Is it necessary to file an affiliate income tax return? -the case in Japan-

From the conclusion, affiliate income   requires a final tax return   in Japan.

However, some  "exceptions"  are allowed as follows.

Examples of affiliate income that do not require tax returns

・The employee with affiliate income of 200,000 yen or less.

・If you receive salary from one company, the salary is 20 million yen or less, and the affiliate income is 200,000 yen or less.

・Regardless of your annual income, if your affiliate income exceeds 200,000 yen, you need to file a tax return, but if the amount after deducting the necessary expenses is 200,000 yen or less, you do not need to file a tax return.

・If the affiliate income is 480,000 yen or less

If you have no income except affiliates and your affiliate's annual income is 480,000 yen or less, you do not need to file a tax return.

※If you have a part-time job salary income and the total of salary and affiliate income is 480,000 yen or less, you do not need to file a tax return.

Necessary expenses that can be treated as expenses

・Rent

Rent if you have an office,

In the case of parents' house, property tax etc. can also be expensed

・Utility costs

Water, electricity, fuel, etc.

・Communication fee

Server charges, telephone charges, internet usage charges, costs for brokers, Adobe, etc.

・Depreciation

Expenses for equipment such as personal computers and cameras, work desks and chairs

・Newspaper book costs

The cost of subscribing to newspapers and specialized magazines

・Transportation expenses

Expenses for meetings, gasoline charges, etc.

・the expendables

Battery charge, battery charge, etc.

・Insurance premiums paid

Office fire insurance premiums, etc. when renting an office

How long is the final tax return filing period?

Regarding taxable income from 1/1 to 12/31 of that year, it is necessary to submit a final tax return to the head of the tax office in charge by February 16 to 3/15 of the following year.

Amount of tax on affiliate income

It is important to note that the amount of income includes the entire income for the year.

In other words, if you are paid as a salaryman in addition to the affiliate income,

The calculation must be done after adding up the two.Affiliate tax return classification

Affiliate tax return classification

There are two types of income for filing tax returns: business income and miscellaneous income, and business income is divided into two types: blue filing and white filing.

Miscellaneous income

Affiliate income is classified as miscellaneous income if the affiliate income is continuously stable or if the tax office has not been notified to start a sole proprietorship.

How to declare miscellaneous income

As for the method of reporting miscellaneous income, the total of income and expenses from affiliates is listed in "Table 2 of final income tax return", and the deducted amount is listed in "Table 1 of final tax return" as miscellaneous income.

If you are not sure if you have miscellaneous income, talk to the tax office.

Business income (blue declaration)

As an affiliate, if you have a certain amount of income on a continuous basis and have submitted a "blue filing approval application" to the tax office, you can file a blue filing.

As a special deduction for blue filing, you can receive up to 650,000 deductions from your income.

Conditions for blue declaration

In order to file a blue filing, you need to submit a blue filing approval application to the tax office for approval.

If you continue to do business, you must apply for approval by March 15 of the year you file your tax return.

The application for approval in the year in which the business started must be submitted within two months from the date of opening.

How to file a blue tax return

If you want to receive a special deduction of 650,000 yen, you need to keep a book of daily transactions and attach the balance sheet and income statement to the tax return.

In the settlement book by simple bookkeeping, only 100,000 yen is deducted. In either case, a blue tax return and income tax return will be prepared and filed.

Business income (white declaration)

If you have not submitted the "Blue Filing Approval Application" to the tax office, you will file a white filing. If you have not applied for approval of blue filing, it will automatically be white filing, but since there are many benefits to receive blue filing, we recommend that you proactively file blue filing.

How to file a white tax return

In the case of a white tax return, fill in the details of income and necessary expenses on the income and expenditure breakdown, and then prepare and submit the final tax return.

Make a final tax return

Prepare a tax return and submit it to the tax office. You can file a paper or electronic filing.

When filing a tax return on paper, you can choose to submit it at the tax return counter or by mail.

In the case of electronic filing, you can submit it from your computer 24 hours a day.

Since it is a covid-19, it is more convenient to file electronically because it saves you the trouble of mailing it.

The National Taxation Bureau promotes online filing, and in particular, the special deduction of 650,000 yen for blue filing is permitted only for online filing.

※If you submit it directly to the tax office, it will be 550,000 yen.

納Make tax payment / refund procedures

When you file a tax return, the amount of income tax will be determined, so you will be required to pay income tax or apply for a refund according to your income.

What happens if you don't file a tax return?

A very heavy penalty will be imposed.

【examples of a penalty】

・If you forget to file your tax return

Undeclared additional tax will be paid (15 to 20% will be added depending on the unpaid amount)

・If you have underreported

If you have filed a final tax return but the declared amount is less than the original amount, so-called "missing declaration", an additional tax of 10 to 15% will be levied as an underreporting additional tax.

Even if you have not filed your tax return, you can reduce your penalty by filing your tax return after the deadline.

・If you intentionally make a false declaration

On the other hand, if the content of the final tax return is intentionally false and falls under "income hiding" or "tax evasion", a heavy additional tax will be added and a high additional charge of 35-40% will be levied.

If it is further malicious, it will be subject to criminal penalties and may be imprisoned for up to 10 years or fined up to 10 million yen.

Plan your tax return

Even if it has expired, it is important to file your tax return as soon as you notice it.

Not only is it important to increase money, but it is also important to have know-how to prevent it from being wasted.

Regards,

hiro