Japan withholding tax and allowances for dependants

[Moneymatters]

I did my tax return and once again was surprised by the amount being returned. More than expected.
Nice problem to have right!
It's clear this is related to two older dependants earning under the threshold (as zero is comfortably under.).
Who are frequently not such a nice problem to have..

Ingrate 1. Is in Uni
Ingrate 2. Is in Snr High

Due to being above the income threshold, my company does not perform a nenmatsu chosei for me.
They do however include aforementioned ingrates on my gensenchoushuhyou 源泉徴収票.

Under duress, our payroll agent explained that that make a standard allowance for having them as dependants.
1 扶 養 親 族 - 特別 (And trust me. She thinks she is.)
1 扶 養 親 族 - その他 (That's their definition not mine. But if you looked at the sofa right now you'd think it apt.)

Where the hell is this going Matters! Get to the damn point.

Well. The point is I also include them as the same type of dependants when doing my 確定申告 tax return.
So I'm looking for reassurance I've done the right thing by including my dependants in my tax return. Becuase if I need to give this money back it will be tough. As my partner in crime immediately takes 50% of the rebate as payment for sitting next to me, noisely munching senbei and occasionally saying "try clicking that" like we're in an obscure Far Side strip.

I'm getting other allowances for ideco (I pay directly), paying one kids pension, insurance, but calculating just those the rebates should be half what I'm actually getting. Same last year.

FINALLY! ACTUAL HONEST TO GOODNESS QUESTIONS:
1. Is it correct to include dependants in your tax return even if they are on the 源泉徴収票?

2. Given what the firm is doing is just withholding tax, is it normal for a company NOT to factor in the full allowance for dependants? Hence a rebate. <Edited>

[Beaglehound]

No specialist knowledge but, from experience, when I was a dependent of my wife for a while everything was done through the company and the deduction processed without the need for a tax return. So your suspicion of a double claim may be warranted.

[imaginatorium]

My understanding is that the 確定申告 return is the final statement. Therefore you should declare all the allowances you are entitled to; any 源泉徴収 is simply absorbed into the final figures - in the end it does not really matter what tax was withheld, or what allowances the calculation was based on, because it simply says that you have already paid whatever tax was withheld, and then you subtract this from the tax that you owe. I used to be a translator, and most of my income came with 10% (part 20%) withheld; I completed the return, then the tax due was usually less than the withholding amount, so we got a healthy refund, which I then had to give back when the local tax bill arrived.

FWIW dept. ... One mistake we made (not using an accountant) was failing to claim the much bigger allowances for our two elder kids at university, when I was earning quite a lot. OTOH, according to some estimates we might have saved upwards of 10 million yen by not paying an accountant, and no-one has yet been able to explain quite how the work of assembling all the necessary figures to give to an accountant is less than the work of assembling the same figures to give to the tax office.

[imaginatorium]

Followup: your question 2 seems to be backwards... you mean "withhold too much tax... hence a rebate", I think. Incidentally, does "your company" mean you are incorporated, rather than a separate employer?

[Moneymatters]

Followup: your question 2 seems to be backwards... you mean "withhold too much tax... hence a rebate", I think. Incidentally, does "your company" mean you are incorporated, rather than a separate employer?

I'm just a regular garden variety company employee.

And yes. Me not English much good. I'll edit. thx.

[imaginatorium]

OK, so you are an employee, whereas I was an outside worker (and typically receiving fees from a number of different translation companies). In my case the end-of-year sorting out can only be done by me, whereas in your case typically the company does it by 年末調査 (about which I am only guessing). But in both cases the final return is definitive, so yes you claim all allowances. If you are unsure about this, you could go and ask the tax office (after the 15th!) to confirm it is ok; if you are wrong you may have to file an amended return, but I don't think there would be any penalty for that. But first I would try to see how the difference arises: are they really writing the same allowance figures, for example?

[Tkydon]

FWIW dept. ... One mistake we made (not using an accountant) was failing to claim the much bigger allowances for our two elder kids at university, when I was earning quite a lot. OTOH, according to some estimates we might have saved upwards of 10 million yen by not paying an accountant, and no-one has yet been able to explain quite how the work of assembling all the necessary figures to give to an accountant is less than the work of assembling the same figures to give to the tax office.

If it was in the last 3 years, you can go back and amend the filings to claim the additional allowances and get a refund...

[Tkydon]

Followup: your question 2 seems to be backwards... you mean "withhold too much tax... hence a rebate", I think. Incidentally, does "your company" mean you are incorporated, rather than a separate employer?

I'm just a regular garden variety company employee.

And yes. Me not English much good. I'll edit. thx.

At the beginning of the tax year, you normally provide a statement of Dependents for the coming Tax Year, and the company uses that to predict how much tax you might need to pay in total in the coming tax year, and how much they would need to withhold each month (from tables), but it is approximate, and so you could end up not paying enough and getting an additional bill, or paying too much and get a refund.

Do you have a Home Loan Deduction?
For the first year, you have to do a Kakutei Shinkoku, but then the Tax Office issues vouchers for subsequent years, so that it can be handled by Nenmatsu Chosei, and you'd get a refund in Dec paycheck, but if they didn't do your Nenmatsu Chosei, they didn't process your Home Loan Deduction.

The difference between the allowance for a regular dependent (380,000) and a Special Dependent (19-23) (630,000) is 250,000 per kid, so if the Withholding calculation had been done on the lower value, you would expect to see the additional reduction of Taxable Salary of 250,000 per kid, and the reduction of your marginal Tax Rate x 250,000 per kid... If your marginal Tax Rate is 33% + 0.693% Reconstruction Tax, then you might see a rebate of 84,000 per kid.

If your expected salary at the beginning of the year was large, maybe due to a big year the year before, the input to the prediction process may have been too high. Better too high than too low...

Also, if you had a big extra tax bill the year before (2020 Tax Year) due to some under-calculation or other source income, they may have charged you Yotei Nozei (Advanced Tax Payment), which would be taken into account, and possibly refunded if you did not have the same under-calculation or other income in the 2021 Tax Year

Any other Allowances, Deductions, Insurance Premiums, Furusato Nozei, or Medical Bills?

Anyway, as Imaginatorium said, the 確定申告 return is the final statement, and the Gensen Chosu (withholding amount) is just deducted from the Final Tax due, so you can't double book the dependents.

[Moneymatters]

Followup: your question 2 seems to be backwards... you mean "withhold too much tax... hence a rebate", I think. Incidentally, does "your company" mean you are incorporated, rather than a separate employer?

I'm just a regular garden variety company employee.

And yes. Me not English much good. I'll edit. thx.

At the beginning of the tax year, you normally provide a statement of Dependents for the coming Tax Year, and the company uses that to predict how much tax you might need to pay in total in the coming tax year, and how much they would need to withhold each month (from tables), but it is approximate, and so you could end up not paying enough and getting an additional bill, or paying too much and get a refund.

Do you have a Home Loan Deduction?
For the first year, you have to do a Kakutei Shinkoku, but then the Tax Office issues vouchers for subsequent years, so that it can be handled by Nenmatsu Chosei, and you'd get a refund in Dec paycheck, but if they didn't do your Nenmatsu Chosei, they didn't process your Home Loan Deduction.

The difference between the allowance for a regular dependent (380,000) and a Special Dependent (19-23) (630,000) is 250,000 per kid, so if the Withholding calculation had been done on the lower value, you would expect to see the additional reduction of Taxable Salary of 250,000 per kid, and the reduction of your marginal Tax Rate x 250,000 per kid... If your marginal Tax Rate is 33% + 0.693% Reconstruction Tax, then you might see a rebate of 84,000 per kid.

If your expected salary at the beginning of the year was large, maybe due to a big year the year before, the input to the prediction process may have been too high. Better too high than too low...

Also, if you had a big extra tax bill the year before (2020 Tax Year) due to some under-calculation or other source income, they may have charged you Yotei Nozei (Advanced Tax Payment), which would be taken into account, and possibly refunded if you did not have the same under-calculation or other income in the 2021 Tax Year

Any other Allowances, Deductions, Insurance Premiums, Furusato Nozei, or Medical Bills?

Anyway, as Imaginatorium said, the 確定申告 return is the final statement, and the Gensen Chosu (withholding amount) is just deducted from the Final Tax due, so you can't double book the dependents.

Thanks both. Now confident I've not done the wrong thing.
The reason I think the firm are using the correct table is they are notoriously hopeless so I made them show me which table they use and sure enough there is one for 1* special and 1 * "others"...

So I suspect it's becuase my salary does vary a bit year on year they may have over estimated how much to withhold.

I peversely almost want to get an additional tax bill following the return next year. Just to see if my partner's "50% non-negotiable" rule applies to money flowing out.

[beanhead]

If it was in the last 3 years, you can go back and amend the filings to claim the additional allowances and get a refund...

This is a very good point.

We knew that in 2021 we had used more than 100,000 for medical expenses, so we claimed for this.
When we checked the receipts for 2019 and 2020, we realized that the dental work Mrs Head had done took us over the threshold in those years as well. So, we filed today for those costs as well and will get a small refund.