Jump to Another Job - Part 6: Tax Considerations - Year-end Adjustment & Resident Tax
Jump to Another Job - Part 6: Tax Considerations - Year-end Adjustment & Resident Tax
Changing jobs mid-year affects your tax obligations in Japan. Understanding how to handle year-end adjustments and resident tax payments will help you avoid complications and ensure compliance with tax regulations.
Tax Implications When Changing Jobs
Overview of Tax Responsibilities
When you change jobs in Japan, you need to manage two main tax obligations:
- Income tax (所得税) - handled through year-end adjustment or tax filing
- Resident tax (住民税) - may require switching payment methods
Year-end Tax Adjustment (年末調整)
How Year-end Adjustment Works
Year-end adjustment is the process where your employer calculates your exact annual income tax and adjusts for any over or under-payment throughout the year.
When Your New Company Can Handle It
Your new employer can perform year-end adjustment for your entire year if both conditions are met:
- You work until the end of December at your new company
- You submit your tax withholding slip (源泉徴収票) from your previous employer
Legal basis: National Tax Agency Guidelines
Comprehensive guide: NTA Year-end Adjustment Manual
Required Documents
From previous employer:
- Tax withholding slip (源泉徴収票) showing income and tax withheld
- Must cover the period from January 1 to your resignation date
To submit to new employer:
- Original tax withholding slip
- Any relevant tax deduction certificates (insurance, medical expenses, etc.)
When You Must File Your Own Tax Return
You must file a final tax return (確定申告) if:
- Your new company cannot obtain your previous employer's tax withholding slip
- You have a gap in employment that extends into the new tax year
- You have additional income sources
- You want to claim deductions not processed by your employer
Filing period: February 16 - March 15 of the following year
Resident Tax (住民税) Management
Understanding Resident Tax Payment Methods
Two payment methods:
- Special collection (特別徴収): Deducted from monthly salary
- Ordinary collection (普通徴収): Self-payment through bank transfer or convenience store
What Happens When You Leave Your Job
Automatic change to ordinary collection:
- When you resign, your resident tax temporarily switches to self-payment (普通徴収)
- You'll receive payment slips from your municipal tax office
- Payment is typically divided into quarterly installments
Continuing Payroll Deduction at New Company
To continue special collection at your new job:
- Request from your new employer to continue payroll deduction
- Submit Employee Change Notification (給与所得者異動届出書)
- Coordinate between old and new employers for seamless transition
Reference guide: R-Agent Tax Transition Guide
Timeline for Resident Tax Changes
If You Resign Mid-Year
June-December resignation:
- Remaining resident tax for the current year continues
- Next year's tax (June to May) follows your employment status
January-May resignation:
- Current year's remaining tax may be deducted from final paycheck
- Next year's tax starts with self-payment unless new employer takes over
Tax Planning Strategies
Optimal Timing Considerations
For year-end adjustment:
- Starting a new job before December maximizes the chance your new employer can handle year-end adjustment
- Keep all tax documents organized during your transition
For resident tax:
- Coordinate with both employers to minimize payment gaps
- Understand your payment schedule to budget accordingly
Document Management
Essential documents to maintain:
- Tax withholding slips from all employers in the tax year
- Receipts for tax-deductible expenses
- Health insurance and pension payment certificates
- Records of any unemployment benefit payments
Common Scenarios and Solutions
Scenario 1: Job Change in June
Situation: Resign in June, start new job in August
Tax handling:
- Year-end adjustment: New company can handle if you provide previous employer's tax slip
- Resident tax: Switch to self-payment for July, resume payroll deduction in August
Scenario 2: Extended Gap Between Jobs
Situation: Resign in March, start new job in September
Tax handling:
- Year-end adjustment: Likely need to file your own tax return
- Resident tax: Self-payment during unemployment period
Scenario 3: Multiple Job Changes in One Year
Situation: Work at three different companies in one tax year
Tax handling:
- Year-end adjustment: Final employer needs tax slips from all previous employers
- Resident tax: Multiple transitions between payment methods possible
Action Checklist
Before Leaving Your Current Job
- Request tax withholding slip (源泉徴収票)
- Understand your resident tax payment schedule
- Gather all tax-related documents for the year
When Starting Your New Job
- Submit tax withholding slip to new employer
- Discuss resident tax payment preferences
- Complete Employee Change Notification if continuing payroll deduction
If Filing Your Own Tax Return
- Gather all income statements for the year
- Collect deduction certificates
- Calculate total tax owed or refund due
- Submit return by March 15 deadline
Professional Advice
When to Consult a Tax Professional
Consider professional help if:
- You have complex income sources
- You're unsure about deduction eligibility
- You have international tax obligations
- You want to optimize your tax strategy
Free Resources
Government resources:
- Local tax office consultations
- National Tax Agency website and phone support
- Municipal tax office guidance for resident tax
Key Takeaways:
- Plan your job transition timing to simplify tax obligations
- Maintain thorough documentation throughout the process
- Coordinate with both employers for smooth tax transitions
- Don't hesitate to seek professional advice for complex situations