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Income Tax Rate brackets

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  • Income Tax Rate brackets

    Hello, wondering if someone could help me out here. I need some help figuring out my monthly taxe rate. Have been searching online for a direct answer but so far am just getting generalities such as you can be taxed between 10-25% depending on your income etc. This is not helpful when you're trying to budget things.

    The reason I'm asking is because lately, the tax rate deducted from my income has been fluctuating each month and it's frustrating when you're trying to do a monthly budget. For example, I booked a couple of flights based on my projected monthly income and past income tax deduction then found out my monthly salary is shorter than I projected because the deducted tax went from 10% to almost 20%.

    I work on contract for several companies. Basically, I get paid monthly (hours x payment rate) minus the income tax. For a couple of companies, it is a consistent amount of hours each month. The tax rate is also consistent (10.21%) so this is no issue.

    But, for one specific company, when I started this year the income tax deduction was 3.55% of my monthly income. However, this past month, I earned more and it jumped to 17%. My income next month will be higher because of more hours. I don't want any surprises regarding the deducted tax. Could someone help me out in figuring out at what income amount (monthly or annually) the tax rate jumps up?

    I live in Tokyo and only income tax (no health insurance, pension plan etc) is deducted from my salary.


    If someone, could help me out with something like this that would be great:

    Hypothetical example of an annual income that breaks down monthly and the associated income tax rate:
    Monthly Income of Y150,000-Y200,000 is taxed at 10.21%
    Monthly income of Y300,000-Y449,000 is taxed at 17%
    Monthly Income of Y450,000+ is taxed at 25%

  • #2
    http://www.japan-guide.com/e/e2206.html

    Not sure how up to date that is, scroll down for rates per income bracket.

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    • #3
      Originally posted by FemaleCanuck View Post
      Hello, wondering if someone could help me out here. I need some help figuring out my monthly taxe rate. Have been searching online for a direct answer but so far am just getting generalities such as you can be taxed between 10-25% depending on your income etc. This is not helpful when you're trying to budget things.

      The reason I'm asking is because lately, the tax rate deducted from my income has been fluctuating each month and it's frustrating when you're trying to do a monthly budget. For example, I booked a couple of flights based on my projected monthly income and past income tax deduction then found out my monthly salary is shorter than I projected because the deducted tax went from 10% to almost 20%.

      I work on contract for several companies. Basically, I get paid monthly (hours x payment rate) minus the income tax. For a couple of companies, it is a consistent amount of hours each month. The tax rate is also consistent (10.21%) so this is no issue.

      But, for one specific company, when I started this year the income tax deduction was 3.55% of my monthly income. However, this past month, I earned more and it jumped to 17%. My income next month will be higher because of more hours. I don't want any surprises regarding the deducted tax. Could someone help me out in figuring out at what income amount (monthly or annually) the tax rate jumps up?

      I live in Tokyo and only income tax (no health insurance, pension plan etc) is deducted from my salary.


      If someone, could help me out with something like this that would be great:

      Hypothetical example of an annual income that breaks down monthly and the associated income tax rate:
      Monthly Income of Y150,000-Y200,000 is taxed at 10.21%
      Monthly income of Y300,000-Y449,000 is taxed at 17%
      Monthly Income of Y450,000+ is taxed at 25%
      Unfortunately, because your income fluctuates so will your tax. You'll get taxed each month as if that month's pay were 1/12th of your annual salary. When you complete an income tax return at the end of the year it'll all get sorted out, and you'll either pay some more or get a refund, depending on how much was actually deducted at source. One of the bains of being on a contract with a fluctuating income, I'm afraid.

      Comment


      • #4
        This is complicated and it takes a lot of general tax understanding plus effort to understand it well. I'll give you some general info and the proper link to english version of the Japan tax authority guide.

        Anyway here is the definitive document from the tax agency itself. It's in English but a bit hard to understand because taxation is complicated-- probably have to read it about 3 times to understand 100%. The tax calculation (brackets) you're looking for is on p 46. BUT - this is taxable income, i.e. after personal deduction and the employment deduction.
        As was stated the withholding each month will be made assuming you make the same amount for 12 months.

        http://www.nta.go.jp/tetsuzuki/shink...012/pdf/43.pdf


        BTW, the 10.21% withholding is a self-employed contractor withholding flat rate. The other company is treating you an an employee - different scheme due to employment income deduction. You final tax for the year you will have to figure out for yourself. The employer unusually does it but that does assumes you have only 1 employer. Again the withholding treatments are very different. Anyway for withholding, yes, it will go up -- there is a big jump in marginal rate from 10% to 20%. I hope you understand what marginal rate means -- just the portion above the threshold, eg 350,000, gets taxed at the higher rate.

        BTW, there is a huge withholding you get for employment income vs self-employment income (the 10.21% guys are treating you as a contractor, ie you are self employed). If you are teaching at a school or being dispatched, IMO you should treat that as employment income when tax filing comes, to take advantage of the employment income deduction. This is solely my personal opinion based on info I have, mostly links to Japanese info, mostly from mr. majestic (GP poster who knows taxes really well). I'm in a similar situation in that I'm being withheld at 10.21% but I will try to claim employment income even though it was withheld at 10.21% making it look like self-employment income. I done this yet because I didn't need to file last year, haven't filed taxes in Japan yet but will for the current year. Similar to my job, I assume your job situation also actually fits the definition of employment (pay by the hour, hours and work content controlled by the employer, work done at fixed hours at employers site, employer provides all equipment, etc). I don't know if I will get any push back on this from the tax agency because I haven't done it yet. But the deduction for employment income is huge and I want that! I'm just saying, FYI. On self-employment income you can deduct any expenses, but if not working from home and you didn't buy equipment like computers etc then those deductions are very small compared to the employment income deduction.

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