Income tax deduction for dependents not residing in Japan

[Viralriver]

Hi all, looking for some advice on this topic. I fear it's already too late to claim any income tax deductions for this year (if not, please tell me!) but would like to get the ball moving for next.

Right now with my employer I have 0 dependents listed. I live in Japan alone and am single. I do however have 2 siblings (17yo in school, 22yo in university) and two parents both below retirement age, one works and the other stopped working a few years back from illness due to a poor work environment. As such, only 1 person earns money, and I am paying back money every month to help out where I can. I'd like to be able to get tax deductions on this if possible, but not really sure where to start.

I can't find much English documentation on what the eligiblity requirements are, what the min/max payments need to be, how frequently they need to be made, if my siblings even 'count', etc.

Any advice appreciated!

[TokyoWart]

Although this link is specific to Shinjuku it matches my experience in the documentation expected when you claim a dependent who lives overseas:

http://www.foreign.city.shinjuku.lg.jp/ ... todoke_14/

[ARK]

@Viralriver: Please find deductions for dependents below

380000 Yen per person = Aged 16 to 18 years or 23 to 69 years
630000 Yen per person = Aged 19 to 22years

https://www.mof.go.jp/english/tax_polic ... x.html#a03

[Matt_Black]

I'm now in a similar situation as the OP so let me use this existing thread to get some help.

My parents who are not residing in Japan are getting on a bit and I'm helping them financially.

The process described here sounds straight forward- https://www.nta.go.jp/english/taxes/ind ... m#page-top

In addition, if a person claims an exemption for dependents, etc., relating to his/her relatives residing overseas in the final tax return, such person is required to attach "Documents Concerning Relatives" and "Documents Concerning Remittances" to the final tax return, or present such documents when submitting the final tax return.

Here is what I'm unsure of:

- I'm employed full-time and my employer takes care of my employment taxes, but I also do kakuteishinkoku (確定申告) each year to declare my additional income. Does it matter when I claim the dependent cost, through Nenmatsu chōsei
年末調整 or kakuteishinkoku 確定申告 ?

- Both of my parents work- my understanding is that this does not matter and they could still become my dependents?

Thanks in advance.

[TokyoWart]

- I'm employed full-time and my employer takes care of my employment taxes, but I also do kakuteishinkoku (確定申告) each year to declare my additional income. Does it matter when I claim the dependent cost, through Nenmatsu chōsei
年末調整 or kakuteishinkoku 確定申告 ?

- Both of my parents work- my understanding is that this does not matter and they could still become my dependents?

You can claim your parents through the company but must also do so through kakuteishinkoku (確定申告) because that settles your net tax bill. When you claim them through the company your ongoing withholding through the year will adjust accordingly. I believe they can only make a very small income if you claim them as dependents.

[Tkydon]

Here is what I'm unsure of:

- I'm employed full-time and my employer takes care of my employment taxes, but I also do kakuteishinkoku (確定申告) each year to declare my additional income. Does it matter when I claim the dependent cost, through Nenmatsu chōsei
年末調整 or kakuteishinkoku 確定申告 ?

- Both of my parents work- my understanding is that this does not matter and they could still become my dependents?

Thanks in advance.

It doesn't make any difference whether you claim your dependents at:

Nenmatsu-Chosei declaring at the beginning of the year declaring Next Year's Expected Dependents.
The Company will decrease withholding throughout the year to account for the increased deductions... no end payment due, but no refund either.

Nenmatsu-Chosei declaring at the end of the year due to New Dependents for this year, not declared at the begining of the year.
The Company will decrease your final assessed tax for the year... You will get a refund at your marginal tax rate for the additional dependent(s).
If the additional Dependent Allowance is Y380,000, then you will receive a refund of 5%, 10%, 20%, 23% or 30% of that amount according to your Marginal Tax Rate, according to your actual income level.

Kakutei Shinkoku declaring at the end of March following the end of the year due to New Dependents for the year.
The Tax Office will decrease your final assessed tax for the year... You will get a refund at your marginal tax rate for the additional dependent(s).
If the additional Dependent Allowance is Y380,000, then you will receive a refund of 5%, 10%, 20%, 23% or 30% of that amount according to your Marginal Tax Rate, according to your actual income level.

You are expected to provide actual proof of funds remitted to support the dependent, and there is an unwritten expectation that the total amount remitted will be greater than the amount of the deduction, so more than Y380,000 per dependent, or Y630,000 in the case of students between 19 and 22.

If you have proof of funds transferred in previous years, you can go back and amend or file Kakutei Shinkoku for the past three years.
Then you will receive a refund of not only the 5%, 10%, 20%, 23% or 30% of that amount according to your Marginal Tax Rate, according to your actual income level, but also the 10% Residents' Taxes overpaid.

[Matt_Black]

Thank you for the replies TokyoWart and Tkydon, very informative. I'll get in touch with my HR to get the ball rolling.

[regular]

and there is an unwritten expectation that the total amount remitted will be greater than the amount of the deduction, so more than Y380,000 per dependent

What happens if the remitted amount is less than Y380,000 per dependent? Can't we then benefit by deducting taxes for the amount remitted for that dependent for this tax year?

[Tkydon]

and there is an unwritten expectation that the total amount remitted will be greater than the amount of the deduction, so more than Y380,000 per dependent

What happens if the remitted amount is less than Y380,000 per dependent? Can't we then benefit by deducting taxes for the amount remitted for that dependent for this tax year?

I heard there was a case where someone was truly gaming the system by claiming many dependents whilst actually sending no money, so the rules were made stricter.

If you are in the ball park, I don't think you would be questioned. If you could not corroborate your claim that you were supporting them, they may reject your claim, and not allow you to take the deduction for that 'non-Dependent'.

They are, after all, giving you the opportunity to send the amount of the deduction tax free. Therefore, If you send Y380,000, it is only actually costing you:
1 - Marginal National Tax Rate - Reconstruction Tax Rate - Residents' Tax Rate = Actual Cost To You

1 - 5% - 0.105% - 10% = 84.895%
1 - 10% - 0.21% - 10% = 79.79%
1 - 20% - 0.42% - 10% = 69.58%
1 - 23% - 0.483% - 10% = 66.517%
1 - 33% - 0.693% - 10% = 56.307%

depending on your actual income level. The Japanese Government is paying the remainder with money that you would have otherwise paid to them in taxes.

[Matt_Black]

You are expected to provide actual proof of funds remitted to support the dependent, and there is an unwritten expectation that the total amount remitted will be greater than the amount of the deduction, so more than Y380,000 per dependent, or Y630,000 in the case of students between 19 and 22.

Is my understanding correct that the funds can be remitted from a non-Japanese account as long as translation is provided? The NTA website seems to indicate so, but I want to make sure- https://www.nta.go.jp/english/taxes/ind ... m#page-top

"3 "Documents Concerning Remittances" refer to documents for the year that fall under either (1) or (2) or (3) of the following (if the document is in a foreign language, a Japanese translation is required), and prove that the taxpayer paid in the year for the living expenses or educational expenses of each of the relatives residing overseas as necessary."