Tax: employment vs business income?

I'm a freelance writer living in Tokyo, about to file my taxes as usual. But after doing some reading on http://gaijintax.com/tax-info/, I've started thinking that I've might have gone about this the wrong way so far. Previously, I've declared my freelance income as regular employment income. But judging from what this Gaijin Tax site says, it seems like I could in theory reduce my tax bill significantly by declaring it as private business income instead, and claim a long list of deductions.

Since this all seems pretty complicated to me, I was wondering if anyone here with knowledge of these things by any chance could clear a couple of things up for me:

1. What is the tax rate for "self-employed" people like me? Is it higher or lower than the standard income tax? Is it the same as the "corporate tax" (which seems to consist of 3, 4 or even 5 different taxes)?

2. I've seen lots of people mention the "white form" and "blue form" for filing business income. But the difference is unclear to me. Are deductions for specific business expenses (in my case, mainly lots of business trips) available using the white form, or would I have to apply for the blue form?

3. Is it at all possible to deduct specific business expenses from regular employment income?

Thanks in advance!

Hello.

At first, if you are really freelancer, your income is not employment income.

As for rate of income tax, it differs depending of the amount of your taxable income.

If the amount of taxable income is higher, the rate of income tax is higher.

If you can use blue form ( blue tax return = aoiro shinkoku ), you can apply for income deduction of 650,000 yen.

So, you can reduce the amount of taxable income by 650,000 yen.

If you declare your income as employment income, you cannot sum up transportation fee as deductible expense.

You can learn a lot of matters relating to tax in this website. http://japanhousesaitama.lawyerjapanese.com/saitama/

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I'm a freelance writer living in Tokyo, about to file my taxes as usual. But after doing some reading on http://gaijintax.com/tax-info/, I've started thinking that I've might have gone about this the wrong way so far. Previously, I've declared my freelance income as regular employment income. But judging from what this Gaijin Tax site says, it seems like I could in theory reduce my tax bill significantly by declaring it as private business income instead, and claim a long list of deductions.

Since this all seems pretty complicated to me, I was wondering if anyone here with knowledge of these things by any chance could clear a couple of things up for me:

1. What is the tax rate for "self-employed" people like me? Is it higher or lower than the standard income tax? Is it the same as the "corporate tax" (which seems to consist of 3, 4 or even 5 different taxes)?

2. I've seen lots of people mention the "white form" and "blue form" for filing business income. But the difference is unclear to me. Are deductions for specific business expenses (in my case, mainly lots of business trips) available using the white form, or would I have to apply for the blue form?

3. Is it at all possible to deduct specific business expenses from regular employment income?

Thanks in advance!

Are you employed and getting "salary" paid to you by that employer, or are you an individual doing his own business on spot contract basis?

If you go to the tax office (before March 15) they will have the form and the tax guide in English. I believe there are different columns for "salary 給与所得" and business revenue 事業収入　営業収入." If you consider yourself a freelancer, then you should be filing under "business revenue."

However, don't forget that "salaried worker" has an automatic deduction (assumed expenses) and freelancers filing with business revenue need to justify all deductions/expenses with receipts.

1. That depends totally on the taxable income amount.

2. "Blue form" can be used if you can keep books properly (meaning noting down every expense every day; well, I can't, so I am on "white"). You get an extra deduction for going that way, but it is not much).

3. If you are entering your revenues under "給与", no, you get the automatic deduction (assumed expense percentage), and you cannot claim items separately.

"3. Is it at all possible to deduct specific business expenses from regular employment income?"
No.
"1. What is the tax rate for "self-employed" people like me? Is it higher or lower than the standard income tax?"
it is the same.
"Is it the same as the "corporate tax"?"
No.

salary: we can get automatic deduction.(but, no other deduction)
self-employed: we have to itemize everything. sometimes the amounts itemized are not higher than automatic deduction. if you buy high price items, the costs should be divided in several years, according the law.
blue: you have to write records correctly according to the law.
white: you can write them briefly.
if you take blue, you can have some deduction.
I advise you start from white.

your income is not a salary.
hire an accountant and learn somethings from him. it costs relatively cheap.

Thanks for the replies!

"if you buy high price items, the costs should be divided in several years, according the law."
I see. Does this apply to business trips (air fare, hotel stays) or only physical items?

Also, the official tax guide (http://www.nta.go.jp/tetsuzuki/shinkoku/shotoku/tebiki2015/pdf/43.pdf) indicates that I will need a "statement of profit and loss" for my non-employment income. Does this just mean I have to fill out the white form (earning, deductions etc) like the Gaijin Tax site shows, or is it a separate document I need to present as well?

That dividing up of large items mentioned by ken is referring to depreciation of things like equipment, PC and such, so that applies to only physical items (there may be amortization of business rights and other intangible matters, but I have not de alt with those at all).

There is an A4 sized form called profit and loss statement that is part of the whole format package the tax office gives you. You need to fill that out. This is where you list your total revenues, then your expenses, like rent, utilities, tranportation expenses, advertisement fees, other miscellaneous expenses, etc., to arrive at your profit that goes into the big form.