Sorting out income from employer and private - help please

[Deckard]

Hi

This is my first tax year so I'm a little confused. I've checked out gaijintax.com and threads here but need to clarify a few things.

I have about 200,000 from a Japanese employer and my own private income of about 1,800,000. I'm not declaring my larger income as a business as it was only for 2008 and not a continued business. I'm declaring it simply as other income on form B. [feel free to tell me if this is not a good move].

Problem I'm having is form B has an AMOUNT OF EARNINGS blue section and an AMOUNT OF INCOME green section. What exactly is the difference?

I've put my 200,000 in (カ) and 1,800,000 in (ク).
I put my 200,000 in (6) as well.
I've put my 源泉徴収票 in (37).

Now on form B page 2 in the Details of Income area I've put the same Japanese company where the 200,000 is from and I put the 1,800,000 down in the Dividends, Misc, Capital Gains, Occasional Income area along with the Dectuctable Amounts total I arrived at from totaling up my rent costs from teaching English privately which the 1,800,000 is from. I've labeled the Income Type as 'Teacher'.

The problem I'm having is the grand total of income is 1,800,000 + 200,000. This gets into the taxable income level unless I declare expenses. I noticed at gaijintax.com that there is a form FA0302 Expenses and Receipts form. Do I need this? My friend told me I don't because I'm not declaring my private 'other' income as a business. But if I don't declare as a business how do I write off rent? Btw, the rent is not rent from my house as many people declare. I was renting a completely separate mansion just for my business so I assume I should be able to write of 100% of that rent right?


I'd really appreciate some clarity on this.

Thanks

[Majestic]

Hello Deckard

The green section (Earnings) is for gross earnings. The blue section (Income) is Earnings less a certain amount excluded to arrive at your taxable income base. The "certain amount" is a calculation that one of the learned posters here described as a "deemed deduction". Basically its a deduction from your gross income. You can find out how to calculate this here. The calculation section starts at around page 27.

I think you have "カ" and "ク" right, but your amount in 6 and 7 will be the amounts AFTER you have deducted the amounts above. Your employment income is so low that you might end up putting a "zero" at 6 (I'm not 100% sure cause I haven't looked through this in a while).

For 37 you will need to figure out your tax payable, so you won't put anything from your 源泉徴収票 in this space.

Regarding your expenses - this is really out of my territory, so take this for what its worth - you will make any deductions from your teaching income before you put the final figure into your miscellaneous income. So your miscellaneous income will be 1.8M less your school rental expenses. Check out the tax guide's pages 28 - 29.

Hope this helps,
Maj

[Deckard]

Originally Posted by Majestic

Hello Deckard

The green section (Earnings) is for gross earnings. The blue section (Income) is Earnings less a certain amount excluded to arrive at your taxable income base. The "certain amount" is a calculation that one of the learned posters here described as a "deemed deduction". Basically its a deduction from your gross income. You can find out how to calculate this here. The calculation section starts at around page 27.

I think you have "カ" and "ク" right, but your amount in 6 and 7 will be the amounts AFTER you have deducted the amounts above. Your employment income is so low that you might end up putting a "zero" at 6 (I'm not 100% sure cause I haven't looked through this in a while).

For 37 you will need to figure out your tax payable, so you won't put anything from your 源泉徴収票 in this space.

Regarding your expenses - this is really out of my territory, so take this for what its worth - you will make any deductions from your teaching income before you put the final figure into your miscellaneous income. So your miscellaneous income will be 1.8M less your school rental expenses. Check out the tax guide's pages 28 - 29.

Hope this helps,
Maj

So form FA032 [receipts and expenses] isn't relevant to my situation then? If my misc income from teaching privately is 1.8 less my school rental expenses then ク is calculated on 1.8 minus that 'deemed deduction' you mentioned above? So then both ク and the Dividends, Misc, Capital Gains, Occasional Income areas would show the same amount?

The Dividends, Misc, Capital Gains, Occasional Income area has:

Income Type | Name Place | Earnings | Necessary Expenses | Deductible Amount

教師　　　　　　名前住所　　　 1.8M 1.1M

...in the Deductible Amount column I enter the 'Japanese deemed deduction' [special calculation you pointed out above]

Therefore that final Deductible Amount and 7 would reflect the same figure?

[Majestic]

Originally Posted by Deckard

So then both ク and the Dividends, Misc, Capital Gains, Occasional Income areas would show the same amount?

Both "ク" and the 3rd column of the Dividends, Misc, Capital Gains, Occasional Income would be the same amount. The 4th column (for expenses) is where you would enter your rent expenses. It looks like you only take that deemed deduction on your employment income. In your case you make less than 650,999 in employment income, so while the amount you enter at "カ" will be 200,000, the amount you will enter on #6 will indeed be "0" (bear in mind I am NOT a tax accountant so please double-check everything). The amount you enter at "ク" will be 1,800,000, but the amount you enter at #7 will be 1,800,000 minus whatever your rental + other teaching-related expenses were.

On Sheet "B" in the Dividends, Misc, Capital Gains, Occasional Income section you will put 1,800,000 in the 3rd column, and your relevant expenses in the 4th column, and the difference in the 5th column, which will be the same amount as you input into #7 above (which is what I think you said - but don't get confused by that "deemed deduction" which only applies to employment income).

I don't know how much your rent was, but if you end up with any taxable income at all it would be pretty surprising.

[Deckard]

On page 30 it says "Amount of employment income is calculated as follows:



snipped...

** When I file how long will it take to get it back and when and how can I get a certificate showing that I paid tax so I can present it to immigration for my spouse visa renewal coming up?

p.s. My wife (we are technically separated) isn't using my last name. I didn't mention anything about her in my tax because I think she's basically doing the same. This is my first tax year so I really don't think it's a big deal if I don't mention her. What do you think? She makes hardly any income and it's next to impossible to ask her about this stuff.


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[Majestic]

Originally Posted by Deckard

What do you think? .

I think you are making this much, much harder than it needs to be.

You got your employment income right - so basically its "0" due to you making less than 650,999 in employment earnings. So now you have to tackle your misc. earnings. You earned 1,800,000 and from this you get to deduct your rental expenses (which are 1,100,000?). If that figure is right you have miscellaneous earnings ("ク") and miscellaneous income (#7) of 700,000. This is your total income, and so you enter this figure (again) at #9.

From 700,000 you get to deduct 380,000 as spouse deduction (#21). Forget the fact that you aren't living together - you are still married as far as the tax man and officialdom are concerned. You also get to deduct a further 380,000 for yourself (#24). If you have any rugrats you get to deduct an additional 380,000 for each of them at #23. I'm assuming its just you and the missus, so this means your total deductions are 760,000, and you put this figure at #25.

This makes your taxable income "0" (#9 - #25... can't put a negative number for taxable income, so you got zero income to tax). Put "0" on line #26. Put it again on #27 cause any percent of zero is zero. Put zero again on line #34. NOW, you actually had tax taken out of your company work, so you get to put "810" at line #37. Now I'll leave the rest of the calculations to you... but the short version is that you should get this 810 back. It will get sent to your bank account. When you send the paperwork to the tax department, you should send a copy as well, and send a stamped self-addressed envelope along with your return. The tax man will sign the copy (making it "official") and send it back to you for your records. In addition, the local branch of the NTA will be able to give you a copy of your tax records once they have had a chance to get these numbers into their system. Might take a couple of months.... I forget how long it takes for you to be able to get a copy of your most recent tax record.

I've purposely left out the shakai hoken and other bits of info on this. If you are a stickler for detail you will add these into your tax sheet.

Let me know where to send the bill...
Price Waterhouse Majestic

Note: this tax business had a deadline of about a month ago, and so there is a chance that the tax people could penalize you (i.e. you might not get your 810 back).

[Majestic]

Just a final note, the deduction for your wife (380,000) is available to you assuming she did not work full time and make more than something like 1,030,000 last year. I forget the actual figure, so the tax nazis might jump on me at this point. If she worked full time and is taking the 380,000 deduction for herself, you cannot claim this deduction.

Another complication: if your wife claimed YOU as a deduction, you may gum up her taxes if she doesn't amend her taxes. But this is really, really getting into a level of complication that I don't want to touch. You said she makes hardly any income, so I'll assume its less than 1,030,000 and that for all intents and purposes you are the breadwinner of the family for 2008.

[Deckard]

Thanks

You saved my ___. You have received karma +8

Didn't you mean to say 1.8M was ク and 700,000 (my net) was line 7? Because you said the green section was GROSS. Form B page 2 under Occasional income as we talked about above was 1.8M [Earnings], 1.1M [Necessary Expenses] and 700,000 [Deductible Amount].

On line 38 I put [-810円].

Oh I just remembered on Form B page 2 I have to fill in the spouses name and D.O.B.

I noticed as well that it has a residential tax area. Don't you pay your taxes first then they decide the residential tax amount? I did get a separate letter from the office requesting residential tax but at the time and now I don't even know what it would be.


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[Majestic]

Originally Posted by Deckard

Didn't you mean to say 1.8M was ク and 700,000 (my net) was line 7? Because you said the green section was GROSS.

I did say that the green area was for gross earnings, but in the wacky world of tax calculations you deduct expenses to arrive at your miscellaneous earnings (page 28 of the tax guide, which I'm sure you have read by now). So "ク" and 7 will be the same figure.

Originally Posted by Deckard

Form B page 2 under Occasional income as we talked about above was 1.8M [Earnings], 1.1M [Necessary Expenses] and 700,000 [Deductible Amount].

Yes, all correct except for the last two words. The remaining 700,000 is not a "deductible amount". That 700,000 is your miscellaneous earnings (and is your miscellaneous income as well). From this figure you will deduct amounts for you and your wife (and any dependants).

I noticed as well that it has a residential tax area. Don't you pay your taxes first then they decide the residential tax amount? I did get a separate letter from the office requesting residential tax but at the time and now I don't even know what it would be.

Residential tax is basically 10% of your taxable income. Since you have no taxable income, your residential tax will be zero. Note the local authorities have a slightly differerent method for calculating certain types of income, but for your purposes I don't think it makes any difference. Usually the NTA sends your tax information to the local tax authorities, and they in turn notify you of your local tax liability. Since your liability is zero, they shouldn't bother you.

[Deckard]

Hi Majestic and others.....

Just wanted to stop by and say thanks for your help. I FINALLY went to the tax office today and submitted my income tax. Of course I was a couple of months late and the front girl and main dude were sooooo nice and helpful. He seemed to like the fact that a foreigner was attempting to be somewhat responsible at trying to establish a steady lifestyle in Japan. I have to admit, it felt good since it was my first submission. I actually went to another tax office that was listed on the net but somehow wasn't correct. Those people too were so nice and took the time to photocopy maps and everything and show me how to take the bus to the right place LOL This is in Osaka. So the guy checked over everything even though the deadline was long past and said everything looks good. He also showed me how to fill in the post or bank slip and also explained about the residence tax and that I can worry about that next year since this is my first one.

I also have to extend my spouse visa this week and now I have a nice 在職証明書 and copy of my stamped 所得税 to present to immi. It's my last hurdle as I'm a bit worried since the wife and I are living separately and I'm still using the same addy. This will be my second extension so hopefully my the grace of Buddha it will be a three year visa. If I get this three year visa then it's off to the races for PR!! No worries, my new gf wants to get married too so at the worst case I'll change to a new koseki LOL

Holy sh_t I'm at this cafe in Namba and the talent today is extra astounding. Nice boobies. [That's why I'm separated LOL]. This cafe is a secret WiFi cafe. No one knows about the WiFi. I live close by and I'm pretty sure the only gaijin that ever comes here. It's not the BS BB Mobile Point or NTT-West WiFi either where you need to be a yahooBB or NTT subscriber in order to use the WiFi. This is a brand of true free WiFi I've never heard of.