Brainstorm: all the ways to reduce taxes in Japan

[RetireJapan]

Would like to do a video about this, but need a bit of help brainstorming

What are all the ways to (legally) reduce your taxes in Japan? Right now, I have:

mortgage tax break
iDeCo
DC pension
fuka nenkin
kokumin nenkin kikin
furusato nozei (not reducing taxes, but getting free stuff)
SME savings scheme
SME kyosai safety scheme
commercial real estate depreciation
charitable donations

anything else?

[eyeswideshut]

1) Payments to support family members up to 360K per year I believe
2) In additional to depreciation for domestic commercial properties, expenses related to rental properties whether domestic or overseas.

For business owners there are probably a lot of other expenses that can be claimed but for salaried employees there is not much really. I think you may have got them all.

[Kiro]

What I've used before and which you didn't mention already:
- Earthquake insurance
- Life insurance
- Supporting dependents (in or outside Japan, amount vary based on age of the dependent)
- Medical expenses (above JPY 100k)
- Losses carried forward for stocks (you do need to have losses from the previous years, but it is a way to reduce current taxes)
- Foreign tax deduction（外国税控除）

What I've never used but I always see when doing the e-tax:
- Dividend deduction (only for JP stocks was it?)
- House reforms to make it more earthquake resistant
- 'Hit by a disaster' deduction (this one I hope I never get to use...)

About Furusato nouzei, I thought it does also reduce the % of taxes slightly, since it gets added to the deduction from net income part?

[captainspoke]

Be disabled? (障害者)

You get an extra deduction when filing (¥270k or ¥400k, depending on degree), plus some other tax relief--eg, the yearly car tax, which comes every spring, about ¥38-40k/yr, I just toss that slip in the glove box and ignore it.

[david]

Gakushihouken? Admittedly its not a great option...

[allatsea]

What I've used before and which you didn't mention already:
- Medical expenses (above JPY 100k)

The JPY 100k figure is often used, but if your income is low, then < JPY 100k is possible.

This site states 100,000 yen or 5 percent of your annual income (whichever is smaller).
https://www.ibmjapankenpo.jp/eng/member ... tem02.html
It has a lot of info about medical expenses deductions, including a long list of eligible costs.

Transport from home to hospitals, clinics, etc., can be included under medical expenses. The tax office told me it was OK to include transport expenses even if some of them were covered or partly covered by an employer, but I don't have a reference for this.

There is also a self-medication tax system for over-the-counter (OTC) drugs (check the above link for details).

[sutebayashi]

1) For high income earners I gather there is advantage in forming a company, and paying business tax, rather than paying the nose bleed top rates of personal income tax?

I gather one’s income has to get upwards of something like 18 or 20 million before it becomes a viable option.

(I have long been interested in this, but every time I look at it it doesn’t seem like it’ll be worth it for me, but maybe in retirement becoming a shacho could be fun)

2) Once your income is high enough to push your marginal tax rate above 20.3%, it pays more after tax to earn investment income. So don’t work too much for income, earn through investing to keep one’s tax burden lower.

[Gareth]

If you are self-employed:

Remember your pension payments and health insurance payments act like tax deductible expenses.

There are lots of expenses that you can legitimately claim that will reduce taxes, like a portion of your utilities and rent if you work from home

Doing the blue form tax return can add 650,000 to your tax deductible expenses thus further lowering taxes.

Try to avoid being an “invoice issuer” because you’ll get clobbered for consumption tax, but that’s getting harder and harder. So if you have to be, then remember the consumption tax you had to pay is a tax deductible expense for the following year’s tax return.

[Manuchan]

Angel Zeisei is another way to reduce taxes.
https://www.angelzeiseifund.jp/

[zeroshiki]

Angel Zeisei is another way to reduce taxes.
https://www.angelzeiseifund.jp/

This is one of those things that sound like a lie/scam but is apparently true(?!)

Angel Investment Deduction
https://www.chusho.meti.go.jp/keiei/chi ... index.html

I assume the standard for getting the deduction is quite strict but its surprising we've never heard of it.