Annual Deduction limit for medical expenses + Furusato Nozei?

[smalldog]

FIrstly I want to thank Ben and the other members of this forum with my first post - this site and forum has been a great asset to me in my journey of understanding how best to handle my financial affiars in Japan. Thank you.

I have some fairly hefty medical bills which could do with tax deducting at the end of this year - it might even get close to the JPY 2 million yen limit (am expecting at least 1.2-1.5 mill).

I am told from pub chatter that this cap on medical bill tax deduction is in someway considered in the same bracket as Furusato Nozei - i.e. one can only deduct up to X amount in total per year for both medical and Furusato Nozei (+other deductions too). Or that one can deduct a bit more than this, however a medical bill deduction eats into your Furusato Nozei allowance.

Meanwhile, I can't find any info online connecting the Furusato Nozei tax deduction and the medical bills deduction - in my understanding (or wishful thinking maybe) from my research the two are separate and as long as you have the high-quality problem of paying enough annual tax you can deduct both in full. (If it's relevent I paid very vaguely approx JPY 13 mill tax last year and am expecting to pay something in the 15 mill range this year - this is ward and federal combined.)

i.e. from my research I believe I can deduct up to JPY 2 million for my medical bills and then up to the JPY 1.8 million annual Furusato Nozei limit I have with my tax paid = no problem to claim and receive JPY 3.8 million for both in full as long as my recipts are in order?

Can anyone here kindly provide clairty on this question please?

Am I; i) running a risk of buying some extremely expense cases of beer, fruit and steak if I use close to my Furusato Nozei limit this year; or i) can I deduct both up to the maximum amount and the tax office will treat both totally separately as long as the total number is less than total amount of taxes paid?

Thank you.

[Moneymatters]

I wonder if this is the relevant information.
https://chester-souzoku.com/money/4619/

ふるさと納税と医療費控除を併用すると、ふるさと納税の控除限度額が医療費控除の2～4.5％ほど減額されます。
Your furusato limit is reduced by 2-4.5% of your claimed medical deduction.

It just seems far too simple. Like one of those Westerns when someone says. "It's quiet. Too quiet."..

It also says you can't use "one-stop" furusato if claiming the medical deduction! so watch out for that.

Similar information here.

https://creditcard.a-tm.co.jp/articles/ ... tion-2976/
Let's first take a moment to marvel at what must surely be a tongue in cheek heading of "わかりやすく解説！"
The two examples provided, about a million mouse scrolls down the page, show the drop in furusato.
A bit more than 4% but possibly because limits where reached.

I did have a play using this caclulator using my own data and it looks accurate to me..
https://www.furusato-tax.jp/about/simulation

Impressively. It is aware of the 2mil limit for medical deductions.
Projecting social health contributions accurately can be a challenge.
Maybe run your numbers using last years data first to gauge the impact of using the medical deduction.
I'm guessing you'll see less than a 10万 reduction to your furusato allowance.
Of course. I could be wrong about all of this as my Japanese has become rather hopeless.

Now. Have you found anywhere offering IPA under furusato nozei?

[smalldog]

Thanks for your detailed reply and research moneymatters - most appreciated and it looks indeed like good news.

From a calculation here it looks like my donation limit drops less than 5万 even if I claim the full 200万 medical, so feeling much more confident here to keep eating and drinking on my tax ¥.

As to the most important part of this whole thread, a few of my favourite Furusato Nozei beer options are as follows:-

【ふるさと納税】コエドビール瓶12本セット(毬花、瑠璃、白、伽羅、漆黒、紅赤 全6種×2本)
[楽天] #Rakutenichiba
https://item.rakuten.co.jp/f113247-miyo ... item_share

【ふるさと納税】よなよなエール（24缶）クラフトビール　【お酒・ビール】
[楽天] #Rakutenichiba
https://item.rakuten.co.jp/f202177-saku ... item_share

<br>【ふるさと納税】カミカツビール　IPA 6本セット
[楽天] #Rakutenichiba
https://item.rakuten.co.jp/f363022-kami ... item_share

【ふるさと納税】玉村本店　志賀高原ビール堪能セット（24本×3回お届け）　【定期便・お酒・ビール・酒・地ビール・セット】　お届け：毎月中旬お届け＜br＞※入金確認後、翌月から連続3回お届けします。
[楽天] #Rakutenichiba
https://item.rakuten.co.jp/f205613-yama ... item_share

The Yona Yona whilst a widely sold beer is IMO that for a reason - it’s totally delicious and rarely available on Furusato Nozei so don’t miss you chance.

Otherwise, nothing wrong with a 12 month Premium Malts subscription to make your wife and the local Yamato delivery guy judge you: 【ふるさと納税】12ヶ月定期便 ザ・プレミアム・モルツ 九州熊本産 月1箱(24本) 12ヶ月コース(計12箱) 阿蘇天然水使用 プレモル ビール 神泡 (350ml×24本)×12カ月《お申込み月の翌月から出荷開始》サントリービール株式会社
[楽天] #Rakutenichiba
https://item.rakuten.co.jp/f434418-mifu ... item_share

Thanks again.

[Moneymatters]

Happy to help. Those beer recommendations are great.

As I'm partial to Shiga Kogen I'll be going with that for one choice! pretty good cost per bottle performance too.

[Tkydon]

On Medical Expenses,

You cannot deduct what is paid by the Health Insurance Company.
You can deduct your contributions / excess that you pay, or the whole bill if not covered by insurance for yourself and your dependents.
You cannot deduct the first portion of the less of 5% of Total Taxable Income or Y100,000
You can deduct any Medical Expenses over that threshold to a maximum of Y2,000,000.

You need to list all receipts and amounts paid, and provide that number in Form B - Page 1 - Item 27

See Page 39
https://www.nta.go.jp/english/taxes/ind ... 020/01.pdf

You do not need to submit the receipts, but you do need to keep them for 5 years, in case the Tax Office would like to inspect them.

[smalldog]

Thanks Tkydon - shall bear all of this in mind. My kakutei shinkoku is going to be more fun this year than ever before!

Enjoy the ShigaIPA moneymatters .

Shall try to report back here in 9 months time to let you know how well (or badly!) this whole process goes.

[Tkydon]

On Furusato Nouzei

The principle of Furusato Nouzei is to reassign a portion of your Resident's Taxes (Prefectural and Municipal) from high population density tax-rich locations to low population density tax-poor locations.

https://www.realestate-tokyo.com/living ... ato-nozei/

https://www.nta.go.jp/english/taxes/ind ... 020/01.pdf

Pages 39-40 refer to the Deduction for Medical Expenses

Pages, 41-42, 53, and 64 refer to the Deduction for Donations for Furusato Nouzei (Hometown Tax)

Page 64 states that you must file if you claim deductions for both Medical and Furusato Nouzei Deductions.

A very large Medical Deduction (say Y2,000,000) will obviously change your Total Taxable Income considerably, and may well change your Marginal Tax Bracket, reduce your Resident's Taxes by 10% of that value (a maximum of Y200,000), and therefore change your entitlement level for Furusato Nouzei.

The maximum amount of tax credit deductible for Furusato Nouzei is 20% of the amount of Residential Taxes, which in turn is 10% of Total Taxable Income, so 2% of Total Taxable Salary, so you should probably limit your Furusato Nouzei purchases in the year in which you will claim such a large Deduction for Medical Expenses.