The procedure of calculating your own income and tax amount for the year (January 1 to December 31) and filing a declaration with the tax office during the period from February 16 to March 15 of the following year. While most salaried employees can complete their obligations through year-end adjustment, a final tax return is required for medical expense deductions, Furusato Nouzei donation deductions, reporting side income, and the first year of mortgage deductions.
When a Final Tax Return Is Required and Types of Filing
The main cases requiring a final tax return are: having business income as a self-employed person or freelancer, salary income exceeding 20 million yen, side income exceeding 200,000 yen, receiving salary from two or more sources, and having real estate income or stock capital gains. Cases where filing is not mandatory but advantageous include: medical expense deduction, Furusato Nouzei donation deduction (6 or more municipalities), the first year of mortgage deduction, and having left a job without receiving year-end adjustment.
Filing types are divided into "white return" and "blue return." White returns have simpler bookkeeping requirements but no special deduction. Blue returns require double-entry bookkeeping but offer significant benefits including a special deduction of up to 650,000 yen, 3-year loss carryforward, and the ability to count family member salaries as business expenses. Those with business or real estate income should choose blue return filing despite the extra effort. Using accounting software (freee, Money Forward Cloud Tax Return) makes blue return filing possible even without knowledge of double-entry bookkeeping.
Practical Steps and Key Considerations for Filing
The final tax return process follows this sequence: gather necessary documents, calculate income, apply deductions, compute tax amount, prepare and submit the return, then pay taxes (or receive a refund). Using the National Tax Agency's "Tax Return Preparation Corner," you can complete the return simply by following on-screen instructions. Filing via e-Tax (electronic filing) allows you to file from home, and refund processing is faster (typically about 3 weeks, compared to 1-2 months for paper submissions).
A common mistake is missing the filing deadline (March 15). Late filing incurs a delinquent return penalty (5-20%) and late payment interest. However, refund filings (where you are getting money back) can be filed retroactively for up to 5 years, so if you forgot to file for medical expense deductions or Furusato Nouzei in past years, you can still file now. Also, filing a final tax return invalidates all One-Stop Special applications, so you must include Furusato Nouzei donations in the return. Overlooking this point and losing deductions is extremely common.
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