Residency, income tax, resident tax, deductions, and cross-border filing.
Japan taxes you based on your residency status: non-resident, non-permanent resident, or permanent resident for tax purposes (distinct from immigration status). This determines whether only Japan-source income or worldwide income is taxable. Most employees have income tax withheld and settled through year-end adjustment (年末調整), so they never file a return — but side income, two employers, large medical expenses, or investment income can require a tax return (確定申告).
Two taxes run in parallel: national income tax (progressive) and local resident tax (住民税, roughly 10%), which is billed the year after the income is earned. New arrivals often get a surprise resident-tax bill in their second year, and people leaving Japan can owe resident tax after they depart.
Popular tools reduce tax: Furusato Nozei (ふるさと納税) turns part of your resident tax into local-government gifts, and deductions exist for medical costs, dependents, insurance, and iDeCo. Filing is done through e-Tax or at the tax office in the Feb 16 – Mar 15 window. For crypto, foreign assets, or US/Japan overlap, professional advice is worthwhile.
Non-resident, non-permanent, and permanent resident — and what each is taxed on.
Japan taxes you by tax-residency category (separate from your visa): non-residents on Japan-source income, non-permanent residents also on remitted foreign income, permanent residents on worldwide income.How the hometown-tax donation scheme turns resident tax into local gifts.
Furusato Nozei lets you donate to local governments for gifts while deducting almost the whole amount from your taxes — you effectively pay ¥2,000 for the gifts.When year-end adjustment is enough and when you must file a 確定申告.
Many employees are settled by year-end adjustment; you generally must file if you have side income over ¥200,000, multiple employers, self-employment, or want certain deductions.Cloud accounting software · freee K.K.
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For tax, Japan classifies you as non-resident, non-permanent resident, or permanent resident — separate from your immigration status. Broadly: non-residents are taxed only on Japan-source income; non-permanent residents (in Japan under 5 of the last 10 years, without permanent intent) are taxed on Japan-source income plus foreign income paid in or remitted to Japan; permanent residents (for tax) are taxed on worldwide income. This affects foreign income and investments, so confirm your category with the NTA or a tax accountant.
Many employees do not, because tax is settled by year-end adjustment (年末調整). You generally must file (確定申告) if you have side income over ¥200,000, two or more employers, self-employment income, sizeable investment or crypto gains, or you want to claim deductions like large medical costs or a first-year mortgage credit. Filing season is Feb 16 – Mar 15 via e-Tax. When unsure, check the NTA guidance or ask a 税理士.
Resident tax (住民税, about 10%) is charged the year after the income is earned, based on the previous year’s income. So in your first year you often pay little, and in your second year you get a bill for your full first-year income. The same lag means people who stop working or leave Japan can still owe resident tax afterward. Budget for it in advance.
Furusato Nozei (ふるさと納税) lets you donate to local governments and receive local gifts (food, goods) while deducting almost all of the donation from your resident and income tax — you effectively pay ¥2,000 out of pocket for the gifts. It is worth it for most taxpayers with sufficient income, up to a limit based on your income and family situation. Use the official rules and a limit simulator, and keep the paperwork (One-Stop or tax return) to claim the deduction.
Crypto profits are treated as miscellaneous income (雑所得) and taxed at your marginal rate — combined with resident tax this can reach roughly 55%, unlike the ~20% flat rate for listed stocks. Every disposal is taxable, including selling for yen, trading one crypto for another, and spending crypto on goods. You must track cost basis and calculate gains, so recordkeeping tools are important, and larger activity often warrants a tax accountant.