Claiming back medical expenses

[Roger Van Zant]

This year I am on track to spend over 200,000 yen in medical expenses.
I am a member of shakaihoken through my company, as a full-time seishain.
I don't earn enough money to be in any higher-tax bracket, so I am just a bog-standard rate taxpayer.

I believe I can claim back some money if I spend more than 100,000 yen in a year.

Can anyone answer these questions?

1) From when to when is the period used for calculating (e.g. Jan 1 - Dec 31? Apr 1 to Mar 31?)
2) When can I submit my claim? (e.g. is there a specific 30-day window or something?)
3) Where do I go to submit the claim? (city hall? all online? through my company?)
4) How much can I expect to get back on total expenses of, say, 220,000 yen?

Thanks.

[adamu]

This is a tax question, not an insurance question.

1) From when to when is the period used for calculating (e.g. Jan 1 - Dec 31? Apr 1 to Mar 31?)

Jan 1 - Dec 31.

2) When can I submit my claim? (e.g. is there a specific 30-day window or something?)

Tax return season, Jan-March.

3) Where do I go to submit the claim? (city hall? all online? through my company?)

As part of your tax return to the Tax Office.

4) How much can I expect to get back on total expenses of, say, 220,000 yen?

Not sure, I believe it's deducted from your taxable income, so you'd get back whatever the tax you would have paid on 120,000 yen is.

We have a little bit of info here: https://retirewiki.jp/wiki/Medical_Expenses_Deduction

[ClearAsMud]

As has been mentioned (adamu beat me to this), the deduction must be claimed on a normal income-tax return, so the period covered is from Jan. 1 to Dec. 31. The return is the one you file either online or with the tax office between mid-February and mid-March of the following year (or beginning from January 1 if you are due a tax refund). A company does not include this deduction on an employee's year-end adjustment, so the employee has to file an income-tax return to claim it.

The formula used for calculating the deduction is as follows:

• First, subtract any reimbursements received from health insurance or the like from total medical expenses.
• Next, subtract 100,000 yen from the result (or subtract 5% of your income [shotoku] if your income is 2 million yen or less).
• The resulting amount can be claimed as a deduction on your income-tax return, up to a maximum of 2 million yen.

Thus, if you have 220,000 yen of out-of-pocket medical expenses, you can basically expect to be able to claim a deduction of 120,000 yen, reducing your taxable income by that amount and resulting in an incremental decrease in tax owed. As a company employee, you file an income-tax return to show that you "overpaid" your taxes through your employer and want to claim a refund of the overpaid amount, whatever that might turn out to be -- you actually have to run the numbers to calculate the amount of the refund.

As an example, let's say you (or your company) reported a taxable income for you of 3 million yen. According to the standard formula, your tax is 3,000,000 x 0.1 - 97,500 = 202,500 yen. Factoring in a medical deduction of 120,000 yen means that your true taxable income should have been 2,880,000 yen, resulting in a tax of 190,500 yen. Your income-tax return would then show that you are due a refund of 202,500-190,500 or 12,000 yen.

A statement of medical expenses incurred must be attached to the return or completed online, and receipts must be kept on file at home for a period of five years. Properly documented public-transportation expenses qualify for the exclusion as long as the transportation was used for the purpose of receiving treatment, but note that any part of a route covered by a commuter pass does not qualify, and taxi fares only qualify if public transportation is not readily available or if special circumstances apply (e.g. broken bones).

Pages 39-40 of the English 2021 Income Tax Guide describe the deduction for medical expenses in more detail.

The paper version of the deduction statement can be
downloaded here.

[Roger Van Zant]

Thank you very much to both of the above posters!

[Wales4rugbyWC23]

As has been mentioned (adamu beat me to this), the deduction must be claimed on a normal income-tax return, so the period covered is from Jan. 1 to Dec. 31. The return is the one you file either online or with the tax office between mid-February and mid-March of the following year (or beginning from January 1 if you are due a tax refund). A company does not include this deduction on an employee's year-end adjustment, so the employee has to file an income-tax return to claim it.

The formula used for calculating the deduction is as follows:

• First, subtract any reimbursements received from health insurance or the like from total medical expenses.
• Next, subtract 100,000 yen from the result (or subtract 5% of your income [shotoku] if your income is 2 million yen or less).
• The resulting amount can be claimed as a deduction on your income-tax return, up to a maximum of 2 million yen.

Thus, if you have 220,000 yen of out-of-pocket medical expenses, you can basically expect to be able to claim a deduction of 120,000 yen, reducing your taxable income by that amount and resulting in an incremental decrease in tax owed. As a company employee, you file an income-tax return to show that you "overpaid" your taxes through your employer and want to claim a refund of the overpaid amount, whatever that might turn out to be -- you actually have to run the numbers to calculate the amount of the refund.

As an example, let's say you (or your company) reported a taxable income for you of 3 million yen. According to the standard formula, your tax is 3,000,000 x 0.1 - 97,500 = 202,500 yen. Factoring in a medical deduction of 120,000 yen means that your true taxable income should have been 2,880,000 yen, resulting in a tax of 190,500 yen. Your income-tax return would then show that you are due a refund of 202,500-190,500 or 12,000 yen.

A statement of medical expenses incurred must be attached to the return or completed online, and receipts must be kept on file at home for a period of five years. Properly documented public-transportation expenses qualify for the exclusion as long as the transportation was used for the purpose of receiving treatment, but note that any part of a route covered by a commuter pass does not qualify, and taxi fares only qualify if public transportation is not readily available or if special circumstances apply (e.g. broken bones).

Pages 39-40 of the English 2021 Income Tax Guide describe the deduction for medical expenses in more detail.

The paper version of the deduction statement can be
downloaded here.

If I can just jump on board and go off on a slight tangent; What is the Japanese Tax office opinion of hospital bills for family members at foreign hospitals. This is for a facial injury and my daughter went to a private hospital about 50,000 yen is hospital expenses. I am planning to ask my accountant but would appreciate advice.

[ClearAsMud]

What is the Japanese Tax office opinion of hospital bills for family members at foreign hospitals.

I'm not in a position to offer authoritative advice -- I can only report generally on what can be found online, and individual circumstances require individual attention. But in principle, medical expenses incurred overseas by Japanese tax residents (and their dependents) are eligible for the deduction as long as those expenses meet the same definition of medical treatment used in Japan (i.e., no optional procedures like plastic surgery). The NTA specifies that if such expenses are paid in a foreign currency, the TTM rate in effect on the date of payment is used to calculate the yen value of such treatment (see Question 4 of the FAQ on this page ).

Note the proviso that one must be a Japanese tax resident to claim the deduction. Periods during which one is not a tax resident are not covered (on the other hand, payments for previously received treatment made after one has acquired -- or re-acquired -- tax residency are apparently eligible). The basic assumption is that treatment was received during a temporary trip overseas. Furthermore, you would have to reduce your expenses by any amount received from, say, travel insurance.

Remember that tax residents are also covered by their regular health insurance while traveling overseas, so you would probably first want to claim reimbursement under your insurance before worrying about the tax deduction. Reimbursement would apparently be calculated according to Japanese standards, so it's quite possible you wouldn't receive the full 70% of your out-of-pocket expenses, but you would receive a fair proportion of them, and the deduction could be used for anything over that amount.