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Working kids impact on Japanese taxes
Posted: Fri May 21, 2021 12:19 pm
by TJKansai
Moneymatters wrote: ↑Mon Nov 02, 2020 9:32 am
Anyway, back to the subject at hand. This table shows the allowances for dependents.
https://moneliy.jp/life/tax/7244/2
The benefit isn't really that great. I try to remind my two 16+ kids that they bring little to the table in money terms. Speaking frankly, other than a robust theft deterrent for the sofa they serve no material purpose to the household whatsoever. But I digress.
So let's say AFTER your allowances you still have a significant amount of income over 9mil but less than 18 mil.
that will be taxed as income at 33% and you'll pay approx 10% resident tax.
So what does that table mean.
Well. Your daughter from age 19-23 would save you:
630,000 * .33 = 207,900 off you income tax bill.
and
450,000 * .10 = 45,000 off your resident tax bill. A total of 252,900 net more money to you.
https://www.zeikin5.com/calc/
I just ran a recent year's 源泉徴収票 of my own on this calculator and found it highly accurate.
You could play with the little levers. I had all the allowances I'm likely to available myself of. For the first time ever I think I know what my tax bill is for this year before it's even over!
Although the post above was regarding a father-in-law situation, Moneymatters had some good info about dependents.
My 21-year old (uni student) son "says" he may earn over 1 million this year, and my wife says this is some kind of cutoff. I am unsure what the best move is.
Have any of you limited your kids'/spouse's income to stay under that 1 mil?
Re: Working kids impact on Japanese taxes
Posted: Mon May 24, 2021 12:38 am
by Moneymatters
TJKansai wrote:
My 21-year old (uni student) son "says" he may earn over 1 million this year, and my wife says this is some kind of cutoff. I am unsure what the best move is.
Have any of you limited your kids'/spouse's income to stay under that 1 mil?
It seems to me you lose the allowance in one go once they exceed 103万.
They will also need to start paying income tax on the income above 103万.
Once they exceed 130万 they will need to pay health insurance by themselves.
"Have any of you
limited your kids'/spouse's income to stay under that 1 mil?"
Brilliant. Nice one!
I can't get my lot to stop running aircon when there are windows open! How on earth am I supposed to limit what they do outside the house.
I don't receive the spouse allowance personally, but I told my wife she was welcome to earn as much as she wanted! (She chose zero for the first 21 years of marriage but now has a part time job staying well under the limit she would need to pay health insurance.)
You could explain to your student that you'll be significantly out of pocket if they exceed the threshold. Implying you might need to charge something for room and board. Good luck.
Re: Working kids impact on Japanese taxes
Posted: Sun Jul 04, 2021 3:45 am
by Tkydon
Allowances for Dependants (5-420)
You will claim these when filing forms for your Year End Adjustment 年末調整.
Child up to 18 --- 380,000
Child 19 to 23 --- 630,000
Working Student (5-460)
When the Taxpayer is a working student, an allowance of Y270,000 may be deducted from his/her total income amount. However, none is allowed where total income exceeds 650,000 nor if income other than earned income exceeds Y100,000 (Law 2①(32),82).
However, you have to be careful. My son recently received a Resident's Tax Bill for 2020, as "his school did not qualify for Working Student status"... ??? I need to dig into that...