White Form Tax Returns in Japan: A Basic Guide
What is a White Form tax return?
The White Form tax return (白色申告 - shiroiro shinkoku) is the standard tax filing system in Japan for self-employed individuals, freelancers, and small business owners. It serves as the default option for those who haven't specifically applied for the Blue Form system, requiring simpler record-keeping but offering fewer tax benefits.
Who should use the White Form?
The White Form system is particularly for those just starting their businesses, or people with small scale self-employment.
- New business owners: Those just starting their business journey who want to focus on establishing operations before dealing with complex accounting requirements
- Part-time freelancers: Individuals who maintain regular employment while doing freelance work on the side, especially if their freelance income is relatively modest
- Small-scale operations: Business owners with annual income under ¥3 million and straightforward business models
- Simple business structures: Those with few business expenses, limited inventory, and no employees
- Transitional periods: Business owners who missed the Blue Form application deadline but plan to switch in the following tax year
- Digital platform workers: Individuals working primarily through platforms that provide detailed income statements (like ride-sharing or delivery services)
The White Form might be your best choice if you:
- Have limited time for bookkeeping and accounting tasks
- Don't anticipate significant business losses that would benefit from loss carry-forward
- Have most of your income and expenses clearly documented through digital platforms or bank statements
- Are testing a business idea before committing to full-time operations
- Plan to keep your business operations small and simple
Do I have to apply for the White Form?
No, if you have started a business or are self-employed, the default option is the White Form. You don't need to make any special application in order to file your taxes.
If you are currently using the Blue Form and want to switch back to the White Form, however, you can submit a "Cancellation of Blue Form Tax Return" (青色申告の取りやめ届出書) to the tax office to switch back.
What are the record-keeping requirements?
The White Form has more straightforward record-keeping requirements compared to the Blue Form. While less demanding, maintaining good records is still essential for accurate tax filing and potential audits.
Recommended Record-Keeping Practices:
- Keep a simple spreadsheet or ledger tracking monthly income and expenses
- Maintain separate bank accounts for business and personal use
- Store receipts and documentation for at least 7 years
- Take photos or scan receipts to prevent fading
- Use basic accounting software or apps to track expenses
- Document any mixed personal/business expenses with clear notations about business use percentage
While the White Form doesn't require double-entry bookkeeping or complex accounting systems, maintaining organized and consistent records will help ensure smooth tax filing and provide protection in case of audit inquiries.
Limitations and considerations
The White Form comes with several limitations compared to the Blue Form system:
| Feature | White Form Limitation |
|---|---|
| Basic Deduction | ¥48,000 maximum |
| Loss Carry-Forward | Not available |
| Family Employment | Limited recognition of family employee expenses |
Practical implications of using the White Form:
- May face more challenges when applying for business loans due to simpler records
- Less detailed documentation available during tax audits
- Fewer tools for analyzing business performance
- Potentially lower credibility with financial institutions
While the White Form system offers simpler record-keeping requirements, the reduced tax benefits and limitations make it most suitable for those with straightforward business operations or as a temporary solution while preparing to transition to the Blue Form system. For most business owners who can maintain more detailed records, the Blue Form system's additional benefits usually outweigh its increased record-keeping requirements.