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Tax declaration and multiple jobs

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  • Tax declaration and multiple jobs

    Hello everyone,

    I imagine this question may have been asked and answered before, but I couldn't find any information after a quick scan of this part of the forum, so please excuse me for asking the question again.

    So here is my problem:
    I arrived in Japan at the start of last year, and soon found work at a big eikaiwa. Shortly after that, I started doing an evening each week at a small place down the road from my house.
    In April last year, I found a job at a company, and quit the eikaiwa. I had told the HR manager during the interview process I was teaching, so he said I had to give it up upon starting the new job. That was no problem, as I was not enjoying it anyway.

    However, I stayed on at the neighbourhood place, as I was receiving cash and thought the "what nobody knows won't hurt them" rule applied. It's casual work and never amounts to more than 20,000 per month.

    Fast forward 18 months, and somehow over the weekend my wife mentioned that a gensen choshu hyo was in my pay packet from the small school at the end of last year. How it came up in conversation more than 8 months later is a different problem which I can worry about later. At the end of last year, I submitted the gensen choshu hyo from the big eikaiwato my employer. However, quite obviously, this other one was not submitted. This raises various problems; hopefully I can receive advice on at least some of them, so I'll list them out.

    1. Submitting the form to the tax office.
    Last year's income from the school was about 150,000 yen, with 0 tax withheld (hence my thinking it was a cash deal, because there was never a mention of tax on the monthly "payslip" [numbers handwritten on an envelope]). If I submit it now, my wife says that amended figures will be sent to my employer, which sounds like trouble to me.
    Dumb question number 1 - do employers send details of employee earnings to the tax office? I'm sure they do. So whilst the amount is small (10,000 tax owing?), what sort of trouble might I be looking at if I don't submit the details?

    2. Continuing at the school
    My wife said that I should quit there ASAP, to show my company that I have taken action "before being caught".
    I told her that I doubt it would make much difference after an 18-month stretch of naughtiness, so her supplementary view is that I will get the bullet from them sooner or later.
    Further to this, as far as documentation goes, I can't see the difference of quitting the school now, in the middle of the year, or closer to the end of the tax year.
    If I am to continue at the school, I think I need to have a discussion regarding future arrangements (preferably backdated to the start of the year).
    The lady who runs it is cool, yet I am hesitant to suggest anything which puts her livelihood at risk. To give you a rough idea, she is a Japanese lady who has spent a long time in the US, so she is capable of teaching most classes herself. At the moment, one other foreigner and I teach one evening each per week. Looking at the history of the school, it appears that every other teacher so far has been a university student. So I didn't think "grown-up" stuff like tax would be a problem. Whilst I know that this question can't be answered, hypotehetically, what are my chances of negotiating for this tax problem to not get worse?

    3. Quitting the school
    So if I choose to leave the school, I will receive a gensen choshu hyo for this year also. Again, the income won't be more than 200,000 (not worth this headache?), so the tax liability won't be huge. But pretending it doesn't exist might make it huge. Is a head-in-the-sand approach combined with a "dumb foreigner who couldn't understand" defence going to cut it? Has anyone been in this sort of predicament before?

    It is obvious that what I didn't know is going to hurt somehow, so advice on damage minimisation would be greatly appreciated.

  • #2
    first advice: either spend the required amount of time understanding the tax law based on the English documents available on the web from the tax authority, or spend a few man yen consulting with an accountant. i have studied the law myself but to have any idea about your situation I'd need to know all the numbers, I would not get into any complicated analysis taking some hours for free, and I'm not well qualified so even if I gave you an answer you shouldn't count on it being correct.

    that having been said, I *guess* that the school did not withhold anything because the salary is so small that if they calculate the taxes based on that salary as your only income, you would owe nothing. It's only when added onto your other income that it's taxable at 10% local taxes and some rate depending on your entire income for national tax, maybe another 10? Plus it would slightly increase what you should pay for kokumin hokken if that's what you're on. But because it's so small, the school quite possibly has no withholding obligation, and since they're not sending any money from you to the tax authorities, the probably don't have anything to report about you either. Why the heck don't you talk with the accountant or owner of the small school and find out what if anything they reported last year and/or will report this year to whom.

    You should figure this out and not wimp out and quit over it imo. the amounts are small, so if nothing has been reported, if I were you I might take the very small risk of it biting me in the butt, and just forget about it for last year while figuring out exactly how to handle it for this year. In all likelihood, nobody at any school is gonna care what happened last year or will want to get into any extra hassle or more work for themselves over it, and the tax authorities don't know about it and don't decide to do a deep audit on you at random (seems quite unlikely, but what do I know?).

    Again, you need to either hire and accountant or learn the tax regulations very well for yourself, if you are doing complicated stuff like trying to retroactively fix this mistake, as well as making sure everything is done correctly going forward, seeing as you have the complication of multiple employers, possibly some of which could be considered some form of 'self-employment' or contracting. That's the limit of my free advice.


    • #3
      Best advice is above -- talk to a professional, or talk to the tax office. They will be surprisingly helpful.

      You can file an amended tax return reflecting what the figures should have been.

      You will owe tax on the under-declared amount. You will also owe interest calculated from the day it was due until the day you actually pay it. They could also hit you with a penalty, though they have the discretion not to if you haven't deliberately been evading the tax (as evidenced by you going to talk to them).

      Assume your SOR is spouse of a Japanese national, and so you don't also have job related visa compatibility issues...?

      Assume your main employer is deducting tax? Assume your main employer is also deducting city tax? The city tax payment will change depending on the total declared income, so it is possible your main employer would notice.

      I don't believe you need to ask the little school to do anything differently, so no worries on making life difficult for her.

      At the end of 2013, your main employer will give you the year-end statement and will submit a tax return on your behalf. You can ask them not to, but then you would need to explain why.

      You will need to submit your own [amended] tax return by the filing date of March 15, 2014 reflecting all of your earnings, and you'll need to do the tax calculations yourself, or have the nice folk at the tax office do it for you.

      It's all explained in detail in English in the income tax guide for foreigners:

      It's step-by-step and totally self-doable, but takes a bit to wrap your head around the instructions...

      Engaging someone who knows what they're doing is possibly your best bet -- and the tax office will help if you ask them.


      • #4
        Yeah, since he's not doing anything illegal, all he needs to do is file an amended return directly that the main employer won't see anyways.


        Just ask at the tax office, or get your wife to ask for you. She porbably thinks what you're doing is wrong because you lied to your main employer, but it isn't illegal, especially if you're on a spouse visa.


        • #5
          OP: The chances of you being caught by either your main employer of the tax office is incredibly remote in my opinion.

          Don't let your wife put the fear of Buddha into you! I'd talk to your wife and make sure she doesn't call your employer with such a trifling matter. The last thing your employer wants is a problem, so don't provide them with a chance for vast air sucking through teeth. Even if they found out, and I simply can't see how they would, it's a piddling 2man a month. You tell em you teach the neighborhood kids once a week and they give you a bit of pocket money. They aren't going to fire you for that.

          As for declaring it to the tax office... Mmm... If you haven't received a letter from them stating you "forgot" to declare neighborhood eikaiwa income then they don't know about it. You can do it next tax year or not at all if you like or even as others have stated you can do it now if it worries you so much. You could ask the neighborhood eikaiwa lady if she has given the Tax office your name and how much you earn if that would help placate your wife. I'd say it's highly unlikely she has told them anything.

          I think you're worried about nothing. The bigger problem I see is you blindly handing over your pay packet to your wife!


          • #6
            Hello Toffer25

            This is a hugely popular topic on many Japanese websites. I recommend you go through some of the information available on those sites to get yourself familiar with the issues before you do anything. I'll put some links below to help you and wife sort it all out.

            Basically, both of your employers will report your wages to your city/ward hall. Your residents tax for next year will be based on your total income, and your city hall will calculate it and notify your main employer so that your main employer can deduct the correct amount from your paycheck. This is how your company will find out that you have a second job.

            Usually, if you have two jobs and you don't want your main employer to know about your second job, you have to

            1. File your own national tax returns (確定申告)- which you are supposed to be doing if you have two sources of income anyway.
            2. Change your residents tax from "Special Withholding" to "Normal Withholding"
            3. Pay residents tax on your own

            Normally, if you have just one employer, your deductions for residents tax works like this; Your employer pays you a salary of (for example) 5,000,000 a year. They report this to the city hall for calculation/billing of residents tax. The city hall sends a notice back to your main employer notifying them to deduct (roughly) 10% from your salary. They do this by sending a slip to your employer that allows your employer to deduct 500,000 yen in 12 monthly installments (something like 41,666/month) from your paycheck. Now in your case you have two incomes coming in. The city hall knows about these two incomes because your employers are required to send this information to your city of residence. Using your figure of 150,000 from your side job, plus your main salary of 5,000,000 yen, the city hall will now send a slip to your main employer telling them to deduct 10% of 5,150,000 from your paycheck, which comes to 42,916 in 12 monthly installments. Your company HR person, or finance person, if they are clever and/or have a lot of free time on their hands will think, "wait a minute, Toffer25 only makes 5,000,000 a year, why is city hall telling me to deduct more than 41,666 per month?". This is how the cat gets out of the bag on your second job.

            You can avoid this by telling city hall to send the calculation and the bill directly to you instead of to your company (the step #2 above). In Japanese its called "Normal Withholding" (普通徴収) as opposed to "Special Withholding" (特別徴収). To be clear, Normal Withholding is when you pay the taxes directly to the city hall, rather than having them taken out of your paycheck. However, there is a catch to this in that you can only change to Normal Withholding if your side business is something other than wage income. So I am not sure that this option is available to you. It depends upon your contract with your side business.

            A further thing to note is that miscellaneous income under 200,000 need not be reported at all. However, as above it might be hard to claim that your income from your second job is indeed "miscellaneous income".

            In either event, I would come clean to your employer to make most of these problems go away. The tax problem is relatively minor, simple, straightforward, but it all becomes complicated if you try to deal with it while at the same time concealing it from your employer.

            Some reading for you and your wife



            • #7
              Originally posted by toffer25 View Post
              I started doing an evening each week at a small place down the road from my house ... In April last year, I found a job at a company, and quit the eikaiwa. I had told the HR manager during the interview process I was teaching, so he said I had to give it up upon starting the new job. That was no problem, as I was not enjoying it anyway.

              However, I stayed on at the neighbourhood place, as I was receiving cash and thought the "what nobody knows won't hurt them" rule applied. It's casual work and never amounts to more than 20,000 per month.
              Our company had a case of somebody 'moonlightning' and we got professional advice which I will relay as follows :
              + A company *might* prevent you for working for a competitor but not running your own business
              + You may not violate labor standards by 'working too much' (which won't be the case in 'one evening a week')
              + The second job should not reflect badly on your main job (e.g. a doctor running a hostess bar) or be a conflict of interest (e.g. poaching students from the school to get private lessons)

              So are you an 'employee' at the 'small place' ?

              Were you asked in writing to stop working there or did you sign something that says 'all second jobs have to be pre-approved by the company' ? If this is not the case, you can just say something like 'I'm sorry, I misunderstood'.

              But if you signed something and the company tries to fire you for 'breach of contract' it gets more difficult. What kind of contract do you have ? Don't quit yourself over that triviality but just say something like, 'sorry, I did not know that this was illegal', because it is most likely not.
              If they fire you over this, you can go to labour court and they company MUST prove that there was some damage done, which is most like not being proved. Then they will be ordered to pay you back pay,,,

              Edit : Not sure about the tax thing, but if you have additional income (such as an inheritance, etc.) you would anyway NOT declare it to your employer but directly to the tax authority. Your employer MIGHT suspect something if they see that your total income was slightly higher than their pay, but again you could just say that these were stock dividendes, or whatever).
              Last edited by ttokyo; 2013-08-13, 03:47 PM.


              • #8
                Magestic, incredibly thorough response. As usual you are super helpful on tax related matters!

                I hadn't realized that there is this anti-privacy aspect build into the system where an employer can get some info about you that is none of their business.
                Last edited by kabunushi; 2013-08-13, 03:57 PM.


                • #9
                  Originally posted by ttokyo View Post
                  Your employer MIGHT suspect something if they see that your total income was slightly higher than their pay, but again you could just say that these were stock dividendes, or whatever).
                  Do they really see "total income"? I can understand if they see "total salaried income", but for investment income that is taxed as a part of the kakutei shinkoku process, I don't think it would be included, would it? (just commenting without specific knowledge here...)


                  • #10
                    Toffer 25,

                    Except for Punch-to-the-gut's suggestions, you've gotten some real gold-standard advice here.

                    I've always found the folks at the tax office to be friendly and accurate. Given the amounts involved, I'd suggest dealing directly with them instead of hiring an accountant or other go-between.


                    • #11
                      A colleague of mine at the "church" works at one of the biggest food companies in Japan on weekdays and then did for 3 years weddings on weekends(collecting money for wedding, engagement ring, house deposit etc.). For those three years, each year his part-time income exceeded his full-time employment income. His city taxes were deducted each year from his weekday job payment, while the "church" reports diligently all the income to the Tax Authority each year. He was never "caught" or forced to make any explanation.
                      Probably he got lucky. I am not sure. Or his total income was not so high to alert the HR people. Which should be surprising since the "church" accountant for two years running marked that income mistakingly as wage income, so basically he had two wage incomes, while his contract forbids him from taking a second full time job. He currently moved to the int'l division and spends all the time abroad so he cannot work anymore on weekends or in Japan, for that matter. But we have many others - uni professors, trading companies employees, IT specialists etc - who have never had any trouble being caught by their main employer.
                      Not that it answers your question, but from my limited experience and knowledge of accidental cases - it happens probably very rarely. Not that you should not be prepared and or in the know. I always think that it might be OK, unless as someone wrote earlier, the main employer proves that you damage the company's image with your second or third or forth part-time employment (which is my current MO).


                      • #12
                        Thank you all for your rapid and considered responses.

                        I have investigated the situation more, and it turns out that (luckily?) my employer marked me down as "Normal Withholding" (普通徴収) last year, so I am paying residents tax directly to city hall. That appears to make the situation a bit easier, but I think I am not out of the woods yet.

                        On the contract side of things, I am directly employed by a subsidiary of a big company, who then have me working "haken" for the parent company. The subsidiary is small though (about 300 employees), so any suspicious numbers in their accounting could easily be picked up. The contract I signed does not mention second jobs, but it does refer to the "rules of employment". I will have to check them when I return to work tomorrow.
                        I teach after hours classes within the company also, so they can't say that my side job reflects badly on my main role. However, even without a direct breach of contract, the fact that the HR manager asked me twice after I started work "Have you quit the teaching?" makes it sound they are pretty serious about the issue. If I am found out, they may not sue me, but simply not renew my contract.

                        I will be seeing the eikaiwa lady this afternoon, so I'll bring up the topic with her. My sister-in-law (the cool head in the family) has also provided me with some Japanese links. I'll read them and the pages Majestic has provided above.

                        Thank you all for your honest and thorough advice. I'll check in again soon.