A guide to filing tax returns for "sugar daddy" relationships: How much do you need to earn? How to do it and how to avoid getting caught.

"What if the tax office finds out?"
"I don't want the company to find out."
"Do I need to file a tax return for the money I earned from sugar dating...?"

Many women experience these kinds of anxieties from the end of the year through the tax filing season.

In fact, income from "sugar dating" (compensated dating) may require filing a tax return depending on the circumstances, and neglecting to do so could result in additional taxes of up to 40%.

On the other hand, by knowing the correct rules and making a few adjustments to the resident tax procedures, it's possible to pay your taxes without your company finding out.

In this article, PATOLO, a sugar daddy app, will explain everything from determining whether you need to file a tax return, to the specific procedures involved, how the tax office might find out, and tips for preventing your company or family from finding out, all from the perspective of someone who has experienced it firsthand.

This media outlet is operated by UNIVERSE GROUP and provides information to help women considering or engaging in "sugar dating" make safe and satisfying choices. The content is based on actual user reviews and our own research, and we prioritize an unbiased perspective that includes not only the benefits but also the risks and points to be aware of.
>>Editorial and Management Policy

Do I need to file a tax return for income from "sugar dating"? What is the threshold for filing a tax return?

Whether or not you need to file a tax return for money earned through "sugar dating" depends on your annual income and whether or not you have a main job.

The most recent tax filing period is set from February 16th (Monday) to March 16th (Monday), 2026, for the 2025 tax year (Reiwa 7). If those who are eligible do not file their tax returns within this period, they will be subject to additional taxes.

Source:National Tax Agency's "Special Feature on Filing Tax Returns"

In this section, we will first clearly explain the two criteria for determining whether you are required to file a tax return, broken down by occupation.

Company employees and office workers (with side jobs) are required to file a tax return if their annual income exceeds 20 yen.

If you are a company employee (office worker, part-timer, etc.) and are engaging in "sugar dating" as a side job, you will need to file a tax return if your annual income exceeds 20 yen.

Source:National Tax Agency, "No. 1900: Salaried Employees Who Need to File a Tax Return"

It's important to note the difference between "income" and "earnings" here.

Income is the amount remaining after deducting necessary expenses from revenue. For example, even if you receive an annual allowance of 30 yen, if your necessary expenses amount to 15 yen, your income will be 15 yen, and you will not be obligated to file a tax return.

If you receive a monthly allowance of 30,000 yen for a year, that amounts to 360,000 yen annually, and even after deducting expenses, it will often exceed 200,000 yen.

Even if you think, "My side job is just a little, so it doesn't apply to me," you might actually be affected, so be careful.

Please note that even if you are not required to file an income tax return, you will still need to file a separate resident tax return. Since there is no "20 yen rule" for resident tax, you are still obligated to file a return even if the amount is small.

Source:Ministry of Internal Affairs and Communications "Individual Resident Tax"

Full-time housewives, students, and unemployed individuals are required to file a tax return if their annual income exceeds 58 yen.

If you do not receive a salary from a company (e.g., full-time housewives, university students, part-time workers earning less than a regular part-time job), you will need to file a tax return if your annual income exceeds 58 yen.

Source:National Tax Agency: "Regarding the revision of the basic deduction for income tax under the 7 tax reform"

The amount of 58 yen is the standard amount of the "basic deduction" which was raised from the 7th year of Reiwa (2025) (it was 48 yen before the revision).

However, for the tax years 7 and 8 only, the basic deduction has been further expanded in stages according to the total income amount.

Specifically, if your total income is 132 million yen or less, the basic deduction is 95 yen, and if your income is below that, your taxable income will be zero, so you do not need to file a tax return.

Students can also utilize the working student deduction (27 yen), meaning that income tax is not levied on total income up to 85 yen (up to 150 yen if only salary income).

However, if you are dependent on your parents, you need to be aware of other income thresholds (such as an annual income of 123 million yen or 150 million yen), which I will explain in more detail later.

"Self-check for eligibility for tax filing" that can determine in 3 seconds.

For those wondering, "Do I actually need to file a tax return?", we've compiled a guide outlining the determination process based on occupation.

Try plugging your annual income into the following table.

Please note that the following figures are based on the Income Tax Act for the year 2025.

Your situation	Estimated annual income	Final return
Office worker / Office lady / Part-time worker	Over 20 million yen	必要
Office worker / Office lady / Part-time worker	Below 20 yen	Not required (a separate resident tax return is required).
Full-time housewife/unemployed	Over 58 million yen	必要
Full-time housewife/unemployed	Below 58 yen	Must not
Student (with working student deduction)	Over 85 million yen	必要
Students (within parental support)	Over 123 million yen	Necessary + possibility of being removed from dependent status

According to a survey of female members conducted by PATOLO, a certain number of members receive an allowance of 10 yen or more per month, and in reality, the number of people who exceed this standard on a yearly basis is higher than expected.

For more information, please see The going rate for "sugar daddy" arrangements (based on a survey of 1,093 female members) It is published in

What tax is paid on income from "sugar dating"? The difference between "gift tax" and "income tax (miscellaneous income)".

Money received through "sugar dating" (or "papa katsu") can be subject to either "gift tax" or "income tax (miscellaneous income)," depending on the nature of the transaction.

Confusing these points can lead to incorrect tax filing categories, so it's important to understand the criteria correctly.

This section explains the criteria for determining tax status by type, and finally answers the question, "Could this possibly be business income?"

One-time gift with no consideration → "Gift tax" (over 110 million yen per year)

One-time acts of assistance that are not given with the expectation of reciprocation, such as receiving pocket money naturally out of romantic feelings or receiving money as a birthday present, may be considered "gifts."

There is a basic exemption for gifts, and no gift tax is levied on gifts up to 110 million yen per year.

Source:National Tax Agency, "No. 4402 Cases in which gift tax applies"

However, the basic exemption of 1.1 million yen is based on "the total amount of gifts you received in one year," not "the total amount received from the same donor."

Please note that even if you receive small amounts from multiple sugar daddies, you are required to declare it if the total exceeds 110 million yen.

In fact, gift tax rates tend to be higher than income tax rates.

The tax rate for receiving 200 million yen as a gift annually is 10%, but if it is treated as income tax (miscellaneous income), expenses can be deducted, which often results in a lower tax liability.

If it is continuous and involves consideration, then it is subject to "income tax (miscellaneous income)".

Income that is recognized as continuous and "consideration-based" (meaning there is an economic correspondence between the income and the service provided under tax law), such as receiving a fixed monthly allowance or receiving money in exchange for meals or companionship, is classified as "miscellaneous income" and is subject to income tax.

Source:National Tax Agency "No. 1500 Miscellaneous Income"

It should be noted that this "consideration" is a concept under tax law and is a term used within a framework separate from the terms used for businesses related to adult entertainment or sex-related businesses.

One major advantage of miscellaneous income is that you can deduct expenses.

On the other hand, losses cannot be offset against other income such as salary income, so care must be taken to avoid calculation errors.

Furthermore, if one engages in "sugar dating" full-time and the scale of income is large enough to be recognized as a business, it may be considered "business income."

The differences between business income and miscellaneous income are summarized in the following table.

income classification	continuity	Compensation	Business scale	Expense accounting	Profit and loss
Gift tax	One-off/Irregular	None (free of charge)		Improper
Other income	drop-off service	drop-off service	Side hustle level	Possible	Improper
Business income	drop-off service	drop-off service	Full-time/Business-oriented	Possible	Possible

It's safe to assume that most of the income earned by women engaging in "sugar dating" falls under the category of "miscellaneous income."

To declare it as business income, you will need to implement full-fledged tax management, such as filing a blue return application and creating accounting records.

Judgment Criteria Based on the National Tax Agency's Views and Case Law

In reality, the determination of whether something is a one-time or ongoing transaction, and whether there is compensation involved, is largely left to the discretion of the tax office.

In past court cases, there have been instances where receiving cash for meals once or twice a month was deemed to constitute "consideration" and was therefore subject to income tax.

The following are some guidelines to consider when deciding whether to proceed:

• I receive a fixed amount of money from the same person every month.
• Money is paid in exchange for meals or companionship.
• The amount is generally fixed, and the gift lacks a natural quality.

If any of these apply to you, it is safest to declare it as income tax (miscellaneous income).

Conversely, if you only receive an expensive gift as a one-time occurrence on a birthday or anniversary, it may be possible to handle it within the limits of gift tax.

If you're unsure, it's best to consult with the tax office or a tax accountant, but using an app like PATOLO that allows you to clarify the terms of your allowance beforehand makes it easier to understand the nature of your income yourself.

PATOLO's proprietary data reveals the "percentage of women who actually need to file a tax return."

"Is my income at a level where I need to declare it?"
"I wonder how much other people are making?"

To answer these questions, we are releasing real data from a survey of female members (n=1,093) conducted by PATOLO.

Rather than generalizing, we will visualize the "probability of being subject to reporting" based on the monthly income distribution of women who are actually engaged in "sugar dating."

Income distribution of allowances for 1,093 female members

According to a survey conducted by PATOLO in 2026, the monthly allowance income of female members was distributed as follows:

Monthly Income Range	Trends of the relevant group	Annualized	Determination of whether a side job (earning over 20 yen)	Full-time (over 48 yen)
~ 3 yen	Just starting out	Below 36 yen	So-so - Not applicable	Not applicable
3-10 10,000 yen	A group that operates stably	36-120 10,000 yen	Target	Target
10-30 10,000 yen	Experienced and continuing participants	120-360 10,000 yen	Target	Target
¥ 30~	The group that dates multiple daddies	¥ 360~	Target	Target

This distribution shows that anyone receiving an allowance of 3 yen or more per month is almost certainly subject to filing a tax return.

Even with a monthly income of just 3 yen, that amounts to 36 yen annually, bringing the 20 yen mark for a side hustle close to the 48 yen mark for a full-time job.

Quick Reference Guide to Filing a Tax Return Based on Monthly Income

We have created a list of income tax filing requirements based on occupation and monthly income range.

Try applying this to your own situation and see if it applies to you.

Please note that the following figures are based on the Income Tax Act for the year 2025.

Monthly Income Range	Office worker/OL	Full-time housewife/unemployed	Student (within dependent allowance)
1 million yen	Not required (¥12 per year)	Must not	Must not
3 million yen	Required (36 million yen per year)	Not required (¥36 per year)	Must not
5 million yen	Required (60 million yen per year)	Required (60 million yen per year)	Must not
10 million yen	Required (120 million yen per year)	必要	Necessary + possibility of losing dependent status
20 million yen	Required (240 million yen per year)	必要	Necessary + No longer a dependent
¥ 30~	必要	必要	Necessary + No longer a dependent

For students, once your monthly income exceeds 10 yen, your annual income will approach the 123 million yen threshold (the point at which you are no longer considered a dependent of your parents).

This is the point where the risk of your family finding out suddenly increases, so you need to be especially careful.

Furthermore, for relatives aged 19 to under 23, a "special deduction for specific relatives" has been newly established since 7, allowing parents to receive a certain amount of deduction even if the relative is no longer considered a dependent.

Those who think "I'm not a target" are actually the most likely to become targets.

What I want to emphasize here is the fact that those who think, "It's a small amount, so it doesn't concern me," are often the ones who are actually affected.

Here are some common misconceptions among those new to "sugar dating":

• I only receive a small amount, a few tens of thousands of yen a month, so it's okay.
• I think there won't be any record because it's a cash transaction.
• It's given to me for meal expenses, so it's not pocket money.
• It's irrelevant because they were only active for a short period.

However, if you continue to receive a monthly allowance of 30,000 yen for a year, that amounts to 360,000 yen annually, exceeding the 200,000 yen threshold for a side job.

How to file your tax return for sugar dating income | Completed in 5 steps

Filing your tax return becomes surprisingly simple when you break it down into five steps.

If you have a smartphone and your My Number Card, you can complete the process from home without having to go to the tax office.

STEP 1: Summarize your income and expenses for the year.

Since tax returns cover income from January 1st to December 31st, the first step is to compile your annual income and expenses.

The following information is needed for the calculation:

• Total amount of allowance received
• Date of receipt and recipient (for internal use only; not included on the declaration form)
• Receipts for related expenses

To avoid omissions, use the following methods to record how you receive your allowance.

If you receive it via bank transfer

Since records are kept in your bank passbook or online banking transaction history, all you have to do at the end of the year is download the CSV file and summarize it in Excel. This is the easiest way to keep records.

If you receive it in cash

Make it a habit to record the date and amount in your smartphone's memo app or spreadsheet on the same day.

Without records, you won't be able to explain things if the tax office checks on you later.

If you receive it via PayPay or other electronic money

Since the transaction history is recorded in each app, be sure to save screenshots at the end of the month or end of the year.

Even if the balance is deleted, the transaction history data will remain.

When communicating via an app like PATOLO, the reliability of the record increases because you can trace the date and time of communication with the other party through the app's message history and profile information.

STEP 2: Prepare the necessary documents and your My Number Card.

The documents required for filing your tax return are as follows:

It differs slightly depending on whether you use e-Tax or not.

Document	e-Tax	Document submission
My number card	Required	A notification card plus identification documents can be used as a substitute.
Withholding tax slip (for company employees only)	Prepare on hand	No attachment required (for storage only).
Expense receipts	保管のみ	保管のみ
Bank account information (for refunds)	必要	必要
My Number Portal App	Required	Must not

If you do not have a My Number Card, please apply for one at your local municipal office.

Since it can take 1-2 months for the document to be issued, waiting until the very end of the year to act will mean you won't make it in time.

STEP 3: Prepare your tax return using e-Tax (recommended)

e-Tax (National Tax Electronic Filing and Payment System)Using this service, you can complete your tax return using your smartphone without having to go to the tax office. The process takes approximately 1-2 hours.

The general procedure is as follows:

Log in using the My Number Portal app.

Install the app on your smartphone beforehand, then log in by reading your My Number Card.

You will need two types of passwords (a 4-digit password for user authentication and a 6-16 digit alphanumeric password for signatures). If you have lost them, please reset them at your local municipal office.

Prepare your tax return using the "Tax Return Preparation Corner".

Follow the on-screen instructions to enter your income and expenses.

For miscellaneous income, it is common to write "Category: Sugar Daddy Income" or "Remuneration" in the "Miscellaneous Income (Other)" section, but the guidance on how to write it may differ depending on the tax office, so if you are unsure, check with your nearest tax office.

Entering deductions and calculating tax amount

Enter any applicable deductions, such as medical expense deductions, life insurance premium deductions, and social insurance premium deductions.

e-Tax automatically calculates the tax amount, so there's no need to worry about calculation errors.

If you prefer to submit your tax return in paper form, simply print the tax return you created using the tax return preparation section as a PDF and mail or bring it to the tax office.

STEP 4: Make sure to switch your resident tax to "ordinary collection".

This is the most important point to prevent your company from finding out.

On the second page of your tax return, in the section for "Matters concerning resident tax and business tax," please check "Pay yourself" for the method of collecting resident tax on income other than salary and public pensions.

If you forget to do this check, the notification of your resident tax for your side job may be sent to your company's accounting department, and they might notice that "this person's resident tax is different from everyone else's," leading to the discovery of your side job.

If you switch to the regular collection method, your resident tax notice will be sent to your home.

STEP 5: File your tax return and pay your taxes.

Once you've completed your tax return, simply press the submit button on e-Tax to complete the submission.

After sending, you will receive a confirmation email in your message box, so be sure to save it.

You can choose from the following payment methods:

• Tax payment by bank transfer (automatic withdrawal from your account in late April)
• Direct payment (instant withdrawal from your account)
• Internet banking
• Credit card payment (fees apply)
• Payment at convenience stores (for amounts under 30 yen)
• Cash payment at the tax office counter

If you don't want your company to find out, you can pay your taxes without your employer or family knowing by using automatic bank transfer or online banking.

By completing these five steps just once a year, you can be freed from tax-related worries.

What can and cannot be claimed as business expenses in sugar dating.

One major advantage of miscellaneous income is that you can deduct expenses that are necessary to earn that income.

By properly accounting for expenses, you can lower your taxable income and legally reduce the amount of tax you pay.

This section will clearly distinguish between typical examples of expenses that can be claimed and those that cannot.

Typical examples of expenses that can be claimed (part of beauty treatments, transportation costs, and communication expenses)

The criterion for determining whether an expense qualifies is whether "that expenditure was directly necessary to earn income from sugar dating."

For items used for both personal and business purposes, only a portion of the expense will be claimed.

Typical examples of expenses that can be claimed are as follows:

• Transportation costs to the meeting place (train/taxi)
• Beauty expenses specifically for sugar dating (hair and makeup, nails, and some hair removal)
• Clothing and accessories worn for the initial meeting (actual items worn)
• Monthly fee for sugar daddy dating apps
• Part of the communication expenses used specifically for sugar dating.
• Photo shoot fee (profile picture, etc.)

One thing to be careful about is the concept of "apportionment." For example, you cannot deduct the entire 1 yen monthly smartphone bill as a business expense; only the percentage of time spent on "sugar dating" (for example, 20%, so 2,000 yen) can be claimed as an expense.

If it's difficult to completely separate beauty expenses from personal expenses, it's more realistic to allocate about half of them.

Items that are not recognized as expenses

On the other hand, expenses related to living expenses and personal entertainment are not recognized as business expenses.

Typical examples of expenses that cannot be claimed are as follows:

• Meal expenses (not required if Dad paid for what you ate)
• Full amount of home rent and utilities
• Cosmetic surgery and orthodontic treatment
• Travel and leisure expenses
• Gym and beauty salon membership fees
• Branded goods (if it cannot be proven that they are for business use only)

Many people, in particular, think that cosmetic surgery can be claimed as a business expense, but this is considered an investment in one's own body and is generally not permitted.

Exceptionally, it may be permitted only if it is clearly necessary for the sole purpose of performing the job, but please understand that the bar is high.

How to keep receipts and records (real-world industry practices)

To have your expenses approved, it is essential to keep receipts and invoices, and to make notes about how the expenses were used.

If a tax audit occurs, expenses may be disallowed if these documents are not in order.

The key points to keep in mind for practical application are as follows:

Take a picture of your paper receipt with your smartphone and save it to the cloud.

Since paper documents can fade or get lost, I take a picture of them with my smartphone as soon as I receive them and store them in monthly folders on Google Drive or Evernote.

Save electronic receipts as screenshots and PDFs.

For online and QR code payments, download and save the receipt as a PDF immediately after purchase.

App history may become unavailable in the future.

Please be sure to write the "purpose" in the memo field.

Recording when, for whom, and for what purpose the nail polish was made, such as "2026/03/15 Nail polish for meeting with someone, for Mr./Ms. XX," will make it easier to explain to the tax office if they ask.

The principle is to store it for 7 years.

Tax return documents and related accounting records and receipts must generally be kept for seven years.

Source:National Tax Agency: "Bookkeeping, record keeping, and blue return filing"

Storing your data in the cloud significantly reduces the risk of loss.

Properly accounting for expenses can result in greater tax savings than you might expect.

What happens if you don't file your tax return? Five ways your non-filing will be discovered and the penalties involved.

Some people might think, "Since it's a cash transaction, there's absolutely no chance of getting caught," but the tax authorities' investigative capabilities are far more sophisticated than you might imagine.

Here, we'll outline five common ways in which undeclared income is discovered, along with the penalties if caught.

Understanding the consequences of not filing a tax return will allow you to calmly assess the risks involved.

① Investigation of bank account deposit and withdrawal history

The tax authorities have the authority to investigate the deposit and withdrawal history of bank accounts of individuals suspected of failing to file tax returns.

Source:National Tax Agency: "Procedures for Tax Audits"

If a fixed amount is deposited into an account under a personal name every month, or if there are unusually large deposits, it is more likely to become the subject of an investigation.

In particular, banks are required to report cash transactions exceeding 2 million yen to the tax office, so repeated large cash deposits are more likely to be detected.

② Reverse lookup from the father's expense accounting and payment records.

There are cases where business owners and self-employed men who are "sugar daddies" are claiming payments made through "sugar dating" as business expenses such as "entertainment expenses" or "gratuities."

In this case, your name may appear on your father's tax return or payment statement, which could reveal that he failed to file a tax return.

People tend to think, "It's safe because the other party is a business owner," but the opposite is actually true; the way business owners claim expenses is often the most common way undeclared income is discovered.

③ Social media, tip-offs, and whistleblowing

If you brag about your allowance or post records of your purchases of luxury goods on X (formerly Twitter) or Instagram, it could lead to someone reporting you to the tax office.

In fact, the tax office has a dedicated window for tip-offs, and they accept information even anonymously.

In reality, tips often come from people close to the person, such as ex-partners, colleagues, or friends.

Posting on social media increases the risk of your identity being revealed and also raises tax risks, so it's safest to minimize the amount of information you share about your activities.

④ Income tracking through the My Number system

As the My Number system is implemented, it has become easier for tax authorities to track individuals' income through linking bank accounts with My Numbers and various administrative procedures.

Source:National Tax Agency: "Tax-related procedures under the My Number system"

While it's not possible to instantly track all accounts at this time, the linking of deposit accounts to My Number (social security number) is being expanded in stages, and it is expected that the accuracy of tracking will improve in the future.

⑤ Penalties for failure to file a tax return (late payment tax, non-filing penalty tax, heavy penalty tax)

If it is discovered that you have not filed a tax return, you will be subject to multiple penalties in addition to the taxes you were originally owed.

penalty	tax rate	Message
Delinquent tax	Up to 8.7% per year	Interest from the day after the statutory due date until the payment date.
Undeclared additional tax	15~30%	This is the penalty imposed if you fail to file within the deadline.
Heavy tax	35~40%	If it is determined that the information was intentionally concealed or falsified

For example, if you should have paid 500,000 yen in taxes but failed to file a return, you could end up paying over 600,000 yen in taxes due to a 15% penalty for failure to file (75,000 yen) and late payment penalties.

If it is determined that there has been concealment or falsification, a heavy penalty tax of 40% (20 yen) will be added, and it is not uncommon for the burden to exceed 70 yen.

Moreover, the tax office has the authority to investigate going back up to 5 years (or 7 years in serious cases).

It's not always the case that you'll get away with just failing to file a tax return for one year; there are real cases where you're hit with back taxes for past years all at once.

If, after reading this far, you've come to the conclusion that "it would be bad if I didn't file a tax return," then check out the next section to find out how to file a return without your company or family finding out.

Practical techniques to keep your tax return a secret from your company and family

"I need to report it, but I absolutely don't want my company or family to find out."

I think this is a sentiment that many people genuinely feel.

Here, we will explain, in order of priority, specific measures to take to report your situation correctly without letting others find out.

Be sure to select "ordinary collection" for resident tax (most important).

The most important thing to do to prevent your company from finding out is to switch your resident tax to "ordinary collection."

On the second page of your tax return, in the section titled "Matters concerning resident tax and business tax," please check "Pay yourself" for "Method of collection of resident tax on income other than salary and public pensions, etc."

Without this check, the resident tax on the side job will be deducted from the company's salary as "special collection," and the company's accounting staff will notice that "the resident tax is higher than other employees."

This is the most common way that a side job is discovered.

If you choose the ordinary collection method, the resident tax notice will be mailed to your home, and you will pay it yourself.

Since it has absolutely no impact on your company's payroll calculations, there's no need to worry about your employer finding out.

However, some municipalities have implemented a "mandatory tax collection" system where income from side jobs is also included in the special tax collection.

If you are concerned, it is best to inform your local government's resident tax office after filing your tax return that you would like your income from your side job to be collected through regular collection.

Causes and countermeasures for getting caught doing a side job (other than through resident tax)

Besides local taxes, there are several other ways your side job could be discovered.

We have compiled a list of typical routes and countermeasures.

Posts on social media

If you frequently post photos of luxury goods, high-end restaurants, and overseas travel, people will start to question your source of income.

It's best to keep your account private to avoid being seen by colleagues or acquaintances, and refrain from posting anything that suggests a sudden improvement in your standard of living.

Disclosure by colleagues or acquaintances

This is a pattern where rumors start after someone mentions, "Actually, I'm making money from a side job."

Unless you tell them yourself, it's unlikely they'll find out through social media or the tax office.

Health insurance association notice

Some health insurance associations may notify you of the income status of your dependents.

Those who are dependents of their spouse should be careful.

Year-end tax adjustment documents

The year-end tax adjustment forms provided by the company do not have a section for recording income from side jobs.

Even if you are asked to fill out a form, it is sufficient to only include information related to your main job.

Be aware of the income threshold that removes you from your parents' dependency status (for students and housewives)

Students and full-time housewives, in particular, need to be careful about the threshold at which they are no longer considered dependents of their parents or spouse.

If you are no longer considered a dependent, your parents' or spouse's income tax will increase, and the likelihood of your family finding out will increase.

From the 7 fiscal yearTax reformSince the standards have been raised, let's make sure we're up-to-date on the latest guidelines.

Main "income thresholds" related to dependents (for fiscal year 7 and later)

Annual income (estimate based on salary only)	影響
123 million yen	You will no longer be considered a dependent for income tax purposes (previously, the income threshold was 103 million yen).
130 million yen	You will no longer be covered as a dependent under social insurance (you will have to pay your own health insurance premiums).
150 million yen	The working student deduction will no longer be available (for students).
160 million yen	Not eligible for the full spousal special deduction (guideline for those with a spouse)

If a student's combined income from part-time jobs and "sugar dating" exceeds 123 million yen per year (total income of 58 yen), their parents will no longer be able to claim the dependent deduction on their tax return, which will change their tax liability and increase the likelihood of being found out.

Furthermore, for specific relatives such as university students aged 19 to under 23, the following will apply from the 7 tax year onwards.特定親族特別控除A new section has been established.

Under this system, even if a relative is no longer considered a dependent, if their total income is between 58 yen and 123 yen, the parent may be able to receive a deduction of up to 63 yen.

This new system offers a more gradual transition compared to the previous system, where the burden on parents increased dramatically the moment their children were no longer considered dependents.

For those who don't want their family to find out, a realistic approach would be to simulate your annual income beforehand and adjust your activity pace as needed.

Frequently Asked Questions (FAQ) about filing tax returns for sugar daddy/sugar baby income.

We've covered the basics so far, but now we'll answer some specific questions that our readers frequently ask.

Please check only the items that interest you.

What should I do about undeclared income from past years? (Late filing)

If you failed to file a tax return in the past when you should have, the best course of action is to file a "late return" as soon as possible.

If you file your tax return voluntarily before being notified by the tax office, the penalty tax for failure to file may be reduced or waived.

Source:National Tax Agency, "No. 2024: What to do if you forget to file your tax return"

Specifically, if you file your tax return voluntarily before receiving an audit notice from the tax office, the penalty for failure to file will be reduced to 5% (normally 15-30%).

Conversely, the longer you leave it unattended, the more late payment penalties will accumulate, and the larger the total amount of additional taxes you will have to pay.

Don't think, "I haven't filed my taxes for years, so it's too late now..." Instead, take this opportunity to consult with a tax accountant or be honest with your nearest tax office.

Do I need to file a tax return even if I receive cash in person?

Just because it's a cash transaction doesn't mean you don't need to declare it.

Under the Income Tax Act, the tax is levied on "the fact that income was received," and the method of receipt is irrelevant.

Some people think, "It's okay because there's no evidence if I hand it over in person," but there are many ways it can be discovered, such as through bank account deposit records, the sugar daddy's expense claims, and social media posts.

Even when paying in person, keeping a record and reporting it properly is ultimately the safest option.

Do students who engage in "sugar dating" (compensated dating) need to file tax returns?

Even students are required to file a tax return if their annual income exceeds 58 yen (for the year 7 and onwards).

However, because you can use the working student deduction (27 yen), you will not have to pay income tax on total income up to 85 yen.

For those whose only income is salary, it is calculated that income tax will be zero up to an annual income of 150 million yen.

One thing to be aware of is that if your annual income exceeds 123 million yen, you will no longer be considered a dependent for your parents' income tax purposes.

Because your parents' income tax will increase, the chances of your family finding out will increase dramatically.

Students should prioritize minimizing the risk of their parents finding out and carefully consider whether they can keep their income below 123 million yen per year, or whether they can be honest with their parents after being removed from their dependency status.

Furthermore, if you are between 19 and 23 years old, the "Special Deduction for Specific Relatives" allows for a gradual increase in your parents' financial burden even if you are no longer considered a dependent.

Should I hire a tax accountant to file my tax return? What's the typical cost?

While you can generally file your tax return yourself, those with high incomes or who are unsure about deductible expenses may consider hiring a tax accountant.

Status	Recommendation
Annual income of less than 100 million yen and low expenses.	Do e-Tax yourself
Annual income of 100 to 300 million yen; unsure about how to determine expenses.	Tax accountant one-time consultation (5,000 to 2 yen)
Annual income exceeding 300 million yen, income from multiple sugar daddies.	Hiring a tax accountant to handle your tax return (5 to 10 yen)
Return filing and tax audit support for past years	Hire a tax accountant (10 to 30 yen)

Since accountant fees can be claimed as business expenses, it's a good idea to weigh the tax-saving benefits against the consultation fees before making a decision.

It's also important to check beforehand whether the tax accountant has knowledge of "sugar dating" (compensated dating).

Summary | Filing your tax return for "sugar daddy" activities "correctly and early" is the safest option.

Finally, let's summarize the key points of this article.

For "sugar daddy" activities, you need to file a tax return if your annual income exceeds 20 yen if it's a side job, or 58 yen if it's your full-time job (for the year 7 and onwards).

By simply checking one box to switch your resident tax to "ordinary collection," you can significantly reduce the risk of your company finding out.

Conversely, if you leave the tax return unresolved, you will end up paying more than 1.4 times the original tax amount in late payment penalties, non-filing penalties, and heavy penalties, and the tax office has the authority to investigate going back up to 5 years.

The days of thinking "it won't be found out because it's cash" are over. There's a possibility of being found out through multiple channels, including bank accounts, My Number (social security number), social media, and the father's expense reporting.

• Start recording your annual allowance income and expenses in a spreadsheet.
• If you do not yet have a My Number Card, apply for one at your local municipal office.
• Add the tax filing period (most recently, the 2025 tax filing period was from February 16th to March 16th, 2026) to your smartphone calendar.

To continue working safely and for the long term while properly reporting your income, the first step is to choose an environment that makes income management easy.

If you use an app that allows you to clearly define the terms of compensation in advance and ensures security through merchant support and confidentiality agreements, you can focus on your activities without worrying about tax issues.

PATOLO is a fully vetted dating app where more than half of the male members have an annual income of 2,000 million yen or more. It has systems in place to ensure that women can participate with peace of mind, such as pre-confirmation of allowances, full guarantee of travel expenses for face-to-face meetings, and confidentiality agreements with male members.