Furusato Nozei - the refund mechanics

[Tk_working_mom]

Hello,

So I'm trying to figure out how I can confirm that all the monies donated get refunded (minus the 2,000 yen transaction fee). Via this website (link below), it seems the refund happens on 3 levels:
http://dc.daiwa.jp/ideco/column/article_039/

1. As a deduction from taxable income, so depending on one's tax rate, only a portion of the donation gets refunded from the tax office via bank transfer. (It does not get deducted from the tax amount)

2.&.3. Tax credit/reduction of resident tax

I'm quite fuzzy on the last 2 ways, it seems the remaining portion of my donation comes through a resident tax reduction/credit (so cash never comes back to me). If that is the case, how can you tell the correct amount will be deducted? Does it mean I just have to trust that the ward office will make the correct deduction? Because my employer also pays my resident tax, so what exactly goes in and out of the resident tax, where the credit was applied, is quite a black box to me.

Does anyone know? Should I just ask the ward office, would they be able to show me the breakdown and the tax credit amounts I received from furusato nozei donations from prior years?

Thanks for sharing your insight!

[StockBeard]

I was going to reply then realized I actually have the same question as you. Currently my visibility is only on my tax return, and for that, you get roughly a tax discount of maybe 30% (or whatever your tax rate is) of what you paid for furusato nozei (since, as you say, it's deducted from your income, not from the tax itself). So not sure what happens to the remaining part.

[N00bster]

I had a similar question last year: viewtopic.php?f=8&t=505

Basically the rest is just resident tax that you won't pay (up to 20% of it). So you need to compute how much resident tax you are supposed to pay first. If the remainder (after removing the part deduced from your income tax) of your furusato nozei does not go above 20% of your resident tax, then it will be removed from it.

The exact forumulas can be found on this page: https://www.soumu.go.jp/main_sosiki/jic ... ction.html

[StockBeard]

Thanks N00bster!

[kizuki]

Hello,

So I'm trying to figure out how I can confirm that all the monies donated get refunded (minus the 2,000 yen transaction fee). Via this website (link below), it seems the refund happens on 3 levels:
http://dc.daiwa.jp/ideco/column/article_039/

1. As a deduction from taxable income, so depending on one's tax rate, only a portion of the donation gets refunded from the tax office via bank transfer. (It does not get deducted from the tax amount)

2.&.3. Tax credit/reduction of resident tax

I'm quite fuzzy on the last 2 ways, it seems the remaining portion of my donation comes through a resident tax reduction/credit (so cash never comes back to me). If that is the case, how can you tell the correct amount will be deducted? Does it mean I just have to trust that the ward office will make the correct deduction? Because my employer also pays my resident tax, so what exactly goes in and out of the resident tax, where the credit was applied, is quite a black box to me.

Does anyone know? Should I just ask the ward office, would they be able to show me the breakdown and the tax credit amounts I received from furusato nozei donations from prior years?

Thanks for sharing your insight!

You should be able to check this in the resident tax slip that you receive (either from the ward office or from your company). The slip that I receive has the Furusato amount mentioned in the notes of the slip and that’s how I know that it has been considered in the resident tax computation.

[adamu]

I've been looking into this a bit, and it seems that if you can get away without filing a tax return, there is also a "one stop" system.

You need to keep the donations to a maximum of 5 municipalities, and submit an application to each location you when you donate (so maybe it should have been called the "5 stop" system). If all goes well, the full amount (minus the 2000 yen fee) is deducted from your residence tax (none from income tax) the following residence tax year, and no need to file a tax return just because you did furusato nozei.

https://www.furusato-tax.jp/about/onestop (Japanese)