RetireJapan

unborderedlife wrote: ↑Thu Jan 21, 2021 6:06 am 1. When calculating the amount of income tax for the year {A}, should it be based on the gross income OR adjusted income with all deductions (health insurance, earthquake insurance, basic deduction, etc.) already subtracted (as shown on the end of year slip)?

unborderedlife wrote: ↑Thu Jan 21, 2021 6:06 am 2. Does {C} need to include domestic income that has tax withheld or are exempt (e.g. Coronavirus stimulus payment, NISA dividends)?

unborderedlife wrote: ↑Thu Jan 21, 2021 6:06 am 3. The NTA page says if the foreign tax pays exceeds the credit limit above, we can credit the excess against the special income tax for reconstruction for the year. But only to a certain limit. If the foreign tax we paid still exceeds the foreign tax credit + special income tax for reconstruction credit, is it just too bad?

unborderedlife wrote: ↑Thu Jan 21, 2021 6:06 am 2. Does {C} need to include domestic income that has tax withheld or are exempt (e.g. Coronavirus stimulus payment, NISA dividends)?

Very good question. Seeing that this is usually no part of the tax declaration at all, I would say no, but in the end only an tax accountant (or one of the free advisors they have in some tax declaration buroes). Does it matter?

unborderedlife wrote: ↑Thu Jan 21, 2021 6:06 am 3. The NTA page says if the foreign tax pays exceeds the credit limit above, we can credit the excess against the special income tax for reconstruction for the year. But only to a certain limit. If the foreign tax we paid still exceeds the foreign tax credit + special income tax for reconstruction credit, is it just too bad?

Thats probably bad then. In the online tax declaration tool, you only need to provide {B}. The rest is automatically calculated based on the tax information you provide. May be you can also play around there?

1. When calculating the amount of income tax for the year {A}, should it be based on the gross income OR adjusted income with all deductions (health insurance, earthquake insurance, basic deduction, etc.) already subtracted (as shown on the end of year slip)?

Does {C} need to include domestic income that has tax withheld or are exempt (e.g. Coronavirus stimulus payment, NISA dividends)?

3. The NTA page says if the foreign tax pays exceeds the credit limit above, we can credit the excess against the special income tax for reconstruction for the year. But only to a certain limit. If the foreign tax we paid still exceeds the foreign tax credit + special income tax for reconstruction credit, is it just too bad?

TokyoWart wrote: ↑Fri Jan 22, 2021 3:58 pm

1. When calculating the amount of income tax for the year {A}, should it be based on the gross income OR adjusted income with all deductions (health insurance, earthquake insurance, basic deduction, etc.) already subtracted (as shown on the end of year slip)?

I just checked the calculation on my form for 2019 and the total tax A is from Line 27 which is after all the deductions you mentioned.

Does {C} need to include domestic income that has tax withheld or are exempt (e.g. Coronavirus stimulus payment, NISA dividends)?

This is the first year for a Coronavirus stimulus but my understanding it doesn't appear on taxes. Your NISA dividends are never reported to the government and don't appear on the tax return.

Cheers, thanks for the confirmation on both counts. How about income that already has had tax withheld (i.e. dividends in the 特定口座 and Japanese bank interest). Can they also be omitted from the tax return and thus the formula above?

My experience is that the foreign tax paid always exceeds the credit limit according to this calculation. The recovery from the special tax for reconstruction is also very small. For 4 years those excess payments appear on the sheet (外国税額控除に関する明細書) where you calculate the foreign tax credit but they never do anything for you.

Yes, I did the calculation and the special income tax for reconstruction credit only worked out to be around 500 yen...So I guess you just "lose" the excess you pay. :/

TokyoWart wrote: ↑Fri Jan 22, 2021 3:58 pm

1. When calculating the amount of income tax for the year {A}, should it be based on the gross income OR adjusted income with all deductions (health insurance, earthquake insurance, basic deduction, etc.) already subtracted (as shown on the end of year slip)?

I just checked the calculation on my form for 2019 and the total tax A is from Line 27 which is after all the deductions you mentioned.

Does {C} need to include domestic income that has tax withheld or are exempt (e.g. Coronavirus stimulus payment, NISA dividends)?

This is the first year for a Coronavirus stimulus but my understanding it doesn't appear on taxes. Your NISA dividends are never reported to the government and don't appear on the tax return.

My experience is that the foreign tax paid always exceeds the credit limit according to this calculation. The recovery from the special tax for reconstruction is also very small. For 4 years those excess payments appear on the sheet (外国税額控除に関する明細書) where you calculate the foreign tax credit but they never do anything for you.

Cheers, thanks for the confirmation on both counts. How about income that already has had tax withheld (i.e. dividends in the 特定口座 and Japanese bank interest). Can they also be omitted from the tax return and thus the formula above?

TokyoWart wrote: ↑Sun Jan 24, 2021 8:15 am

Cheers, thanks for the confirmation on both counts. How about income that already has had tax withheld (i.e. dividends in the 特定口座 and Japanese bank interest). Can they also be omitted from the tax return and thus the formula above?

I think there are two different ways your dividends can be reported in Japan. At least on my form, the dividends from my 特定口座 are not appearing anywhere in this calculation. On my tax return that first page where you have the list of income sources under 収入金額等 and 所得金額 the entries for 配当 are blank (the foreign dividends appear later on 第三表 and the Japanese dividends along with capital gains/losses appear on a supplement to that form). Interest (利子) does appear but at 882 yen for the year (just looking at my return right now -- that's more interest than I remember receiving and I think it must be mostly foreign interest) it really isn't making any difference in the calculation.

unborderedlife wrote: ↑Wed Jan 27, 2021 10:37 am

TokyoWart wrote: ↑Sun Jan 24, 2021 8:15 am

Cheers, thanks for the confirmation on both counts. How about income that already has had tax withheld (i.e. dividends in the 特定口座 and Japanese bank interest). Can they also be omitted from the tax return and thus the formula above?

I think there are two different ways your dividends can be reported in Japan. At least on my form, the dividends from my 特定口座 are not appearing anywhere in this calculation. On my tax return that first page where you have the list of income sources under 収入金額等 and 所得金額 the entries for 配当 are blank (the foreign dividends appear later on 第三表 and the Japanese dividends along with capital gains/losses appear on a supplement to that form). Interest (利子) does appear but at 882 yen for the year (just looking at my return right now -- that's more interest than I remember receiving and I think it must be mostly foreign interest) it really isn't making any difference in the calculation.

I've been playing around with the form, and based on your comment above, I should not enter foreign-sourced dividends but only interest on the first page under 収入金額等? Do I then enter the foreign dividends under 外国税額控除等? I'm using e-tax, so I'm not sure what 第三表 refers to...