How is the inhabitant tax reduction applied for Furusato Nozei?

[N00bster]

Hooray! It's tax season again!

I have used Furusato Nozei for the first time last year and I was wondering whether I understood everything properly as to how the tax reduction applies. I need to submit a Kakutei Shinkoku and would be thankful if someone can confirm that I haven't forgotten/misunderstood anything.

This page explains pretty well how the tax refund is done:

1. The amount paid for Furusato Nozei (minus 2,000Y) is directly deduced from the taxable income as "donation deduction" (寄附金控除). In my Kakutei Shinkoku I have specified that it was Furusato Nozei, and also specified the beneficiary. I will also include the proof of donation when submitting. This will result in a portion ((amount donated - 2000) * income tax rate) returned immediately.
2. The rest is deduced from my inhabitant tax using the formulas specified in (2) and (3) of the document linked above. The amount reimbursed this way shall not exceed 20% of the inhabitant tax.

This means that if I have correctly estimated the amount I can give, the total amount (minus 2,000Y) will be returned through a reduction of my taxable income (1.) and a reduction of my inhabitant tax (2.).

I can see the effect of 1. immediately as the amount I need to pay is reduced on my Kakutei Shinkoku. But how about 2.? Does declaring the donation as 寄附金控除 automatically translates into an inhabitant tax reduction? Or are there extra steps to take?

I am pretty confident that I have done everything right, just want to make sure the inhabitant tax reduction will effectively be applied. Thanks to anyone who could clear my doubts here.

[N00bster]

Replying my own post in case the information is useful to others.

So as it turns out, the information I initially posted was correct. I have received my local tax slip and the furusato donation was properly deducted. Just filling the Kakutei Shinkoku properly was sufficient to get the refund.

2018 was a great year for Furusato Nouzei, 2019 will likely not be as much but let's try to make the best out of it.

[gconway]

Hi N00bster,

Excuse me dragging up old admin pain, but I would like to do exactly the same thing as you. I am not sure if my residence tax reflects the furusato nozei donations I made. Since these were not insignificant, it seems like due diligence to at least verify that money has come back to me.

You mentioned a tax slip you received. Do you know the name of that document? Did you apply for it, or was it sent to you automatically?

Any tip you have would be greatly appreciated.

[N00bster]

So anytime soon you should receive your local tax slip (特別区民税・都民税　特別徴収税額通知 - or something close if you don't live in Tokyo). It comes every year and there is no need to ask for it. It seems to be a bit late this year, probably because of the virus situation, but it should arrive eventually.

In the rightmost column you should see two deductions, both named 税額控除額. The first one is for your ward tax, the second one for the city tax (name might vary a bit if you don't live in Tokyo). Add both and you will have the amount of local tax that you have saved with your furusato nozei donation.

Note that this is not the whole amount. You also need to add the amount you saved from your income tax. How to figure out this amount depends on whether you filled out a 確定申告 or not this year. If you have, your total donated amount (-2000Y) should be under the 寄付金控除 row. Multiply this amount by your income tax rate and you will have the amount of income tax you saved. I don't know how this works if you did the one-stop thing, but I suppose the information is somewhere.

Once you add the sums in the two 税額控除額 and the (寄付金控除 x your tax rate), you should find the amount of money you donated, minus 2000Y. If you find less, it is possible you over-donated.

[gconway]

First of all N00bster, apologies for my delayed reply. But I wanted to say thank you very much for taking the time to make this outline. It is very helpful and much appreciated. It also means I should now be able to account for these donations just by using the local tax slip you mentioned, plus the tax I know I saved at the time of filing my return. Hopefully, it will all be square and I will fully understand how the system works in theory in practice. At the moment, I can't be sure if the local goodies I have been enjoying are super reasonable or super expensive. Will keep an eye out on the local tax slip.

[N00bster]

Glad it helped. Note that your actual situation may vary a bit depending on your location and whether you have other deductions, but the baseline should still apply.

If you go to the link I gave in the initial post and apply the formulas to your taxable income, you should be able to find the amount you can expect to see. I did it for last year and the numbers indeed matched. It feels like magic!

The resident tax notification is supposed to arrive in early June, hopefully the virus thing won't delay it by too much and you will be able to confirm that everything is ok soon.

[captainspoke]

...
The resident tax notification is supposed to arrive in early June, ...

Got mine in today's mail, seems like no delay at all. First payment (deduction from my bank acct) at the new rate will be on the 30th.