In July, money vanishes from a freelancer's account with a sound
In mid-June, an unfamiliar envelope arrives.
The sender is the tax office. When I open it, I see unfamiliar terms lined up.
"Estimated... tax payment? Even though I haven't earned anything yet?"
It seems that in their first summer as a freelancer, many people pause at this envelope. Why am I being told to pay taxes in advance when this year's earnings haven't even been finalized yet?
The true nature of that envelope
This is a notice for "estimated tax payment." It is a system where you pay your income tax for the current year in two installments in advance, based on the previous year's income—it applies to those whose estimated tax base amount is 150,000 yen or more. The notice was already sent out in mid-June.
The deadline for the first installment is July 31, 2026.
This is not the end. At the end of August, the deadline for the second installment of resident tax (ordinary collection) and the second installment of national health insurance premiums—in many municipalities, August 31—will overlap (deadlines vary by municipality, so please check with your local government). Furthermore, in November, the second installment of the estimated tax payment is looming.
By the way, for those whose income this year is likely to be significantly lower than last year, there is a system called "application for reduction of estimated tax payment." The application deadline for the first installment was July 15, which has already passed as of the publication of this article—however, you can apply for the second installment between November 1 and November 15. Please check the National Tax Agency's website for details such as eligibility criteria and required documents.
Every year around this time on X, similar posts appear. The confusion over a system that forces you to pay in advance based on projections—the sentiment of "I haven't even earned it yet" seems to be repeated every year, regardless of how long one has been a freelancer.
I want you to stop and think for a moment here
"Net income disappearing" is not because the system is mean.
It is just that the timing is concentrated.
Estimated tax payment is a prepayment of this year's taxes—if you end up paying too much, it will be refunded when you file your final tax return. The system itself is not that unreasonable. However, if you reach these dates without knowing that the deadlines are clustered in July and August, you will face the reality of your account balance steadily decreasing.
If you don't know, your cash flow will crash. If you do know, you can plan for it. That is the only difference.
3 steps to avoid tears
First. Put all payment deadlines into your calendar. July, August, November, January—register all the scattered deadlines for the whole year in advance.
Second. Set aside a certain percentage of your sales as a "tax box" in advance. Instead of scrambling to move money on the day of the withdrawal, keep it in a separate bucket the moment you earn it.
Third. Scan or photograph notices, payment slips, and invoices each month as they arrive and save them as PDFs. Help your future self when it comes time to file your final tax return.
That is why I made this (freetool.jp)
I have prepared tools to help you handle the third 'organizing' step without any hassle.
▶ Combine monthly documents into a single PDF (freetool.jp/pdf/merge)
Payment slips, invoices, receipts—you can combine the files you've collected each month into one PDF.
▶ Take a photo of a paper payment slip with your smartphone and turn it into a PDF (freetool.jp/pdf/from-image)
Notices that arrive on paper can be turned into PDFs immediately by taking a photo. If you combine them later, you will have a year's worth of records in one file.
In both cases, the processing is completed entirely within your browser, and no files are sent to a server. No registration is required, and it is completely free.
Why am I writing this?
When I was a company employee, taxes were deducted from my monthly salary without me even noticing. I took it for granted back then that the company's payroll department would handle the arrangements for me in the form of a year-end tax adjustment.
As a freelancer, you pay the same amount with your own hands. There is no one to deduct it for you. Visualization and preparation are not things someone else does for you; they are things you create yourself.
Salary deductions during my time as an employee were, so to speak, 'invisible arrangements.' I believe what a freelancer needs is the task of replacing that with 'visible arrangements' using their own hands.
There is an article I would like you to read as well. 'That receipt photo was a nightmare for accounting'—it is also about the arrangements surrounding documents.
note.com/jbratings/n/n6e404d0c4d5b
I want these people to use it
Received a notice of estimated tax prepayment for the first time this year
Don't know what or how much will be deducted in July and August
Payment slips and invoices are scattered everywhere
Every time tax return season comes around, I'm searching for documents
If even one of these applies to you, the next time an envelope arrives, try opening your calendar before you open the envelope.
Finally
You cannot change the system.
But you can change your arrangements starting today.
—Changing the sound of money disappearing from your account from a sound of surprise to a sound you expected. That alone should make this summer sound quite different.
Legal amendments and application conditions may change from year to year. Please check with your local tax office, a tax accountant, or your local municipality for details.
→ Try using FreeTool: https://freetool.jp/?utm_source=note&utm_medium=article&utm_campaign=tachidomaru&utm_content=015-freelance-nozei
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Reference:
- National Tax Agency "Don't forget to pay your estimated income tax and special reconstruction income tax (1st installment)" https://www.nta.go.jp/publication/pamph/koho/campaign/r8/Jul/02.htm
- National Tax Agency "A1-3 Procedures for applying for a reduction in the estimated tax amount for income tax and special reconstruction income tax" (Application period for the 2nd installment: November 1st to November 15th) https://www.nta.go.jp/taxes/tetsuzuki/shinsei/annai/shinkoku/annai/02.htm
- Chofu City "Due dates for resident tax and national health insurance tax" (An example for each local government) https://www.city.chofu.lg.jp/030030/p016023.html
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FreeTool
A collection of free tools to process PDFs, images, and text safely using only your browser. Files are not sent to a server, so it's safe even for confidential company documents. No registration required, completely free. ▶ freetool.jp