Tax Season Survival Guide: Tax Returns Made Easy!

2025-03-10

Many individuals, particularly those who file taxes for the first time, often feel overwhelmed by questions like, “How do I file a tax return?” and “When should I start and finish the process?” A tax return is a process in which you calculate the income tax you owe based on your earnings over the past year and submit the information to the tax authorities.

Freelancers and sole proprietors are typically required to file a tax return. However, even if you’re an employee, you may still need to file one if you qualify for deductions, such as medical expenses, mortgage interest, or additional income from a side job.

In this article, we will guide you through the process of filing a tax return, including who needs to file and who doesn’t. To ensure a smooth filing experience, especially if it’s your first time, it’s important to understand the necessary documents and the basic steps involved.

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What is a tax return?

A tax return is the process of calculating and paying income tax, including any special income tax for reconstruction, on the earnings you generate within a calendar year from January 1st to December 31st. Income is determined by deducting allowable expenses from your total sales or revenue.

There are two methods for filing a tax return: the “blue return” and the “white return.” Before you begin preparing your tax return, it’s important to decide which method suits your situation.

Blue return

The blue return is a filing method that offers several preferential treatments, including:

A special blue return deduction of up to ¥ 650,000.

The ability to record the salary of a blue business employee as an expense.

The option to carry forward or carry back net losses.

The ability to record bad debt reserves.

Access to the special exemption for small depreciable assets

However, suppose you choose to file a tax return using the blue return method. In that case, you will need to submit a “Business Start-up Notification” and a “Blue Return Approval Application” to the tax office in your area. Additionally, unlike the white return, be aware that the blue return requires more documentation, including journals, general ledgers, and cash books, which can be more time-consuming to prepare.

White return

White returns require fewer documents and are easier to maintain compared to blue returns, but they come with fewer tax benefits. If you haven’t submitted a blue return application, you will automatically be filing a white return.

For those who have just started a business with a low income or for business owners operating at a loss, the simpler white return is often a more suitable option.

Who has to file a tax return?

If your income exceeds ¥ 480,000 in a year, you are required to file a tax return. You must file if you meet any of the following conditions:

You earn a certain amount of income as a sole proprietor or freelancer

Your annual income exceeds ¥ 200,000 in addition to income subject to year-end adjustment

Your annual salary income exceeds ¥ 20 million

You receive a certain amount of public pension

You make a certain profit from stock trading

You have other income, such as rental income from real estate

However, if you meet the following conditions, you won’t face a penalty for not filing a tax return. That said, if you apply for income deductions or tax credits, you may receive a refund, making it beneficial to file:

Your medical expenses exceed ¥ 100,000 in a year

An application for a housing loan deduction

A hometown tax payment

Who does not need to file a tax return?

For company employees and part-time workers, in principle, there is no need to file a tax return, as the company handles the year-end adjustment.

Additionally, individuals who fall under any of the following categories do not need to file a tax return:

The annual income is ¥20 million or less from only the salary income

Income from side jobs, other than salary income, is ¥ 200,000 or less per year

Business income of sole proprietors, freelancers, etc., is ¥ 480,000 or less

Individuals who applied for hometown tax payments under the “One-Stop Special System”

How to file income tax return

There are four steps to filing a tax return:

Documents required

Tax return form

Blue return settlement statement (for blue return)

Income and expenditure statement (for white return)

Deduction certificate

Identification document (such as a My Number card)

Bank account information (proof of your bank account)

While you don’t need to submit all of these documents, some are required when preparing your tax return, and others must be kept for a certain period after filing. Be sure to gather all the necessary documents in advance.

Reference: National Tax Agency | Documents to be attached or presented

② How to file an income tax return

There are four ways to prepare a tax return.

▶︎Tax return preparation corner

The National Tax Agency website offers a tool called the “Tax Return Preparation Corner,” where you can enter the necessary information to prepare your tax return. Since this is a government-provided tool, it is reliable. However, it may lack intuitive functionality and can be somewhat less user-friendly compared to other options.

▶︎Tax return software

Tax return software simplifies the process of preparing a tax return by allowing you to easily fill out the form and streamline the filing procedure. Designed to be user-friendly even for individuals with no bookkeeping or accounting knowledge, this software is highly recommended for sole proprietors, freelancers, and salaried workers with side jobs or deductions.

▶︎Handwritten

Handwritten tax returns are not recommended for beginners, as they are prone to calculation and entry errors. Additionally, if you file your blue tax return by hand, you won’t be able to receive the maximum deduction of ¥650,000 (this applies to those who keep electronic books)

▶︎Ask a lawyer or other professional

Filing your tax return with a lawyer will cost money, but it also has the advantage of allowing you to file your tax return accurately and consulting about your tax return. If you are a first-time tax return filer and are worried about filing, or if the tax return is complicated, you may want to consider asking a lawyer for help.

③ When are tax returns due

If you are filing at the tax office counter, the deadline is 5:00 p.m. on March 15th (after-hours collection boxes are available until collection time the next morning). If you are sending it by mail, the deadline is March 15th postmark, and if you are submitting online via e-Tax, the deadline is midnight on March 15th.

④ Paying your tax or receiving your refund

Once you have completed your tax return, pay your income tax by March 15th (or the following weekday if it falls on a weekend or public holiday). There are several ways to pay your tax.

Transfer tax payment

Direct payment (direct debit via e-Tax)

Internet banking

Credit card payment

Smartphone app payment

Convenience store payment via QR code

Cash payment

You can receive your refund by transferring it to your savings account or public fund receiving account or by collecting it at the nearest Japan Post Bank or post office.

If you file your tax return in person at the tax office or by mail, it typically takes about one to one and a half months to receive your refund. However, if you file using e-tax, you can expect to receive your refund in approximately three weeks.

Reference: National Tax Agency | Tax Payment

Tax return filing period

In principle, the period for filing your tax return is from February 16th to March 15th or the following weekday if the deadline falls on a weekend or public holiday.

While it is important to file by the deadline, if you are unable to do so due to unavoidable circumstances such as illness or disaster, there is a system in place to extend the filing deadline.

To request an extension, you must apply for an extension of the deadline for filing and payment due to disaster to the National Tax Agency. Once the unavoidable circumstances are resolved, the filing deadline can be extended for up to two months.

Reference: National Tax Agency | 2024 INCOME TAX AND SPECIAL INCOME TAX FOR RECONSTRUCTION GUIDE

What happens if I don’t do my tax return?

If you do not file a final tax return by the due date, you will be subject to a “late payment penalty,” “failure to file additional tax,” “heavy additional tax,” etc., in addition to the original tax.

In addition, a final tax return serves as proof of income. Therefore, please be aware that if you do not file a tax return, you may not be able to receive services such as exemption from national health insurance and national pension, tax reduction procedures, public housing, and various loan contracts.

Late payment penalty

A late payment penalty is imposed when taxes such as income tax and consumption tax are not paid by the due date. A late payment penalty is added based on the statutory interest rate according to the period of delay in payment.

If payment is made within two months of the due date, 7.3% per annum is imposed in principle. But for periods after January 2021, the rate will be the lower of the specified standard rate of delinquent tax plus 1%.

If payment is made more than two months after the due date, 14.6% per annum will be imposed in principle. But for periods after January 2021, the rate will be the lower of the specified standard rate of delinquent tax plus 7.3%.

Non-filing penalty tax

The non-filing penalty tax is a tax that is imposed if you do not file your tax return by the deadline.

As a penalty for not filing, a certain percentage (usually 15% for amounts up to ¥ 500,000 and 20% for amounts over ¥ 500,000) is added to the amount of tax that should have been paid.

However, if you voluntarily file before a tax audit, the non-filing penalty tax is 5%.

Heavy penalty tax

The heavy penalty tax is imposed if you intentionally conceal income or make false declarations when filing your tax return.

If fraud is detected, a tax rate (usually 35% or 40%) heavier than the additional tax on underreported or undeclared income is applied. In severe cases, criminal penalties may also be imposed.

Reference: National Tax Agency | No.14001 Overview of delinquent tax and additional tax

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