Japan’s Tax Return: How to do Kakutei Shinkoku

Smiles Mobile Remittance, the number one leading global money transfer service provider in Japan, stays committed to lending a helping hand to migrant workers in Japan and is continuously trying to make lives easier and more convenient for them. 

On that note, Smiles prepared a guide on how to do kakutei shinkoku. Japan’s tax return can be difficult especially to foreigners who have never done it before. Take a look at the kakutei shinkoku guide below: 

Final tax return in Japan (Kakutei Shinkoku)

In Japan, the annual tax return, known as “kakutei shinkoku” (確定申告), is a mandatory process for certain individuals and organizations to report their total income earned between Jan. 1 and Dec. 31 of the previous year. The filing process ensures that individuals calculate their income tax correctly and identify any differences between taxes withheld and actual tax liability.

Photo credit: Practical Japan

Who needs to file?

Not everyone is required to submit a final tax return. However, you must file if your total income exceeds the sum of applicable deductions and credits, resulting in a tax liability. The following categories outline who needs to file:

1. Salary earners

Most salary employees are not required to file if:

• Their annual salary is ¥20 million or less
• They receive income from only one employer who withholds taxes at the source
• Their additional income (excluding employment and retirement income) is ¥200,000 or less

2. Pension recipients

Individuals receiving public pension benefits in Japan are not required to file if they meet all of the following conditions:

• The annual pension amount is ¥4 million or less
• All pension benefits are subject to withholding at the source
• Total income (excluding pension-related income) is ¥200,000 or less

3. Self-employed individuals and freelancers

If you are self-employed, a freelancer, or an independent contractor, you must file a tax return regardless of income amount. You will need to report all earnings and deductions accurately.

4. Individuals with multiple sources of income

If you earn income from multiple employers, rental properties, investments, or foreign sources, you are typically required to file a final tax return.

Filing period

The filing period for the final tax return is from Feb. 16 to Mar. 15 of the following year. For example, income earned in 2024 must be reported between Feb. 16 and Mar. 15, 2025.

How to file tax return

You have multiple options for filing your tax return in Japan:

• In-person: Submit your return directly at your local tax office.
• By mail: Send your completed forms via postal mail.
• Online (e-tax): Utilize the e-Tax system for electronic filing, which is often more convenient and allows for faster processing.

Deductions and tax credits

Taxpayers may be eligible for various deductions and credits that reduce taxable income, including:

• Medical expense deduction: If your medical expenses exceed a certain threshold, you may claim a portion as a deduction.
• Social insurance premiums: Payments for health insurance, pension and employment insurance are deductible.
• Mortgage loan deduction: Homeowners with a mortgage may qualify for tax relief.
• Dependent deduction: If you have dependents (e.g., children or older parents), you may qualify for additional deductions.
• Self-employment expenses: Freelancers and business owners can deduct eligible business-related expenses.

Late filing and penalties

Failing to file a tax return on time or underreporting income may result in penalties:

• Delayed filing penalty: Generally 5% to 15% of the tax owed is penalized.
• Under-reporting penalty: If you fail to report income, a penalty of 10% to 20% may be imposed.
• Failure to pay penalty: Interest charges may accrue on unpaid taxes.

Special considerations for foreign residents

Foreign residents living in Japan are subject to Japanese income tax based on their residency status:

• Non-permanent Residents: Taxed on Japan-sourced income and foreign income remitted to Japan
• Permanent Residents: Taxed on worldwide income
• Short-term Residents: May qualify for special exemptions if staying for less than one year

Filing the annual tax return in Japan ensures compliance with tax laws and helps individuals manage their tax obligations efficiently. Understanding the requirements, deductions, and deadlines can help taxpayers avoid penalties and take advantage of available tax benefits. 

Get your remittance certificate for free on the Smiles App for Japan’s tax return

In any case you need a copy of your remittance certificate for tax purposes, you can get yours for free on the Smiles Mobile Remittance App. All you need to do is go to your transaction history from the home page, click download on all transactions, and download or print your certificate directly. 

Download the Smiles App here and let’s “Share Smiles.”