A thorough explanation of tax calculations, tax filing, and tax saving strategies for salaried workers trading overseas forex

If you are a salaried employee or receive a salary from your employer, you must file a tax return if your profits from overseas forex trading exceed 200,000 yen.

Tax filing is a procedure that, in principle, takes place from February 16th to March 15th, where you declare your income from January 1st to December 31st of the previous year and calculate your taxes

Profits from overseas forex trading are subject to comprehensive taxation, meaning that a progressive tax system applies, where the tax rate increases with higher income

Therefore, this article will explain what salaried employees should be aware of when filing their tax returns

For information regarding taxes on overseas forex trading, please read the complete guide to overseas forex taxation

A must-read for salaried workers! Rules regarding taxes and tax filing for overseas forex trading

Let's get straight to explaining the tax and tax filing rules for overseas forex trading that salaried workers should know

Taxes are levied when you make a profit of 200,000 yen or more per year

Salaried employees and others who receive a salary are required to pay taxes if they earn more than 200,000 yen in profits from overseas forex trading annually

Since taxes on overseas forex trading are calculated by combining it with other income such as salary, you must file a tax return if your annual profit exceeds 200,000 yen.

The following are the individuals and conditions under which you are required to file a tax return if you have made a profit from overseas forex trading

<Salaried employees>

Target audience	- Individuals who receive a salary from their employer, such as company employees, part-time workers, or temporary workers. - Individuals who have income from public pensions, etc.
conditions	If your annual income other than salary exceeds 200,000 yen

This is for non-salaried individuals who are not company employees

<Non-salaried employees>

Target audience	Unemployed individuals, self-employed individuals, housewives, students, and others who do not receive a salary
conditions	If your total annual income, including income from overseas forex trading, exceeds 480,000 yen

An important point to note is income from sources other than overseas forex trading is also included in the conditions for filing a tax return . If you have other sources of income, you will need to file a tax return if the total exceeds 200,000 yen.

<Note: This does not apply to the time of withdrawal.>

Taxes on overseas forex trading are incurred not when you withdraw funds from your overseas forex broker account, but when your position is closed and the profit or loss is reflected in your account .

Even if you haven't withdrawn the funds, be aware that the profits and losses from closed positions are still subject to taxation

If your salary income is low, you may not need to file a tax return because of deductions

If your annual income from part-time or temporary work may not need to file a tax return due to deductions.

For example, in the cases described below, you do not need to file a tax return

• Annual salary for part-time workers is 650,000 yen
• Profits earned from overseas forex trading are less than 430,000 yen per year

Calculation formula : (Annual salary 650,000 yen - Employment income deduction 550,000 yen) + Overseas FX 380,000 yen - Basic deduction 480,000 yen = Taxable income 0 yen

If your annual salary is 650,000 yen, you can receive a deduction of up to 1,030,000 yen. If your profits from overseas forex trading are 380,000 yen or less, your taxable income will be 0 yen, so you do not need to file a tax return

[Tax Accountant Supervised] Complete Guide to Taxes on Overseas Forex Trading | Differences in Tax Rates and Calculation Methods Compared to Domestic Forex Trading, and How to File Your Tax Return

The tax category is "miscellaneous income"! Progressive taxation applies, meaning the tax rate increases as you earn more

Profits from overseas forex trading are classified as miscellaneous income, and therefore, progressive taxation applies when calculating taxes

Progressive taxation is a system where the more profit you earn, the higher your taxes become, and the tax rates are set in seven stages according to your taxable income.

Income tax table

Taxable income	tax rate	Deduction amount
From 1,000 yen to 1,949,000 yen	5％	0 yen
From 1,950,000 yen to 3,299,000 yen	10％	97,500 yen
From 3,300,000 yen to 6,949,000 yen	20％	427,500 yen
From 6,950,000 yen to 8,999,000 yen	23％	636,000 yen
From 9,000,000 yen to 17,999,000 yen	33％	1,536,000 yen
From 18,000,000 yen to 39,999,000 yen	40％	2,796,000 yen
Over 40,000,000 yen	45％	4,796,000 yen

Source: Income Tax Rates | National Tax Agency

Unlike overseas forex trading, profits earned from domestic forex trading are subject to separate taxation. This system calculates income tax based solely on profits from domestic forex trading, without combining them with other income such as salary income

The tax rate for separate taxation is a flat 15% income tax and 5% local inhabitant tax, totaling 20%. Until 2037, a reconstruction income tax rate of 2.1% will be added on top of that, bringing the total tax rate to 20.315%

The taxes incurred will be added on top of your salary income

Since overseas forex trading and salary income are subject to comprehensive taxation, income tax is calculated by multiplying the combined taxable income (overseas forex trading and salary) by the tax rate .

If you have any other sources of income besides overseas forex trading, your income tax will be calculated based on your total taxable income, including any profits or losses from those sources

The following eight types of income are subject to comprehensive taxation:

1. Interest income
2. Dividend income
3. Real estate income
4. business income
5. Salary income
6. Capital gains
7. temporary income
8. Miscellaneous income

for these eight types of income, income tax is calculated by multiplying the total taxable income by the tax rate . However, certain business income, capital gains, and miscellaneous income from futures trading (items 4, 6, and 8) are subject to separate taxation, meaning income tax is calculated separately from other types of income.

If the items are subject to separate taxation, declare them separately; otherwise, declare all items subject to comprehensive taxation

Unrealized gains and losses are not subject to taxation

Unrealized gains or losses on open positions are not subject to taxation

subject to taxation the total profit or loss realized after the positions are closed .

Therefore, positions that are not settled and whose profits or losses fluctuate due to exchange rate changes are not subject to tax filing

However, swap points received when adjusting for interest rate differences between currencies being bought and sold are subject to taxation when they are received and reflected in the account

Do I need to file a tax return for losses from overseas forex trading? We'll explain how to fill out the necessary forms and how to offset losses against gains for tax purposes!

Losses cannot be carried forward in overseas forex trading

Losses incurred in overseas forex trading cannot be carried over to the following yearTherefore, losses incurred this year cannot be offset against income in subsequent yearsHowever, if it is within the same year, it is permitted to offset profits and losses from other overseas forex brokers and calculate taxable income If you use three overseas forex brokers in the same year Company A: Loss of 1 million yen Company B: Profit of 500,000 yen Company C: Profit of 800,000 yen The loss of company A (1 million yen) is offset against the profit of company B (500,000 yen) and the profit of company C (800,000 yen), and the tax is calculated on the remaining 300,000 yen

However, cashback is subject to taxation

Cashback received through FX broker campaigns and other promotions is subject to comprehensive taxation.

Therefore, if you receive a cashback, you must include it in your comprehensive tax calculation.

However, the entire amount of the cashback received is not subject to taxation as temporary income; the taxable amount is calculated using the following formula

Calculation formula for temporary incomeCashback received - Expenses - Special deduction (500,000 yen) = Temporary income Formula for calculating the taxable amount on temporary income - Temporary income × 1/2 = Taxable amount of temporary income

The amount subject to tax is half the amount obtained by subtracting the special deduction of 500,000 yen from the temporary income

If you have other temporary income, add it to the taxable amount. If the taxable amount of temporary income exceeds 200,000 yen for salaried employees or 480,000 yen for non-salaried employees, you will need to file a tax return .

Please note that in some cases, the cashback you receive can only be used as margin and cannot be withdrawn. However, cashback that cannot be withdrawn is not subject to taxation.

Are cashback rewards from overseas forex trading taxable? Regarding the necessity of filing a tax return

Depending on the type, bonuses may be subject to taxation

The "bonus campaigns" offered by many overseas forex brokers vary in whether or not they are subject to taxation, depending on the type

Bonuses that can be withdrawn as cash: Taxable.
Credits that can be used as margin: Tax-free.

In short, account opening bonuses and deposit bonuses are "credits" that cannot be withdrawn, so they are not subject to tax. However, loyalty programs and other bonuses that can be converted into cash are subject to taxation.

If you are using MT4 or MT5, you can find out how much profit is taxable from your "Account History." Remember that "Total Profit/Loss" is taxable, while "Total Credit" is tax-exempt

Tax-saving strategies for overseas forex trading that salaried workers can implement

Record all expenses without fail

If you want to reduce the taxes on overseas forex trading

Please note that personal consumables and private dining expenses are not deductible. The criteria should be based on expenses used for overseas forex trading and linked to sales.

The following items are eligible for expense deductions:

• Cost of purchasing a computer or smartphone to be used for trading
• Communication costs
• Related book and newspaper expenses
• Seminar participation fee (including transportation and accommodation expenses)
• Rent and utilities
• VPS contract costs for automated trading
• Transaction fees
• Equipment costs (stationery, desks, chairs, etc. for business transactions)

When reporting expenses, you will need supporting documents such as receipts, invoices, and bank transfer records.

Furthermore, if you are claiming expenses for computers, smartphones, etc., costing 100,000 yen or more, you must spread the expense over several years. ( Depreciation )

Cost of purchasing a smartphone or computer	Distribution method
Less than 100,000 yen	Lump-sum accounting
100,000 yen or more but less than 200,000 yen	Accounted over three years
Over 200,000 yen	Accounted over four years

List of expenses that can be deducted in overseas forex trading | Explanation of what percentage of rent and mobile phone bills should be claimed as expenses

Using income tax deductions

Even salaried employees can claim income deductions other than the basic deduction

Claiming deductions can reduce your tax liability, so be sure to check if you are eligible for any deductions before filing your tax return

The following are the income deductions available to salaried workers:

• Medical expense deduction
• Life insurance premium deduction
• Deduction for contributions to the Small Business Mutual Aid System, etc

you can also use the "furusato nozei" system, which offers gifts in return for your donation .

Pay your taxes with a credit card and earn points

You can choose how you pay your income tax, but you can earn points if you choose "credit card payment."

For example, if your income tax is 1 million yen and the point reward rate is 1%, you will receive 10,000 points . For those with a large income tax amount, paying taxes with a credit card is also recommended.

Summary of Tax-Saving Strategies for Overseas Forex Trading | Explanation of How to Avoid High Taxes and Whether Loopholes Will Be Discovered

Points to note when salaried workers pay taxes on overseas forex trading

This article explains important points for salaried workers when paying taxes on overseas forex trading

How to prevent your company from finding out about your FX profits..

There are two ways to keep your overseas forex trading profits a secret:

• I will pay the local tax on overseas forex trading through ordinary collection
• I don't tell my colleagues that I have a side job

Local resident tax is calculated based on taxable income from January 1st to December 31st of the previous year and is deducted from your basic salary through special collection

There are two ways to pay resident tax: "special collection," where it is deducted from your salary by your company, and "ordinary collection," where you pay it yourself

It's conceivable that the company's resident tax officer might find out if the amount of resident tax is significantly higher than the taxable income from your main job

As a countermeasure, choose to "pay the local tax on overseas forex trading yourself .

be careful, as there are cases where may report you to the company if you tell them about your side job or if they see notifications on your smartphone screen

Make sure to check the "Pay myself" box in the lower right corner of the second page of your tax return form

When filing your tax return , check the box to "pay the local tax on overseas forex trading yourself."

Even if you select "pay yourself," your tax return may be mistakenly processed as special collection, so be sure to check with your city hall after filing your tax return

When filing your tax return, be sure to get your withholding tax statement from your company

When salaried employees and other .

When filing your tax return for overseas forex trading, including other types of transactions, be sure to prepare the following four items

1. Withholding tax slip
2. Documents required to claim various tax deductions (such as insurance premium deductions and medical expense deductions)
3. Annual trading report for overseas forex trading
4. Receipts and invoices to be deducted as expenses

You will need to enter the amounts from these documents into your tax return, so having them ready beforehand will make the process smoother

A complete guide to filing your tax return for overseas forex trading! How to avoid losing money on taxes?

Be careful of late payment penalties for forgetting to pay taxes

is generally set for March 15th

If you forget to pay your taxes or miss the tax payment deadline, you may incur the following late payment penalties

If you file your tax return or pay your taxes after the deadline, you will be charged a late payment penalty of 2.4% to 14.6%.

Failure to file a tax return may result in penalties such as a non-filing penalty tax or a heavy penalty tax

Failure to declare taxable income will result in a penalty tax of 15% to 20%. In cases of serious negligence such as concealing income, a heavy penalty tax of 35% to 40% will be imposed. If the filing deadline is missed, or if there are missing documents or concealment, the approval for blue return filing may be revoked or special deductions may be reduced.

Be careful, as penalties could result in the revocation of your blue return status or the need to pay extra taxes

Make sure you have the funds to pay your taxes

To avoid being charged additional taxes such as late payment penalties, make sure you have the funds set aside to pay your taxes .

Income tax on profits from overseas forex trading during the previous year must generally be paid by March 15th of the following year. Instead of spending all of your previous year's profits, be sure to set aside funds for tax payments beforehand

Furthermore, under the ordinary collection system for resident tax, taxable income for the previous year is calculated, and the calculated resident tax is paid .

Therefore, while special collection deducts resident tax in 12 installments, ordinary collection deducts it in 4 installments, which may result in a larger amount being paid at once

Since ordinary collection means you have to pay your resident tax yourself instead of having it deducted from your salary, make sure you manage your own funds for resident tax

[Overseas Forex] Frequently Asked Questions about Taxes for Salaried Workers

Here are three frequently asked questions regarding taxes on overseas forex trading

1. Can salaried workers file blue tax returns?
2. What is the deadline for paying taxes?
3. Can I combine profits and losses from domestic FX trading?

Let's check the items that interest you

Can salaried workers file blue tax returns?

Salaried employees can also file blue tax returns

The main advantages of filing a blue return are as follows: You can enjoy benefits such as significant tax savings

• You can receive a special deduction of up to 650,000 yen for blue-form tax returns
• Losses can be carried forward for three years, allowing them to be offset against profits in subsequent years

However, to file a blue return, you need to submit the following two applications:

• Notification of Commencement/Cessation of Business for Sole Proprietors
• Application for Approval of Blue Return Filing

Those eligible to file a blue return are individuals with business income, real estate income, or forestry income

For those filing blue-form tax returns, must be kept using double-entry bookkeeping, also known as proper bookkeeping

While single-entry bookkeeping, used for white-form tax returns, is a ledger that simply records income and expenses, double-entry bookkeeping is a ledger that manages detailed records

What is the deadline for paying taxes?

set for March 15th

Be aware that late tax payments may result in penalties such as late payment fees

Can I combine profits and losses from domestic FX trading?

Because overseas and domestic forex trading have different tax systems, profits and losses from each cannot be offset against each other

Overseas forex trading is subject to comprehensive taxation, where it is combined with other income, while domestic forex trading is subject to separate taxation, where income tax is calculated based on the profits from that trade alone

summary

This page explains the tax and tax filing rules for overseas forex trading that salaried workers should know

Finally, let's review the important points

• If you make a profit of 200,000 yen per year, you will need to file a tax return
• Overseas forex trading is subject to progressive taxation, where the tax rate increases as profits increase
• Profits and losses from open positions are not subject to tax reporting
• To prevent my overseas forex trading from being discovered by my company, I pay my local resident tax myself

Overseas forex trading is subject to comprehensive taxation, meaning that taxes are calculated by combining it with your salary income. Therefore, salaried employees should have their withholding tax statement issued by their company ready.

To reduce taxes on your salary income and side income, recommended to utilize expenses and various deductions . However, personal expenses incurred outside of overseas forex trading are not recognized as business expenses.

Since penalties may be incurred if you miss the filing or payment deadline, be sure to file your tax return with plenty of time to spare

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