Tax allowances for dependents who live abroad

[Tkydon]

If you are in full-time employment then your employer does the Year End Adjustment or Nenmatsu Chousei.

Based on your Statement of Dependents for the coming year at the previous year's Nenmatsu Chousei, and your remuneration history for the previous year's total annual salary, and some other details, they project how much they think you will earn in Taxable Income after Allowances and Deductions for this Tax Year.

They then use a table provided by the Tax Office to calculate how much Tax they should Withhold from your Salary every month, which they are obliged to do under the Tax Law, in order to fullfil your Tax obligations for the Tax Year.

Then at the end of the Tax Year, they send you another set of forms; a Statement of Dependents for the coming year, and a Statement of Dependents for the past year, confirming the Statement of Dependents for the coming year you submitted at the end of the previous Tax Year, and a form for claiming additional Allowances and Deductions such as Insurance Premiums, Home Mortgage Tax Allowance, and so on...

They then calculate how much you really should have paid in the Tax Year to cover your Tax Liability, and they either a) give you a rebate in your December Payroll if you have overpaid through the year (which may be the case if you are claiming Home Mortgage Tax Allowance), or b) withhold additional tax from your December Payroll if there is a deficit.

They then issue you the Gensen Choushuhyo - The Statement of Taxes Withheld.

If you have no other Allowances, Deductions or Income of any kind, you do not need to file a Tax Return - Kakutei Shinkoku.

If you do, or if after the fact you wish to change your Allowances, Deductions or Income of any kind, then you have to go and file a Tax Return - Kakutei Shinkoku.

If you wish to claim back Tax based on changes in previous years, you may either have to go and file a Tax Return for those previous years, or amend the Tax Returns you filed for previous years.

You can go back up to 3 years to file changes, and reclaim the Tax on those additional Dependents' Allowances, which will be equal to your Marginal Tax Rate x Dependent Allowance Amount listed above.

Say your Marginal National Tax Rate is 33% and Reconstructions Tax Rate is 0.693%, and 10% Residents' Taxes, then you would get 1/3 of the allowance back in National Tax Rebate and an additional 10% Residential Tax Rebate per year

Y380,000 Per Dependent => Total Rebates of Y165,737 per year
or Y630,000 For Dependents between 19 and 23 => Total Rebates of Y274,775 per year
or Y480,000 For Dependents over 70 => Total Rebates of Y209,352 per year

and so on.

If you are filing for the first time, as opposed to modifying a filing, you will need to take the Gensen Choushuhyo - Statement of Taxes Withheld with you to fill in the correct values on which to base your rebates.

[goran]

....

That’s extremely useful info.
Do you know if there is any governmental agency where I could inquire about the procedure for this? NTA?

Yes. Do you do kakutei shinkoku or are you employed? If you're employed, there's forms you fill out to submit to your employer. If you submit your own tax form, you can go to a NTA office and get a consultation and they'll help you fill it up.

Full time employed. So my employer does the chyousei for me. And I hanko a form at the end of the year. (co-incidentally, this week)
I think the first thing that I need to do is consult with my HR.

[zeroshiki]

That’s extremely useful info.
Do you know if there is any governmental agency where I could inquire about the procedure for this? NTA?

Yes. Do you do kakutei shinkoku or are you employed? If you're employed, there's forms you fill out to submit to your employer. If you submit your own tax form, you can go to a NTA office and get a consultation and they'll help you fill it up.

Full time employed. So my employer does the chyousei for me. And I hanko a form at the end of the year. (co-incidentally, this week)
I think the first thing that I need to do is consult with my HR.

Usually there's a few pages on the chousei form. The first one is your income and then next page they ask you to list out your dependents and then insurance and home loan (all of these have deductions). You just write down your overseas dependents and submit. For my company, they followed up with me and asked me to submit evidence of bank transfers overseas after that.

[goran]

Yes. Do you do kakutei shinkoku or are you employed? If you're employed, there's forms you fill out to submit to your employer. If you submit your own tax form, you can go to a NTA office and get a consultation and they'll help you fill it up.

Full time employed. So my employer does the chyousei for me. And I hanko a form at the end of the year. (co-incidentally, this week)
I think the first thing that I need to do is consult with my HR.

Usually there's a few pages on the chousei form. The first one is your income and then next page they ask you to list out your dependents and then insurance and home loan (all of these have deductions). You just write down your overseas dependents and submit. For my company, they followed up with me and asked me to submit evidence of bank transfers overseas after that.

Thank you.
Just on an off chance, do you think this will impact PR application? I know a definitive answer to this question is impossible. Just fishing for some opinions.

[zeroshiki]

Thank you.
Just on an off chance, do you think this will impact PR application? I know a definitive answer to this question is impossible. Just fishing for some opinions.

Affect in what way? Will it make it more complicated? The simple answer is yes. They will ask you for the same proof documents you've had to provide to the tax agency for your deduction. Which is, of course, more of a hassle than if you didn't do it at all. But if it's valid anyway, then you have no problem.

They consider tax evasion a big no-no for PR and unfortunately cheating on tax using overseas dependents is very common (I read about someone who claimed 20+ dependents) so the burden will be on you to prove its valid.

[goran]

Thank you.
Just on an off chance, do you think this will impact PR application? I know a definitive answer to this question is impossible. Just fishing for some opinions.

Affect in what way? Will it make it more complicated? The simple answer is yes. They will ask you for the same proof documents you've had to provide to the tax agency for your deduction. Which is, of course, more of a hassle than if you didn't do it at all. But if it's valid anyway, then you have no problem.

They consider tax evasion a big no-no for PR and unfortunately cheating on tax using overseas dependents is very common (I read about someone who claimed 20+ dependents) so the burden will be on you to prove its valid.

Mine is only my parents and they aren't completely dependent on me (partially supported by my remittance).
My PR application is underway right now. I have gone 6+ yrs without claiming this tax exemption. Probably its for the best that I let this year go as well and wait for the PR result.
Thank you for all the information! Really appreciate it.

[Tkydon]

Thank you.
Just on an off chance, do you think this will impact PR application? I know a definitive answer to this question is impossible. Just fishing for some opinions.

Affect in what way? Will it make it more complicated? The simple answer is yes. They will ask you for the same proof documents you've had to provide to the tax agency for your deduction. Which is, of course, more of a hassle than if you didn't do it at all. But if it's valid anyway, then you have no problem.

They consider tax evasion a big no-no for PR and unfortunately cheating on tax using overseas dependents is very common (I read about someone who claimed 20+ dependents) so the burden will be on you to prove its valid.

Mine is only my parents and they aren't completely dependent on me (partially supported by my remittance).
My PR application is underway right now. I have gone 6+ yrs without claiming this tax exemption. Probably its for the best that I let this year go as well and wait for the PR result.
Thank you for all the information! Really appreciate it.

20+ Dependents is a little excessive, but if he has the documentation in the form of bank transfer documents and the other required documents to prove that he is supporting them all, then...

This is why the burden of proof was introduced. To ensure that all claims are legitimate.

They don't have to be completely dependent on you. You just need to prove that you are supporting them to a level greater than the Allowance level stated above, so that you support them with Pre-Tax Income instead of Post Tax Income... i.e. you don't have to pay tax on the money you send them, which is no longer calculated as taxable income to you.

If your claim is legitimate it will not impact your PR application.... It's just a couple Y100,000 yen per year., which you are entitled to.. No big deal.

If you decide to apply for rebate for 2019, you had better do it soon as the window is closing. You can currently amend 2021, 2020, and 2019, but 2019 will drop out when 2022 Filing is complete.

Or you can wait until your PR is secured, and then go back 3 years and claim...

[goran]

.......
20+ Dependents is a little excessive, but if he has the documentation in the form of bank transfer documents and the other required documents to prove that he is supporting them all, then...

This is why the burden of proof was introduced. To ensure that all claims are legitimate.

They don't have to be completely dependent on you. You just need to prove that you are supporting them to a level greater than the Allowance level stated above, so that you support them with Pre-Tax Income instead of Post Tax Income... i.e. you don't have to pay tax on the money you send them, which is no longer calculated as taxable income to you.

If your claim is legitimate it will not impact your PR application.... It's just a couple Y100,000 yen per year., which you are entitled to.. No big deal.

If you decide to apply for rebate for 2019, you had better do it soon as the window is closing. You can currently amend 2021, 2020, and 2019, but 2019 will drop out when 2022 Filing is complete.

Or you can wait until your PR is secured, and then f=go back 3 years and claim...

Thank you for the headsup.
Most part of 2019, I was outside Japan and the remittances were not from here. So, I think I can let it go.
Next year I'll try the adjustment from 2020-2022!

Thanks once again!

[Kiro]

For what it’s worth, I got PR approved a few years back while having (two) dependents during many years, including the year I submitted my application, and was never asked anything. Maybe they checked, maybe they didn’t, but all my papers were in order and submitted yearly by the company I worked for.

[goran]

For what it’s worth, I got PR approved a few years back while having (two) dependents during many years, including the year I submitted my application, and was never asked anything. Maybe they checked, maybe they didn’t, but all my papers were in order and submitted yearly by the company I worked for.

Thank you for this information.
I am assuming that the two dependents were residing outside Japan when you were supporting them and no additional documents were required.