cost as much as US $1000. [...snip...]

If someone is just working as an ALT in Japan and does not have complex tax issues (capital gains, rental income, etc etc) then there is no need to hire an accountant. The tax office will work through the forms with you -- they are very friendly and (rather oddly) will point out all the different deductions and explain how to get the most money back.

If things are more complex though then a *good* accountant will *more* than cover the cost of his/her services with all the extra cash they get back for you anyway.

Ian

[Blah Pete]

The tax office will work through the forms with you -- they are very friendly and (rather oddly) will point out all the different deductions and explain how to get the most money back.

I have to agree and was shocked to find this out firsthand. The tax office has saved me money a few times by pointing out deductions. They also explained there are no limits on some declared deductions. I was thimking it was more like the US where everyone is treated as a criminal when you enter the IRS...

[kamome]

I wasn't aware that the tax office provides such services. But sdskinner shouldn't even be dealing with them. Like any domestic employer, the board of education should be deducting and adjusting his taxes automatically without effort on his part.

However, after 3 years the ALT contract expires. He might be working as some kind of independent contractor for the BOE, which means he is responsible now for filing his own return.

[Taro Toporific]

There's a new Japanese website to "explain" Japanese social security that's coming soon...

Web site eyed to explain social security to foreigners
English
The Daily Yomiuri---August 1, 2005
English Web site eyed to explain social security to foreigners
The Social Insurance Agency will open an English-language Web site in September to provide information on the social security system to long-staying foreigners in Japan.
All foreigners living in Japan are obliged to pay social security premiums, such as for health care and pension programs...
The agency wants to make the new site easy to understand for non-Japanese residents who are not familiar with the complicated social insurance system.

Also refer to my report: Foreigners: leave Japan and get a $5,000 bonus

[homesweethome]

Even if you work full-time for an employer, filing taxes under the 'Aou Blue tax filing system will save most people a lot of money, especially if their income is complicated (multiple sources in country and out). This in effect means that as far as tax filing is concerned you are 'self-employed.' You itemize all your expenses and income sources, deducting amounts payed even by you and your employer (pensions, health insurance, rent, social insurance, anything and everything). Companies are going this way, hiring their employees as part-timers but paying them even more over the long run because they too save money, the burden of their taxation liabilities spread out among their employees. Filing under this system blue takes a tax year to do, but worth it in the long run.