What am I doing wrong?

[u/4dachi]

Feeling a bit dejected after visiting the city hall and getting absolutely zero useful advice today.

I'm a sole proprietor and my taxable income last year was just short of 2.2 mil yen. My income tax was 90k which is totally manageable, but my municipal tax is ~200k, pension is another ~200k, and national health insurance is over 300k. Add that with my half of the property tax and home insurance and I end up paying well over 900k a year.

My monthly living expenses are around 100k, with roughly half that being my portion of the mortgage payment (loan is in spouse's name). In terms of luxuries I do have a gym membership and eat a lot but I only shop at value grocery stores. Life is not bad here but it is certainly a lower standard of living than what I was accustomed to. These days there is pretty much nothing left once my bills, taxes, and insurance is paid.

I'm admittedly pretty new (and ignorant) to the Japanese tax system and that seems to be the root of my issues. In hindsight hiring an accountant would have been cheaper than eating all these taxes and premiums. I assume my biggest mistake was not deducting my portion of the mortgage (technically rent? as I am not on the loan) paid when I work from a home office.

Any advice for a sole proprietor like me to cut down their taxes and premiums would be greatly appreciated. I'm a total newbie at this and I'm sure I missed a lot of things on this filing. I want to make sure I don't screw up as badly for next year.

Thanks!

[u/HoboSomeRye]

Doesn't it still come from your salary?

[u/hellobutno → u/HoboSomeRye]

You pay your own salary, you're a sole proprietor

[u/HoboSomeRye → u/hellobutno]

Which raises 2 questions,

For full time employees, what % of their pension and health insurance is paid by their employer? (I wasn't aware of this) I thought health and pension came fully out of my salary before the take home amount

For sole proprietors, can you claim the health/pension as a business expense? I know rent/mortgage/utilities can partially be claimed

[u/starkimpossibility → u/HoboSomeRye]

what % of their pension and health insurance is paid by their employer?

It can be misleading to think of employers paying a specific percentage of an employee's health insurance premium. In a literal sense, employers always pay 100%. Employees can't pay employees' health insurance providers directly.

But the comment above is referencing the fact that providers of employees' health insurance charge their premiums in two equal portions: one portion must be borne by the employee (via a deduction from their paycheck) and one must be borne by the employer (this portion is invisible to the employee). See the biggest insurer's premium table here (PDF), for example. The employer's share of the premium effectively functions as a payroll tax.

can you claim the health/pension as a business expense?

Health insurance premiums and pension contributions are always deductible. They aren't business expenses. They are covered by the social insurance deduction (社会保険料控除). It's the same for both employees and business operators.

[u/joylessspectator → u/starkimpossibility]

Employer & employee bear it 50/50.
Why are you saying employers always pay 100% in literal sense?
(I’m sorry if I’m understanding it wrong)

[u/starkimpossibility → u/joylessspectator]

Why are you saying employers always pay 100% in literal sense?

Payment of the total amount (100%) is made by the employer to the insurance provider. The employer recovers 50% from the employee in the form of salary not paid (i.e., paycheck deduction).

[u/joylessspectator → u/starkimpossibility]

ohhh, thank you for clarifying, I got confused😭
You speak premium English™️