Reporting Additional Income

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sodantitleQ: I am currently working as an instructor at a language school. This year, outside of my regular salary from the school, I have received 180,000 Yen (162,000 Yen after tax) from a different company for some evening classes I taught. I heard that if you receive additional income outside of your regular salary then you don’t have to report it. Is this true?

A: All residents and salaried employees whose total annual income exceeded 20 million Yen, or received income from one source in Japan and earned additional income exceeding 200,000 Yen, or received income from two or more sources which was not subjected to a year-end adjustment (nenmatsu chosei), are required by law to file a tax return for that year’s salary.

You will not have to report taxes if you are salaried or receive bonuses from one workplace, taxes have been deducted from your monthly salary, and your annual income is less than 20 million Yen. This system is called “gensen cho shu“. The amount of taxes paid over the course of one year may often differ from the actual amount due. In this case, on the last payday of the year, the difference between the actual and due amount is calculated and a year-end adjustment is made to complete and correct the employee’s tax payments. The employee may be eligible for a return or may have to pay additional income tax. This process is called “nenmatsu chosei”.

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