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Working online - is it legal?

 
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GreenHorse



Joined: 07 Nov 2017
Posts: 14

PostPosted: Tue Jun 19, 2018 11:08 pm    Post subject: Working online - is it legal? Reply with quote

I know Japan is very picky about what you can do under certain visas, and that apparently working as an ALT is a different category than in an Eikaiwa, the latter of which allows you to teach private lessons but the former does not.

My question is, can you derive income from online teaching to people around the world (I'm thinking Italki, for example) without running astray of visa regulations? Would you need to report that income in Japan, or your home country?

Some people have stated that they need a side job sometimes, so I want to build one up before I go over there.

Sorry, last question for a while!
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Maitoshi



Joined: 04 May 2014
Posts: 718
Location: 何処でも

PostPosted: Wed Jun 20, 2018 12:47 pm    Post subject: Reply with quote

I think side-income over the Internet would be just fine as far as visa status is concerned. To stay on the right side of the law, one ought to report any and all income to any government entities to which one has the duty to report. As an American, this means reporting to both the US and Japan, though the actual taxes would only likely be paid to Japan if you qualify for the foreign income tax exclusion, as most American expatriates usually do. Some of the more enlightened nations (i.e. the UK) don’t even require nationals living abroad to report income earned while abroad.
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marley'sghost



Joined: 04 Oct 2010
Posts: 255

PostPosted: Wed Jun 20, 2018 11:46 pm    Post subject: Re: Working online - is it legal? Reply with quote

GreenHorse wrote:
I know Japan is very picky about what you can do under certain visas, and that apparently working as an ALT is a different category than in an Eikaiwa, the latter of which allows you to teach private lessons but the former does not.

My question is, can you derive income from online teaching to people around the world (I'm thinking Italki, for example) without running astray of visa regulations? Would you need to report that income in Japan, or your home country?

Some people have stated that they need a side job sometimes, so I want to build one up before I go over there.

Sorry, last question for a while!


You really ought to check with MOFA.
https://www.mofa.go.jp/j_info/visit/visa/long/index.html

Pretty tedious reading, but it should spell out what's what.
I think I may have been the one of the ones to say you need a side job. If you have a homemaker wife and two ravenous teenagers to feed, yes, you need side work. Single folks with modest hobbies and manageable school debt probably don't. So don't panic. That said, no reason not to give this Italki thing a go. Might be good experience. At worst, well you can quit.
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taikibansei



Joined: 14 Sep 2004
Posts: 803
Location: Japan

PostPosted: Sat Jun 23, 2018 11:08 pm    Post subject: Re: Working online - is it legal? Reply with quote

GreenHorse wrote:
Would you need to report that income in Japan, or your home country?


Where will the money be deposited? If it will be deposited directly into a Japanese bank account, you will need to report that income in Japan. If it will be directly deposited into a bank account in your home country, you will need to report it in your home country.

Note that, technically, you need to report the income in Japan regardless. That said, unless you are a Japanese citizen or a permanent resident here, I personally wouldn't do it over money deposited directly to a bank overseas. (It is a pain to file/report on earned foreign income in Japan--particularly if you don't want to be taxed twice. )

I personally have never heard of the government going after non-permanent resident foreigners over income earned overseas. I have, though, heard of the Japanese government going after its citizens and after expats who are permanent residents here--though usually over something big (e.g., a house sale back in the States...).

Finally, if it will be deposited directly into a Japanese bank account, note that your local Japanese bank branch may freak out about it over and over (and over) again. When I did this, the local bank would call me up every month in a panic to ask why the same amount of money from the same source had been deposited yet again into the account. This continued every month until I quit the other job. But then, this bank also grilled me about money I sent to and from MYSELF. Your mileage may vary.....
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kzjohn



Joined: 30 Apr 2014
Posts: 277

PostPosted: Sat Jun 23, 2018 11:37 pm    Post subject: Reply with quote

If you're not yet a tax resident, then income that's deposited in your overseas acct should stay there. If you repatriate it to Japan (regardless of amount, and even tho you are not yet a tax resident), it becomes taxable.

If you are a tax resident, then it should be reported.

**

I've been reporting passive income for quite a few years. It's not difficult at all, you just have to know what lines to use and how they break it down (which the tax office helps with), and then send in the relevant paperwork--e.g., monthly or year-end statements.
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The Transformer



Joined: 03 Mar 2017
Posts: 69

PostPosted: Sun Jun 24, 2018 3:28 am    Post subject: Reply with quote

kzjohn wrote:
If you're not yet a tax resident, then income that's deposited in your overseas acct should stay there. If you repatriate it to Japan (regardless of amount, and even tho you are not yet a tax resident), it becomes taxable.

If you are a tax resident, then it should be reported.


If your home country has a tax agreement with Japan (as Western countries do) then that should prevent any foreign-earned income repatriated to Japan from being taxed twice.
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taikibansei



Joined: 14 Sep 2004
Posts: 803
Location: Japan

PostPosted: Sun Jun 24, 2018 5:36 am    Post subject: Reply with quote

kzjohn wrote:
If you're not yet a tax resident, then income that's deposited in your overseas acct should stay there. If you repatriate it to Japan (regardless of amount, and even tho you are not yet a tax resident), it becomes taxable.

If you are a tax resident, then it should be reported. 


Kzjohn, I normally agree with you 100%. However, there are two types of foreign "tax residents" under Japanese law: permanent and non-permanent. In the case of non-permanent tax residents, "if foreign sourced income is received overseas and is not remitted to Japan, it would be non-taxable in Japan." If you are a permanent resident, however, that income is taxed whether you remit it or not. Here's a handy English link on this:

http://shimada-associates.com/en/individual-income-tax-return-in-japan-2017-2018-latest.html

The definitions of the various categories are here:

Quote:
Any individual who has a domicile or owns a residence continuously for one year or more is classified as a “Resident.”

Among “Resident,” any individual of Non-Japanese nationality having domicile or residence in Japan for an aggregate period of 5 years or less within the last 10 years is classified as a “Non-Permanent Resident.”

Resident other than “Non-Permanent Resident” is classified as “Permanent Resident.”

Any individual other than “Resident” mentioned above is classified as a “Non-Resident.”


Accordingly, with regards to the OP, I would not report any overseas income for any reason for the first five years. (And to be frank--and this is where our opinions really differ--unless the sum is significant, I personally wouldn't report even beyond five years.)
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taikibansei



Joined: 14 Sep 2004
Posts: 803
Location: Japan

PostPosted: Sun Jun 24, 2018 5:46 am    Post subject: Reply with quote

The Transformer wrote:
kzjohn wrote:
If you're not yet a tax resident, then income that's deposited in your overseas acct should stay there. If you repatriate it to Japan (regardless of amount, and even tho you are not yet a tax resident), it becomes taxable.

If you are a tax resident, then it should be reported.


If your home country has a tax agreement with Japan (as Western countries do) then that should prevent any foreign-earned income repatriated to Japan from being taxed twice.


Yes and no. If you have earned income outside of Japan but live in Japan, you are able to deduct the amount of tax you can prove you paid (a deductible called 外国税額控除), but you still must pay the difference if the tax rate in Japan is higher. Or so I was told. And in my case, it was higher...so I was taxed twice.

I also have a very unhelpful person in the local tax office. Perhaps if I had a helpful person, I would be more enthusiastic about the process.
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The Transformer



Joined: 03 Mar 2017
Posts: 69

PostPosted: Sun Jun 24, 2018 6:56 am    Post subject: Reply with quote

taikibansei wrote:
If you have earned income outside of Japan but live in Japan, you are able to deduct the amount of tax you can prove you paid (a deductible called 外国税額控除), but you still must pay the difference if the tax rate in Japan is higher.


Yes, that's true. That's what I was told by the tax authorities back home as well.
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kzjohn



Joined: 30 Apr 2014
Posts: 277

PostPosted: Sun Jun 24, 2018 8:07 am    Post subject: Reply with quote

taikibansei wrote:
kzjohn wrote:
If you're not yet a tax resident, then income that's deposited in your overseas acct should stay there. If you repatriate it to Japan (regardless of amount, and even tho you are not yet a tax resident), it becomes taxable.

If you are a tax resident, then it should be reported. 


Kzjohn, I normally agree with you 100%. However, there are two types of foreign "tax residents" under Japanese law: permanent and non-permanent. In the case of non-permanent tax residents, "if foreign sourced income is received overseas and is not remitted to Japan, it would be non-taxable in Japan." If you are a permanent resident, however, that income is taxed whether you remit it or not. Here's a handy English link on this:

http://shimada-associates.com/en/individual-income-tax-return-in-japan-2017-2018-latest.html

The definitions of the various categories are here:

Quote:
Any individual who has a domicile or owns a residence continuously for one year or more is classified as a “Resident.”

Among “Resident,” any individual of Non-Japanese nationality having domicile or residence in Japan for an aggregate period of 5 years or less within the last 10 years is classified as a “Non-Permanent Resident.”

Resident other than “Non-Permanent Resident” is classified as “Permanent Resident.”

Any individual other than “Resident” mentioned above is classified as a “Non-Resident.”


Accordingly, with regards to the OP, I would not report any overseas income for any reason for the first five years. (And to be frank--and this is where our opinions really differ--unless the sum is significant, I personally wouldn't report even beyond five years.)


Hmm, I was at least trying to say that, I think. So take me with a grain of salt.

I guess I'd read that bringing that overseas income into Japan even as a non-permanent resident could trigger taxation, while leaving it outside Japan would not. I'm long past that point, so I may have not been paying proper attention.

As for not reporting it beyond five years, YMMV. "Significant" might be around ¥200,000/yr, the threshold for reporting (or not) some other things.

You may slide under their radar, and likely may, but OTOH, declaring and paying some minimal tax could be better than paying back taxes with interest and penalties for the previous three or five years.
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taikibansei



Joined: 14 Sep 2004
Posts: 803
Location: Japan

PostPosted: Sun Jun 24, 2018 8:12 pm    Post subject: Reply with quote

I'd agree with ¥200,000/yr being the threshold of significant. More to the point, both you and I have 永住権, and so are permanent residents in that sense as well. For people like us, following all the rules to the fullest extent possible is in our best interest.

For somebody here mid-term with no intention of staying longer...yeah, I'd say that ¥200,000/yr is the threshold of what I would report.
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kzjohn



Joined: 30 Apr 2014
Posts: 277

PostPosted: Sun Jun 24, 2018 11:09 pm    Post subject: Reply with quote

There are some recent comments elsewhere that might be relevant to this situation. (scroll down a lot)
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The Transformer



Joined: 03 Mar 2017
Posts: 69

PostPosted: Mon Jun 25, 2018 1:33 am    Post subject: Reply with quote

That thread on reddit makes a good point that there are two sides to this: the "income" side which is overseen by the tax agency, and the "activities" side which is overseen by immigration.

So to stay on the right side of the law, first and foremost, you don't engage in any activities when you're in Japan beyond what your visa allows you to do (where the income is generated or paid into is irrelevant). Then you follow the necessary procedures regarding declaration of income and payment of tax, in Japan and/or in your home country.

I was under the impression that you can engage in "other activities" beyond what your visa authorizes, as long as the income generated doesn't exceed your "main" source of income authorized by your visa. If your second source of income were to become your main source of income, you'd be required to change visas to the visa category in which it falls under. I may be wrong on this though.
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