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The curious case of the eroding eikaiwa salary (The Japan Times Online)

http://www.japantimes.co.jp/text/fl20120703zg.html

Quote:Thus, English instructors in Japan today are far from being the rare, highly sought-after commodity they seemed to be in the '80s and '90s, which has resulted in salaries remaining low and showing no signs of improving.

This is basically what it comes down to. As long as Japan remains "the fantasy land where anime and robots roam freely" there will be a constant flow of slaves to come work the jobs. Some of the jobs don't entail much work really so the pay you get doesn't quite reflect it all that much, but some of these companies are expecting more and more from the ALT/Eikaiwa, while trying to cut the pay. Already there are teachers that basically teach entire classes in the public school system. JET just recently cut its salaries as well to reflect this falling thing too. Why pay more when everyone is paying their teachers 20-30% less than you.

It'll eventually get really bad, with most jobs having so little pay that you barely get by each month. Ie: Burger flipping in your home country pays just as well as teaching English....while still requiring a 4 year degree.

If Japan's economy ever starts growing again, you might see some improvement in all sectors...maybe. I'm extremely cynical about this industry.

I don't know anyone making 250,000 yen a month flipping burgers. Eikaiwa is tax free too depending on your country of origin, right?

vix86 Wrote:JET just recently cut its salaries as well to reflect this falling thing too. Why pay more when everyone is paying their teachers 20-30% less than you.

To be fair, they raised JET salaries salaries too. Old salary was 3,600,000 after any applicable taxes.

Now it's

3,360,000 for first years
3,600,000 in year two
3,900,000 in year three
3,960,000 in year four/five

Tax free and with a yen exchange rate at 80. Kids straight out of college are getting a really, REALLY good deal going on JET.

Yeah, on JET I'm making like $45,000 a year tax free with the exchange rate.

Philosophy major/no skills win!

kitakitsune Wrote:I don't know anyone making 250,000 yen a month flipping burgers. Eikaiwa is tax free too depending on your country of origin, right?

You didn't read that part right. I said "It'll eventually get really bad." I'm not saying anyone working right now is making a burger flipper salary right now. Though some people get lured in by stuff like 180,000yen a month deals.

kitakitsune Wrote:To be fair, they raised JET salaries salaries too. Old salary was 3,600,000 after any applicable taxes.

Now it's

3,360,000 for first years
3,600,000 in year two
3,900,000 in year three
3,960,000 in year four/five

Tax free and with a yen exchange rate at 80. Kids straight out of college are getting a really, REALLY good deal going on JET.

Its a raise if you stay 3-5 years, but I'm really curious to know how many people do that. I have a funny feeling the new scale was put in place this way after looking at the statistics and seeing that a certain percent stay that long, while the vast majority move on to other stuff. Note that the salaries you are seeing there are salaries before taxes. They still take out taxes for Japan. You can't skip out on that.

JET salaries are after tax. If Japanese taxes are applicable to a JET, then by contract, the board of education must give them a raise where their after tax income equals X.

vix86 Wrote:Its a raise if you stay 3-5 years, but I'm really curious to know how many people do that. I have a funny feeling the new scale was put in place this way after looking at the statistics and seeing that a certain percent stay that long, while the vast majority move on to other stuff. Note that the salaries you are seeing there are salaries before taxes. They still take out taxes for Japan. You can't skip out on that.

Eh, part of it is that they WANT people to stay longer, and more pay is a good incentive. When you first come to be an English teacher you're usually pretty awful at it for about 6 months (since you don't yet know how to change your English when talking to learners, you don't have a feel for how much the learners know, you don't realize when you're making cultural mistakes that conflict with your teaching, etc.)

So teachers that stay for at least two years are a plus.

kitakitsune Wrote:JET salaries are after tax. If Japanese taxes are applicable to a JET, then by contract, the board of education must give them a raise where their after tax income equals X.

From the horses mouth.
【Change in Remuneration for JET Programme Participants Arriving in 2012】

Salaries are now BEFORE tax if you come over 2012+.

Tzadeck Wrote:Eh, part of it is that they WANT people to stay longer, and more pay is a good incentive. When you first come to be an English teacher you're usually pretty awful at it for about 6 months (since you don't yet know how to change your English when talking to learners, you don't have a feel for how much the learners know, you don't realize when you're making cultural mistakes that conflict with your teaching, etc.)

So teachers that stay for at least two years are a plus.

Oh I know its incentive. It was mentioned in the change I think. But I still suspect they set it up this way because many people just don't want to stay around for 3 years in the middle of no where and those people will leave. JET will save some money.

vix86 Wrote:

kitakitsune Wrote:JET salaries are after tax. If Japanese taxes are applicable to a JET, then by contract, the board of education must give them a raise where their after tax income equals X.

From the horses mouth.
【Change in Remuneration for JET Programme Participants Arriving in 2012】

Salaries are now BEFORE tax if you come over 2012+.

Well that's some bullshit...Good thing I got in before that change.

Anyway, there are still tax treaties between Japan and most countries within the program. For example, Americans wouldn't pay any taxes until year three and the raise to 3,900,000 would probably be enough to cover all taxes.

Still a really good deal IMO.

3,600,000 AFTER TAX to 3,360,000 BEFORE TAX. That's a significant cut no matter how you look at it. Even in year 4 and 5 you're earning less (after tax) than the previous salary.

I do think the sliding scale to get JETs to stay longer is a good idea though. Also, if saving some money allows the program to continue (rather then be cut altogether), then that's a positive too I suppose.

EDIT: I don't think "most" countries have a tax agreement like the US does... In Australia we certainly don't.

If there is an agreement with the US then it must be specific to the JET program. The thing about the tax free for the US. Is that you can work the system so that once you are here for a full year, you won't pay US taxes--you're exempt. But, you pay domestic taxes here in Japan. I've heard that places will waive residence taxes (ie: city tax) for JETs or something. But there are still other taxes that will hit you, hence the change to salary before tax.

kitakitsune Wrote:Still a really good deal IMO.

Right. JET is still the best in Japan, though there are more expectations too compared to say dispatch.

vix86 Wrote:If there is an agreement with the US then it must be specific to the JET program. The thing about the tax free for the US. Is that you can work the system so that once you are here for a full year, you won't pay US taxes--you're exempt. But, you pay domestic taxes here in Japan. I've heard that places will waive residence taxes (ie: city tax) for JETs or something. But there are still other taxes that will hit you, hence the change to salary before tax.

kitakitsune Wrote:Still a really good deal IMO.

Right. JET is still the best in Japan, though there are more expectations too compared to say dispatch.

I'm not sure exactly what you mean, but it's not specific to the JET program. By treaty, people from certain countries don't have to pay Local Inhabitants Tax or Personal Income Tax for their first two years living in Japan. That is, provided they fill out the paperwork.

(Edit: Made an error here. Not sure which countries are exempt for the first two years. Americans definitely are.)

You do have to pay other taxes though, and if you are a JET they are deducted from your salary.

When JET says 3,600,000 after taxes, they mean after personal income tax and local inhabitants tax. You are responsible for paying any other taxes and fees.

But if you aren't paying Japan taxes, then I think the expectation is that you are paying US Income taxes no?

vix86 Wrote:But if you aren't paying Japan taxes, then I think the expectation is that you are paying US Income taxes no?

Huh? Why would you be paying US Income Taxes when you aren't making any US income?

(My guess is that Japanese don't have to pay American taxes for two years, or something like that, similar to how immigration treaties work. I wonder if anyone knows about this?)

vix86 Wrote:If there is an agreement with the US then it must be specific to the JET program. The thing about the tax free for the US. Is that you can work the system so that once you are here for a full year, you won't pay US taxes--you're exempt.

You don't have to "work the system." The US and Japan do have tax treaties that stipulate that citizens paying taxes in one of the two countries don't have to pay taxes in the other:
http://www.irs.gov/businesses/internatio...30,00.html

There's another component to it whereby in certain cases, US citizens don't have to pay Japanese taxes for the first two years they are working in Japan. I don't entirely understand the details, but no, it's not a JET-specific thing, and yes, people covered by this exclusion don't have to pay US taxes on their Japanese income either.

When I lived in Japan I worked at an Eikaiwa and I paid Japanese taxes. I filed for non-residency status in Canada. If I had not, they would have made me pay taxes in Canada upon return. I had a friend who did not do this when he lived in Switzerland and had to pay tax in Canada when he returned (on top of having paid Swiss tax already).

Basically from my understanding if you are making money somewhere, they want you to pay income tax on your earnings. If you are living in another country and can prove you are paying taxes there and are a non-resident of your native country, they will not tax you. A JET or something is a temporary thing, so it may be different.

RisuMiso Wrote:Basically from my understanding if you are making money somewhere, they want you to pay income tax on your earnings. If you are living in another country and can prove you are paying taxes there and are a non-resident of your native country, they will not tax you. A JET or something is a temporary thing, so it may be different.

This is generally true, but can vary by treaty. Certainly, Americans in Japan don't have to pay income taxes in either country for two years, and after two years they only have to pay Japanese income taxes (unless they are earning more than $90,000 a year).

The JET handbook lists The UK, Australia, New Zealond, and Canada as examples of countries that do not have a tax treaty with Japan.

RisuMiso Wrote:Basically from my understanding if you are making money somewhere, they want you to pay income tax on your earnings. If you are living in another country and can prove you are paying taxes there and are a non-resident of your native country, they will not tax you. A JET or something is a temporary thing, so it may be different.

This is essentially what I was talking about. If you aren't being taxed by someone then there is a problem (usually). Looking at the JET site and their explanation about the US-Japan Tax treaty. You basically get a certificate that says you are a US citizen and it exempts you from Japan's taxes. Reading the IRS site then, it really sounds like you are then expected to file your Japan made income on your US tax income then because you have gotten the certificate that states that your current residency is the US and not Japan, therefore exempting you from being able to claim that you are a resident of a foreign country and don't need to pay the US. Its not a "get out of paying taxes" card, though I can bet many use it like that.

vix86 Wrote:Reading the IRS site then, it really sounds like you are then expected to file your Japan made income on your US tax income then because you have gotten the certificate that states that your current residency is the US and not Japan, therefore exempting you from being able to claim that you are a resident of a foreign country and don't need to pay the US. Its not a "get out of paying taxes" card, though I can bet many use it like that.

No, wrong wrong wrong! It IS a get-out-of-paying-taxes card.

If you live in Japan for more than 330 days a year you DO NOT have to pay US income taxes. You're not working the system at all. That's the tax law.

If you want me to direct you to all the proper IRS forms and their instructions I can. I file my taxes by myself every year, and have for the last five years from Japan.

You do have to file your taxes from Japan, but you claim a 'Foreign Earned Income Exclusion' which makes your taxes come out to zero, as long as you're making less than about 90 grand a year. (IRS Form 2555-EZ)

This is all also in the JET General Information Handbook, which is available online.

I've seen the paperwork from the US for Foreign income exemption.

Under most JET starts, the certificate will get you out of Japan taxes but it won't get you to that 1 year mark for bona fide or physical presence status likely. This is a point of argument I've had with my friend though, since many will then use filing extensions so they can pass one of the tests, but reading the tax law, the extensions are for filing and not for moving/extending the tax year.

*Sigh*

No, you DO pass the physical presence test as a JET without doing anything tricky. As long as you are present in a country for 12 months in a row, starting at any point, and remain in that country for 330 days of those 12 months, you are not liable for US income taxes during those 12 months.

JETs arrive in late July or early August, generally. So by the time April taxes have rolled around they have been there 8 months. They get a free two months extension on filing until June (all people living abroad do), at which point they have been in Japan 10 months. Now, they could choose to pay their taxes then. They could file their taxes and pay. If they did that they could then later file foreign earned income exclusion, in which case the IRS would pay them back the next year, since they didn't actually have to pay taxes for those ten months, legally.

But, it's much easier to request a 2 month extention to file your taxes, all perfectly legal, until you have lived in Japan for 12 months. Then you file your taxes passing the physical presence test, and you don't have to pay those taxes to begin with.

Either way you don't have to pay the taxes, and it's all 100% according to tax law.

The IRS allows people living abroad to file for a 4 month extension in order to meet the 330 day test.

It specifically lists filing out the form to meet the 330 day test on the form 4868 instructions.

Speaking of which - why the hell can't the US make their taxes as simple as Japan's?

kitakitsune Wrote:The IRS allows people living abroad to file for a 4 month extension in order to meet the 330 day test.

It specifically lists filing out the form to meet the 330 day test on the form 4868 instructions.

Speaking of which - why the hell can't the US make their taxes as simple as Japan's?

Ah I never actually looked at the instructions on the form to see that. None of the pages on foreign tax exemption don't mention using the extension for that use (as I recall).

In the words of my friend, "Creating a complicated tax code like the US's, has created an entire industry around it."
In addition, complicated tax code leaves for numerous ways to slip out of paying taxes (if you are rich enough).

Tzadeck Wrote:You do have to file your taxes from Japan, but you claim a 'Foreign Earned Income Exclusion' which makes your taxes come out to zero, as long as you're making less than about 90 grand a year. (IRS Form 2555-EZ)

This is Federal Tax law. You still need to be careful about STATE tax law. For example, Hawaii, where I'm resident, does NOT grant a foreign earned income exclusion. Which means all foreign earned income is taxable. You also don't have to be physically present in state, as long as you are a resident (which can't be dropped by living abroad), you have to pay state income tax on foreign earned income. Sucks man.