This is a translation of the Japanese original. The Japanese version is authoritative; figures follow Japanese tax law.
There are only two forms for working out your business profit in a Japanese tax return. If you have been approved for blue return filing you prepare the blue return financial statements (青色申告決算書, general form) — four pages in all; if you have not, you prepare the statement of income and expenses (収支内訳書, general form) — two pages in all[NTA, blue return financial statements (general form)][NTA, statement of income and expenses (general form)]. In both, page 1 is the main body, and it runs from top to bottom: sales, cost of sales, expenses, income. Monthly sales and the depreciation calculation sit on page 2 and later, and the figures you produce there are carried back to page 1. The forms for the 2026 tax year (令和8年分) had not been published as of September 2026[NTA, tax return forms and guides]. The paper is marked "for the 2023 tax year onwards", however, so you can draft on the 2025 tax year (令和7年分) form. This article turns the whole job into a single route: which box to fill in, in what order, and where the figures go at the end.
The short answer: which form you use, and where to start
| Statement of income and expenses (general form) | Blue return financial statements (general form) | |
|---|---|---|
| Who uses it | People without blue return approval (white return filing) | People with blue return approval |
| Pages | 2 pages | 4 pages |
| Monthly sales and purchases box | None | Yes (page 2) |
| Balance sheet | None | Yes (page 4) |
| Family employees | Deduction for family employees (a fixed amount) | Salary to family employees under the blue return (within the amount notified) |
| Blue return special deduction | Not available | Up to 650,000 yen (a 550,000 yen band also exists up to the 2026 tax year) |
Sources: National Tax Agency, forms for the 2025 tax year[NTA, forms and guides for the 2025 tax year]; National Tax Agency, No.2070 the blue return system[NTA No.2070]
The tax office does not pick the form for you. It is decided by whether you have filed an application for blue return approval and been approved. The application is due by 15 March of the year you want the approval to take effect (or within two months of starting up, if you started on or after 16 January of that year)[NTA No.2070]. For the full picture of the difference, see blue return versus white return filing.
The 2026 tax year forms are not out yet. Draft on the 2025 ones
As of September 2026, the newest forms listed on the National Tax Agency site are those for the 2025 tax year. There is no page for the 2026 tax year yet[NTA, tax return forms and guides].
The National Tax Agency does not state a month in which it publishes them each year. The page for the 2025 tax year, though, carries a notice of an erratum dated 24 December 2025, which shows that both the forms and the guides were already up in late December of the previous year[NTA, forms and guides for the 2025 tax year]. On the same pattern, the 2026 tax year forms can be expected around December 2026, but that is an inference from past practice.
Both the statement of income and expenses and the blue return financial statements are marked "for the 2023 tax year onwards" in the top right corner. The order of the boxes has not changed for several years, so the 2025 tax year paper is enough if you want to practise before the filing season. File the real thing on the 2026 tax year form once it is published (or through e-Tax).
The route through the four pages of the blue return financial statements
Start on page 1 and you will stop again and again, because you keep needing a figure from page 2. Fill in the later pages first, then gather everything onto page 1: that is the quick route.
| Page | What you write | Where it goes on page 1 |
|---|---|---|
| Page 4 | Balance sheet (two columns, start and end of the year), calculation of manufacturing costs | Box 26 of the manufacturing costs goes to "purchases (cost of goods manufactured) (3)" |
| Page 3 | Breakdown of sales and purchases (with a registration number box), special circumstances during the year, calculation of depreciation, breakdown of interest and discount charges, breakdown of fees to tax accountants, lawyers and the like | The total of depreciation column (ri) "amount deductible as this year's necessary expenses" goes to "depreciation (18)" |
| Page 2 | Monthly sales (revenue) and purchases, breakdown of wages, breakdown of salaries to family employees, breakdown of rent, calculation of the allowance for doubtful accounts, calculation of the blue return special deduction | The monthly totals go to "sales (revenue) (1)" and "purchases (3)"; box (9) of the special deduction calculation goes to "blue return special deduction (44)" |
| Page 1 | Profit and loss statement (sales, cost of sales, expenses, income) | Box (45) "income" is the final figure |
Source: National Tax Agency, "How to complete the blue return financial statements (general form) for the 2025 tax year"[NTA, how to complete the blue return financial statements]
How page 1 (the profit and loss statement) flows
- (1) Sales (revenue) — miscellaneous revenue is included. Bring across the total from the monthly boxes on page 2.
- (2) Opening inventory + (3) purchases - (5) closing inventory = (6) cost of sales. The inventory figures come from the inventory lists drawn up at the start and the end of the year.
- (7) Balance ((1) - (6)) — this is your gross profit.
- Fill in the expense accounts from (8) taxes and dues through to (31) miscellaneous expenses, then produce (32) total and (33) balance ((7) - (32)). Salary paid to a family employee under the blue return goes not in "(20) wages" but in (38) salaries to family employees.
- Subtract items such as (39) allowance for doubtful accounts (provision) to arrive at (43) income before the blue return special deduction.
- Take off (44) the blue return special deduction and (45) income is your answer.
Down the left edge of page 4 it says "anyone claiming the 650,000 yen or 550,000 yen blue return special deduction must complete this"[NTA, blue return financial statements (general form)]. Proprietor's capital (元入金) is the total assets at the start of the year less the total liabilities at the start of the year (same source). The National Tax Agency's guide to preparing the balance sheet covers it in detail[NTA, guide to preparing the balance sheet].
The statement of income and expenses (white return) is two pages, and shorter for want of the monthly boxes
The statement of income and expenses puts the profit and loss on page 1 and the breakdowns on page 2. Unlike the blue return financial statements, it has no boxes for monthly sales and purchases[NTA, statement of income and expenses (general form)].
| Page | Boxes |
|---|---|
| Page 1 | Revenue ((1) sales, (2) goods taken for private use, (3) other revenue, (4) total) / cost of sales ((5) opening inventory, (6) purchases, (7) subtotal, (8) closing inventory, (9) cost of sales) / (10) balance / expenses ((11) wages to (16) interest and discount charges) / other expenses (i taxes and dues to re miscellaneous expenses) = (17) subtotal / (18) total expenses / (19) income before the deduction for family employees / (20) deduction for family employees / (21) income. Down the right-hand side: breakdown of wages, breakdown of fees to tax accountants and the like, names of family employees |
| Page 2 | Breakdown of sales (revenue) / breakdown of purchases (both with a registration number box) / calculation of depreciation / breakdown of interest and discount charges / breakdown of rent / special circumstances during the year |
Sources: National Tax Agency, statement of income and expenses (general form)[NTA, statement of income and expenses (general form)]; the same body's "How to complete the statement of income and expenses (general form) for the 2025 tax year"[NTA, how to complete the statement of income and expenses]
Under the white return, family employees give you a fixed deduction rather than the amount of salary you actually paid. It is (a) 860,000 yen for a spouse and 500,000 yen for each other relative, or (b) the figure in box (19) divided by (the number of family employees + 1) — whichever is smaller goes in box (20)[NTA, how to complete the statement of income and expenses]. Note that the deduction for family employees cannot be used in computing miscellaneous income (same source).
Splitting costs between business and private use goes in the "business-use ratio" box
Where your home doubles as your office, or your car doubles as the family car, only the business share is a necessary expense. The National Tax Agency puts it this way: the amount is "limited to the portion that can be clearly identified, on the basis of records of the transactions and the like, as having been directly necessary for carrying on the business"[NTA No.2210].
On the form, the split goes in column (chi), "business-use ratio", of the "calculation of depreciation" (page 3 of the blue return financial statements, page 2 of the statement of income and expenses). Column (to), the total depreciation, multiplied by the ratio in column (chi) gives column (ri), "amount deductible as this year's necessary expenses"[NTA, blue return financial statements (general form)]. Spending that is not depreciation, such as rent or electricity, is entered directly in accounts like rent and utilities, at the amount left after the split. How to settle on a ratio is covered in what percentage is reasonable when splitting home and business costs.
The four requirements for the 650,000 yen blue return special deduction, and the 750,000 yen from the 2027 tax year
Whether you can write 650,000 yen in box (44) turns on how you keep the accounts and how you file. The National Tax Agency's guide to the blue return accounts sets out four requirements for the 650,000 yen[NTA, guide to the blue return accounts].
- Keeping the books by double-entry bookkeeping (the principles of proper bookkeeping)
- Attaching a balance sheet and a profit and loss statement (that is, filling in page 4)
- Filing by the deadline (a refund claim, too, must be filed by the filing deadline)
- Filing the return and the blue return financial statements through e-Tax, or meeting the superior electronic books requirements for the journal and the general ledger and submitting the notification
If you do not meet requirement 4 it is 550,000 yen, and with simple bookkeeping rather than double entry it is 100,000 yen[NTA No.1373].
Under the fiscal 2026 tax reform, the ceiling on the blue return special deduction rises to 750,000 yen for income tax from the 2027 tax year onwards. The 750,000 yen is the 650,000 yen requirements plus either superior electronic books or digital seamless storage, and a notification has to be filed in advance[NTA, guide to the blue return special deduction]. At the same time, the ceiling for a paper filing drops to 100,000 yen from the 2027 tax year (up to the 2026 tax year return, paper filing still allows 550,000 yen) (same source). For anyone who keeps filing on paper, that is 450,000 yen of deduction gone. The safe move is to get ready during the 2026 tax year return, and the blue return special deduction rising to 750,000 yen sets out the requirements and the notification.
Where the figures go on page 1 of the tax return
The financial statements and the statement of income and expenses are filed together with the tax return itself. The National Tax Agency's filing guide sets out the destinations as follows[NTA, guide to filing the return].
| Financial statements / statement of income and expenses | Tax return, page 1 (第一表) |
|---|---|
| Sales (revenue) | The "business - trade" box under revenue |
| Income (box (45) on the blue form, box (21) on the white form) | The "business - trade" box under income |
| Salaries to family employees (blue) / deduction for family employees (white) | The "total salaries to (deduction for) family employees" box |
| Blue return special deduction (box (44)) | The "blue return special deduction" box |
Beside the revenue box is a small "category" square, where you enter a number from 1 to 5 according to how you keep and store your books. If 4 or 5 applies to you, no blue return special deduction above 100,000 yen is available (same source). On page 2 of the return (第二表) you enter each family employee's name, relationship to you and months worked. How to complete pages 1 and 2 is set out in how to fill in the tax return (pages 1 and 2).
- (1) Sales (revenue): 6,000,000 yen (no inventory, so no cost of sales)
- (32) Total expenses: 2,500,000 yen (entered net of the business and private split)
- (43) Income before the blue return special deduction: 6,000,000 yen - 2,500,000 yen = 3,500,000 yen
- (44) Blue return special deduction: 650,000 yen (double-entry bookkeeping, balance sheet attached, filed on time, through e-Tax)
- (45) Income: 3,500,000 yen - 650,000 yen = 2,850,000 yen, which goes to the "business - trade" income box on page 1 of the return
Note: this calculation is this site applying figures in the order set out on the National Tax Agency's form. It is not a worked example published by the National Tax Agency. Tax rates apply to what is left after deductions such as social insurance premiums and the basic deduction are taken off this figure.
Three mistakes that trip people up
Forgetting the inventory count
Goods still on the shelf at the end of the year are not an expense. Leave out box (2) opening inventory and box (5) closing inventory and your cost of sales drifts away from reality, moving your income with it. The guide says in terms that the inventory figures come from "the inventory lists for the start and the end of the year"[NTA, how to complete the blue return financial statements]. The inventory lists themselves must also be kept.
Not pro-rating depreciation by month
An asset bought partway through the year gives you the months you used it, not a full year. The depreciation is multiplied by "the number of months the asset was used in the business in that year, divided by 12"[NTA No.2106]. On the form, the number of months goes in column (ni), "period of depreciation this year". A month in which you acquired the asset partway through still counts as one month[NTA, how to complete the blue return financial statements].
Never filing the notification for salaries to family employees
To put salary paid to a family member in box (38) salaries to family employees, you must have filed the "notification concerning salaries to family employees under the blue return". The deadline is 15 March of the year in which you want to deduct it (or within two months, if you started up on or after 16 January of that year or a family employee joined during the year)[NTA No.2075]. Only what you pay within the method and the amount stated in the notification qualifies (same source).
The whole sequence of closing your books is set out in how a sole proprietor closes the year's accounts.
Frequently asked questions
When will the forms for the 2026 tax year be published?
They had not been published as of September 2026. The 2025 tax year forms were up in late December of the previous year (there is an erratum dated 24 December 2025), so on the same pattern the 2026 tax year forms can be expected around December 2026. That is an inference from past practice. The paper is marked "for the 2023 tax year onwards", so you can draft on the 2025 tax year form.
Does the statement of income and expenses have a box for monthly sales?
No. The box for monthly sales (revenue) and purchases exists only on page 2 of the blue return financial statements. On page 2 of the statement of income and expenses you write a breakdown by customer and by supplier instead.
What happens if I file with the balance sheet left blank?
You cannot claim the 650,000 yen or 550,000 yen blue return special deduction. Down the left edge of page 4 of the financial statements it says in terms that anyone claiming the 650,000 yen or 550,000 yen blue return special deduction must complete it. Where you keep simple books and prepare no balance sheet, the deduction is 100,000 yen.
Where on the form do I split the rent on a home that doubles as an office?
Depreciable assets are split in column (chi), "business-use ratio", of the "calculation of depreciation". Spending such as rent or electricity is entered directly in accounts like rent and utilities at the amount left after the split, and you keep the records supporting the ratio to hand.
Reference links (sources)
- NTA, tax return forms and guides (2025 tax year) — the list of forms, instructions and accounts guides, and the notice of the erratum dated 24 December 2025
- NTA, income tax blue return financial statements (general form) [for the 2023 tax year onwards] — the order of the boxes across four pages, the balance sheet, the calculation of proprietor's capital
- NTA, statement of income and expenses (general form) [for the 2023 tax year onwards] — the order of the boxes across two pages, the business-use ratio box
- NTA, how to complete the blue return financial statements (general form) for the 2025 tax year — which page each figure is carried from, and the depreciation columns
- NTA, how to complete the statement of income and expenses (general form) for the 2025 tax year — the amount of the deduction for family employees, and that it cannot be used for miscellaneous income
- NTA, guide to the blue return accounts (general form) for the 2025 tax year — the table of requirements for the 650,000 yen blue return special deduction
- NTA, guide to income tax and special income tax for reconstruction for the 2025 tax year — where the figures go on pages 1 and 2 of the return, and the "category" number beside the revenue box
- NTA, No.1373 necessary expenses of business income (the blue return special deduction) — the 550,000 yen, 650,000 yen and 100,000 yen bands
- NTA, No.2075 salaries to family employees under the blue return and the deduction for family employees — the filing deadline for the notification and the requirements
- NTA, guide to the blue return special deduction — the 750,000 yen from the 2027 tax year, and 100,000 yen for paper filing
Note: the worked example in this article is this site applying figures in the order set out on the form. For an individual decision, check with a tax accountant or your tax office.
