Limit for dependants

[KCLenny]

Basically not a lot will change for you. Health insurance is indeed based on household income and will not rise massively. National income tax and residents tax may go up, but again not by much. As an employee, your wife's first million yen of earnings each year (give or take) will be exempt from all of these taxes and obligations. Not sure what her current status is regarding pension, but on that income she may well be at least partially exempt if she so chooses.

Regarding paperwork, I don't see any reason why you won't be able to continue doing nenmatsu chosei as now, and her doing the same at her job. One thing to check out is how much spousal deduction you will still be able to claim (she is earning at a level where you will still see a reduction in the tax you pay).

It is a change, but one for the better, and I don't think you need to stress the financials. For sure you will end up much better off. The paperwork can be dealt with as and when it comes

Thanks for the reply.
I’m still not quite clear on the nenmatsuchosei.
When I do mine, so far at least, I’ve been writing her income on it as well.
Do I still need to do that? And if she has to do a nenmatsuchosei at her job, how does she do it? Does she have to write my income on hers as well? And what do we do for the health insurance declaration? As it is currently shared if we both declare the same bill isn’t that some kind of double declaration?
Sorry for all the moronic simpleton questions. I just have no financial literacy above saving money. Never had to learn about any of this coming from the uk.

No, my mistake. Sorry!

No worries. Just realised 28 hours was directly printed on her zairyu card anyway!

[Beaglehound]

I think you will have to continue putting her income on your nenmatsu chosei, though as now that will be an estimate as the year is not finished when you submit it. This gets you the dependent deduction for income/resident tax purposes. As she will not be claiming you as a dependant she doesn't have to submit your income on her nenmatsu chosei.

For health insurance I think it should be sorted out at ward office level without you having to do anything. Once they have both of your finalised tax situations for the year, the premiums will be calculated accordingly and fall on you to pay as designated head of household. Maybe around May though not sure on that. Is she currently paying nenkin? If currently exempt she may have to start paying at least a portion depending on income level.

[ClearAsMud]

2. Under the tax law there is a different, and much lower limit to the amount she can earn and still file jointly with her as your dependent.
If she earns more than Y380,000 (I think - haven't checked for 2023 or 2024 yet) per year, then you can no longer file jointly with her as your dependent on your Tax Return, and she will have to file independently, with her own Personal Allowance, and do her own Year End Adjustment - Nenmatsu Chosei, and possibly her own Tax Return - Kakutei Shinkoku the following March...

Wait that’s the limit? ¥380,000 a year? So she has to do her own nenmatsuchosei?
Also I don’t think I’ve ever done a Kakutei Shinkoku…how does one go about doing that? My boss just gives me 3 forms in December and I fill them out, and that’s all I’ve done for the last 3 years.

3. The limit for her to be a dependent on your Health Insurance. She may have to have her independent health insurance, and there may be other costs...

What? She has to get her own national health insurance? I thought national health insurance was always just for the house based on the total house income? How do we even go about setting that up if necessary and would be massively more money? We are currently paying ¥28,000 a month.

No, for employed spouses the limit for income-tax purposes is not 380,000 yen but 1,030,000 yen. There are actually several "walls" or cutoff points for annual income that apply to working dependents like spouses. The two mentioned most often are those at 1,030,000 yen and 1,300,000 yen.

The 1,030,000 yen cutoff (net rather than gross) is the point at which income tax actually becomes payable for those engaged in regular employment (including パート and バイト). This tax must then be withheld form the employee's wages.This is also when income-tax deductions received by supporting spouses or other family members are either reduced or eliminated.

The second amount is when dependency is considered to have been lost for social-insurance purposes and the (former) dependent becomes personally responsible for paying for his/her own pension and health insurance, along with other items.

The 1,030,000 yen "wall" exists because there is a minimum 550,000 yen deduction (給与所得控除) available to all employees -- see this NTA page for the basic explanation and this page for how the deduction is calculated -- and because there is a minimum 480,000 yen standard deduction for all self-assessing taxpayers, meaning that employees don't actually start paying taxes or become ineligible for the spouse deduction until their taxable income reaches the sum of those two figures. (The standard deduction was raised to 480,000 yen beginning from, I think, 2020.)

See this Freee page for (very!) detailed explanations of the details regarding nenmatsu chosei for working spouses.

There is, by the way, no such thing as filing taxes jointly in Japan. All taxpayers file individually, although deductions may be taken for supporting dependents or for a variety of other reasons.

[edited to fix a couple of typos]

[Tkydon]

Wait that’s the limit? ¥380,000 a year? So she has to do her own nenmatsuchosei?
Also I don’t think I’ve ever done a Kakutei Shinkoku…how does one go about doing that? My boss just gives me 3 forms in December and I fill them out, and that’s all I’ve done for the last 3 years.

There is a limit under whichh you can include her on your Nenmatsu Chosei or Kakutei Shinkoku.
If her income goes over that limit, she will have to do her own Nenmatsu Chosei or Kakutei Shinkoku.

If you are in employment for only one or two employers who withhold tax from payments, and who provide a Statement of Withholding - Gensen Choshu Hyo at the end of the year, and you have no other deductions or income that would require it, you do not need to file a Kakutei Shinkoku.

3. The limit for her to be a dependent on your Health Insurance. She may have to have her independent health insurance, and there may be other costs...

I put this, in case you were on a private health insurance, but then I realized you are on NHI, so I provided the below, which applies in your case.

National Health Insurance is assessed on Household Income, regardless of whether you file together or separately. There are three segments to Kokumin Kenko Hoken, with a Per Person component and an income related component %, each with a maximum ceiling limit.
You can check the actual calculation for your municipality on their website.
Basic Health Coverage (all household members)
Latter Term Care Coverage (all household members)
Long-Term Nursing Care Coverage (household members aged between 40 and 65))
End of Life

Basically the Household NHI premiums are calculated on a per-person component and a %age of previous year's income component, so will be calculated based on the total household reported income, whether filed jointly or separately.

Employee Pension Insurance is also related to income, at 18.3%, with minimum and maximum payments, but the employee pays half and the employer pays half, and both halves are tax free... She would have to pay her own contributions.
https://www.nenkin.go.jp/service/kounen ... yogaku.pdf

I don’t think this part applies to me as we only have national pension.

The National Pension is separated into two categories:

1. The Basic National Pension - Kokumin Kiso Nenkin - Premium Y16,520 per month.
https://www.nenkin.go.jp/international/ ... nsion.html

2. The Employee Pension Insurance System - Premiums start from Y8,052 per month (half of Y16104) and rise at 9.15% of income, half of 18.3% total)
https://www.nenkin.go.jp/international/ ... loyee.html
https://www.nenkin.go.jp/service/kounen ... yogaku.pdf

Are you only paying the Basic Pension contributions Y16,520 per month?

Or are you paying a variable amount based on your income?
The employer should be collecting the Pension Contributions and paying the other half 9.15%...

[KCLenny]

I think you will have to continue putting her income on your nenmatsu chosei, though as now that will be an estimate as the year is not finished when you submit it. This gets you the dependent deduction for income/resident tax purposes. As she will not be claiming you as a dependant she doesn't have to submit your income on her nenmatsu chosei.

For health insurance I think it should be sorted out at ward office level without you having to do anything. Once they have both of your finalised tax situations for the year, the premiums will be calculated accordingly and fall on you to pay as designated head of household. Maybe around May though not sure on that. Is she currently paying nenkin? If currently exempt she may have to start paying at least a portion depending on income level.

She’s on national pension same as me. We were told I think earlier this year that once my income became sufficient she didn’t have a choice and had to pay. One month we were both on 50% exemption. The next month we both had to pay full amount. Thanks for the reassurance though.

No, for employed spouses the limit for income-tax purposes is not 380,000 yen but 1,030,000 yen. There are actually several "walls" or cutoff points for annual income that apply to working dependents like spouses. The two mentioned most often are those at 1,030,000 yen and 1,300,000 yen.

The 1,030,000 yen cutoff (net rather than gross) is the point at which income tax actually becomes payable for those engaged in regular employment (including パート and バイト). This tax must then be withheld form the employee's wages.This is also when income-tax deductions received by supporting spouses or other family members are either reduced or eliminated.

The second amount is when dependency is considered to have been lost for social-insurance purposes and the (former) dependent becomes personally responsible for paying for his/her own pension and health insurance, along with other items.

The 1,030,000 yen "wall" exists because there is a minimum 550,000 yen deduction (給与所得控除) available to all employees -- see this NTA page for the basic explanation and this page for how the deduction is calculated -- and because there is a minimum 480,000 yen standard deduction for all self-assessing taxpayers, meaning that employees don't actually start paying taxes or become ineligible for the spouse deduction until their taxable income reaches the sum of those two figures. (The standard deduction was raised to 480,000 yen beginning from, I think, 2020.)

See this Freee page for (very!) detailed explanations of the details regarding nenmatsu chosei for working spouses.

There is, by the way, no such thing as filing taxes jointly in Japan. All taxpayers file individually, although deductions may be taken for supporting dependents or for a variety of other reasons.

[edited to fix a couple of typos]

Thanks for that. My wife has never done a nenmatsuchosei. She’s never been asked to. Although last year her total income was only something like ¥310,000!

There is a limit under whichh you can include her on your Nenmatsu Chosei or Kakutei Shinkoku.
If her income goes over that limit, she will have to do her own Nenmatsu Chosei or Kakutei Shinkoku.

If you are in employment for only one or two employers who withhold tax from payments, and who provide a Statement of Withholding - Gensen Choshu Hyo at the end of the year, and you have no other deductions or income that would require it, you do not need to file a Kakutei Shinkoku.

My boss holds my tax. Only one job. So I think I have no issues here then. Right?

Basically the Household NHI premiums are calculated on a per-person component and a %age of previous year's income component, so will be calculated based on the total household reported income, whether filed jointly or separately.

The National Pension is separated into two categories:

1. The Basic National Pension - Kokumin Kiso Nenkin - Premium Y16,520 per month.
https://www.nenkin.go.jp/international/ ... nsion.html

2. The Employee Pension Insurance System - Premiums start from Y8,052 per month (half of Y16104) and rise at 9.15% of income, half of 18.3% total)
https://www.nenkin.go.jp/international/ ... loyee.html
https://www.nenkin.go.jp/service/kounen ... yogaku.pdf

Are you only paying the Basic Pension contributions Y16,520 per month?

Or are you paying a variable amount based on your income?
The employer should be collecting the Pension Contributions and paying the other half 9.15%...

I’m only paying basic pension. But I’m also doing fukanenkin. So it’s like 16,920.
My boss does nothing for pension. I’m at a sole proprietorship so don’t know if she has to do anything regarding pension. I was under the impression she didn’t.



So basically I should still put my wife’s income on my nenmatsuchosei this year, and she will probably do hers at her job (but not say my income on hers).
What do we have to do regarding national health insurance? I usually declare on mine as she was a dependent. But if she’s doing a nenmatsuchosei as well this year, does she need to put the NHI payments on hers as well? Pension is easy as separate. I declare mine, she declares hers, simple. Just confused for the health insurance.

[KCLenny]

Also, I really appreciate all the help and support everyone is giving. Thank you so much ^_^

[ClearAsMud]

What do we have to do regarding national health insurance? I usually declare on mine as she was a dependent. But if she’s doing a nenmatsuchosei as well this year, does she need to put the NHI payments on hers as well? Pension is easy as separate. I declare mine, she declares hers, simple. Just confused for the health insurance.

There's no real choice about nenmatsu chosei -- if it's regular employment, an employer is generally required to reconcile taxes withheld with taxes due, and to do that the employer will need to perform a year-end adjustment (exceptions like multiple employers have been noted elsewhere that may require a kakutei shinkoku instead of -- or possibly in addition to -- a nenmatsu chosei).

Regarding NHI and other forms of social insurance, the basic rule for income tax is that whichever member of a household actually pays the premiums is entitled to the deduction. If both spouses are on National Health Insurance, a single bill for the premiums will be sent to the head of the household, who is held personally responsible by the municipality for paying it. The income-tax deduction, however, can be taken by the person(s) actually making the payment. Thus, it's usually to a household's advantage for the higher/highest earner to (nominally) make the payment and claim the tax deduction (i.e., the name on the bill doesn't have to match the name of the person claiming the deduction, and for a single person to claim the deduction provides the highest tax benefit). So in your case, whichever spouse is going to take the National Health Insurance deduction should put the (estimated) amount for the calendar year in the 社会保険料控除 section of the "保" nenmatsu chosei form, with that information left off of the other spouse's form (your spouse would declare her own pension premiums there, unless you also take responsibility for those -- haven't you been doing that?). NHI premiums, unlike pension premiums, don't require supporting documentation for the claim, so if you're the one who's going to claim the deduction this year, just filling out the corresponding entry on your own form will suffice as far as NHI goes.

Keep in mind that some generalization is involved here -- individual circumstances might involve different principles (you work at a company that isn't a company?), and the information on most sites seems to assume that one spouse is going to be a company employee, so what happens when both spouses are on NHI may need more consideration than I've been able to give it. But in view of your spouse's current income, I think you're probably safe for now filling out the NHI information as described above. The people at the tax office are usually willing to help out if you need more authoritative answers (although wouldn't your employer also be able to help since they're the ones who actually make the adjustment?).