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Over the years, I've had numerous discussions about taxes and cost of living with several other expats or newbies to Japan. I tell people that you can expect to pay 40% or more in taxes and pay deductions, and the consumption tax is another added 8% (soon to be 10%). Basically half your money will be taken in taxes, so factor that in and decide if that is enough money for you to want to work and live in Japan.
Let's say you make 10,000,000 yen (100,000 dollars in a 1 to 1 yen to dollar exchange) a year:
20% will be taken as income tax
5% to 10% will be taken as inhabitant or local taxes (equal to city and state taxes, depends where you live)
5% will be taken for national health insurance (can be more in some cases)
9% (approximately) will be taken for pension insurance (equal to social security taxes)
That will usually be 40% or more of your money, usually taken directly from your pay by your company. In Japan, if you officially work for a company, they usually snatch all that directly and not that you pay it (as with various other countries). Out of 10,000,000 you have more like only 6,000,000 yen (60,000 dollars) left.
Japan, especially cities like Tokyo, have one of the highest cost of living. 8% consumption tax (soon to be 10%) and prices for many goods and food being higher than many other places. Then there is rent, electricity, gas, water, phone, Internet, etc...
In some cases and even here, people reacted strangely about how expensive Japan is or living in the city can be, particularly for foreigners or those considering working here. Some people are a special case or doing something illegal, that doesn't apply to what is normally done. A person new to Japan should be wary of taking advice from those in situations much different from their own. I can divide some of these by groups:
1) Foreigners working here for a short time or illegally on tourist visas, then going home soon after their visa expires.
Work visas are tied to you paying all required TAXES. If a foreigner thinks he will be slick and dodge Japanese taxes or required insurance, he can find himself in a lot of trouble. Like the city office locating them years later, then suddenly dumping a huge tax bill on them and demanding immediate payment (seen or heard of this numerous times), or the visa not being renewed.
Working illegally in Japan is like playing a very dangerous game of Russian roulette. When you least expect it, you can be done or caught. And they can ban you from returning to Japan for 5 years, which is forever in many cases, as they won't ever issue you a work visa or give you absolute hell with a marriage visa.
2) Married and/or have multiple kids.
These types can take off numerous deductions, so taxes have a lower burden to them. However, if you are single, you can't. And most people that I met who are planning or have just come to Japan to work are often single.
3) U.S. military base worker types, who's wife is Japanese or are only working part time
The U.S. military or civilian base worker types are paid and subject to U.S. tax codes, given a COLA (Cost Of Living Allowance), and depending on the case paid housing allowances (including government payment of utilities like gas, water, electricity, etc..). So, their taxes are lower (U.S. ones), and are given extra money by their government to live in Japanese apartments/houses.
If they have a Japanese wife who is working, her money can be like extra icing on the cake. Therefore, whatever she is paying in Japanese taxes is partially ignored or they don't care.
4) Young English teachers or low pay workers
In many cases, they pay lower taxes, because their pay is low to very low. Often below 3,300,000 (33,000 dollars) a year. Therefore the amount of disposable income they have is very limited, and often it's their intention to only be in Japan for a long vacation (a year or few years) or find a better paying job later.
In many cases they were hyper focused on just getting the chance to be in Japan as a type of long exotic vacation, so didn't pay too much attention to taxes or even money. Then, only later, did they realize how expensive everything is.
In some cases, the English teacher supplements with illegal side jobs or teaching extra English lessons for undocumented pay. Either putting themselves in danger of getting kicked out the country or overwork and exhaustion from 2 jobs and limited time.
Let's say you make 10,000,000 yen (100,000 dollars in a 1 to 1 yen to dollar exchange) a year:
20% will be taken as income tax
5% to 10% will be taken as inhabitant or local taxes (equal to city and state taxes, depends where you live)
5% will be taken for national health insurance (can be more in some cases)
9% (approximately) will be taken for pension insurance (equal to social security taxes)
That will usually be 40% or more of your money, usually taken directly from your pay by your company. In Japan, if you officially work for a company, they usually snatch all that directly and not that you pay it (as with various other countries). Out of 10,000,000 you have more like only 6,000,000 yen (60,000 dollars) left.
Japan, especially cities like Tokyo, have one of the highest cost of living. 8% consumption tax (soon to be 10%) and prices for many goods and food being higher than many other places. Then there is rent, electricity, gas, water, phone, Internet, etc...
In some cases and even here, people reacted strangely about how expensive Japan is or living in the city can be, particularly for foreigners or those considering working here. Some people are a special case or doing something illegal, that doesn't apply to what is normally done. A person new to Japan should be wary of taking advice from those in situations much different from their own. I can divide some of these by groups:
1) Foreigners working here for a short time or illegally on tourist visas, then going home soon after their visa expires.
Work visas are tied to you paying all required TAXES. If a foreigner thinks he will be slick and dodge Japanese taxes or required insurance, he can find himself in a lot of trouble. Like the city office locating them years later, then suddenly dumping a huge tax bill on them and demanding immediate payment (seen or heard of this numerous times), or the visa not being renewed.
Working illegally in Japan is like playing a very dangerous game of Russian roulette. When you least expect it, you can be done or caught. And they can ban you from returning to Japan for 5 years, which is forever in many cases, as they won't ever issue you a work visa or give you absolute hell with a marriage visa.
2) Married and/or have multiple kids.
These types can take off numerous deductions, so taxes have a lower burden to them. However, if you are single, you can't. And most people that I met who are planning or have just come to Japan to work are often single.
3) U.S. military base worker types, who's wife is Japanese or are only working part time
The U.S. military or civilian base worker types are paid and subject to U.S. tax codes, given a COLA (Cost Of Living Allowance), and depending on the case paid housing allowances (including government payment of utilities like gas, water, electricity, etc..). So, their taxes are lower (U.S. ones), and are given extra money by their government to live in Japanese apartments/houses.
If they have a Japanese wife who is working, her money can be like extra icing on the cake. Therefore, whatever she is paying in Japanese taxes is partially ignored or they don't care.
4) Young English teachers or low pay workers
In many cases, they pay lower taxes, because their pay is low to very low. Often below 3,300,000 (33,000 dollars) a year. Therefore the amount of disposable income they have is very limited, and often it's their intention to only be in Japan for a long vacation (a year or few years) or find a better paying job later.
In many cases they were hyper focused on just getting the chance to be in Japan as a type of long exotic vacation, so didn't pay too much attention to taxes or even money. Then, only later, did they realize how expensive everything is.
In some cases, the English teacher supplements with illegal side jobs or teaching extra English lessons for undocumented pay. Either putting themselves in danger of getting kicked out the country or overwork and exhaustion from 2 jobs and limited time.
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