Trying to figure out furusato nozei amount (with complications)

[KCLenny]

Hi all, interested in finally doing my first furusato nozei this year.
I’m having a hard time figuring out how much allowance I’ll have for 2 reasons.
Firstly my income for this year is quite different from last year and still hasn’t fully settled (my December pay should be significantly higher than usual if everything goes well).
And secondly, does your end of year tax return affect how much allowance you get?
Last year the only thing I declared was my health insurance, and my wife as a dependant (unemployed).
This yeah, I hopefully plan to also declare all my health care costs too as I’m (unfortunately) confident that mine alone total over ¥100,000 and my wife’s separately also total over ¥100,000.
Would this affect the furusato nozei allowance? And if so, would be to increase it or decrease it?

So far on Rakuten’s simple calculate I’m getting back a number of around ¥10,000-¥11,000.

For info, I’m getting around ¥220,000 a month (sometimes a little more, sometimes a little less). My wife doesn’t have an income. We pay ¥20,000 for health insurance (national, no private or company).
We will start paying ¥8300~ ish each for pension. And as I said our combined healthcare costs this year have probably gone over ¥200,000 already (thanks crappy genetics).
Finally my residence tax bill this year was around ¥71,000. Based on my earnings last year which were a little lower than this year.

Finally, when it says to enter your income on the calculator, is the the amount earned, or the amount received after tax?

I’d appreciate any help in figuring out my likely allowance.

[adamu]

I’m having a hard time figuring out how much allowance I’ll have for 2 reasons.
Firstly my income for this year is quite different from last year and still hasn’t fully settled (my December pay should be significantly higher than usual if everything goes well).
And secondly, does your end of year tax return affect how much allowance you get?

Yes, unfortunately the allowance is calculated on your taxable income from this year - which you obviously can't know until the year has finished, so you have to make an estimate.

So far on Rakuten’s simple calculate I’m getting back a number of around ¥10,000-¥11,000.

My first thought is if you're looking at around 10k allowance, it's quite risky. I'm not sure how the numbers work out in your case, but any increase in your deductions (another medical bill, for example) could lower your taxable income, which will in turn lower your allowance. This has the risk that you end up going over your allowance after you've already made the purchase. If you do that, the part that's over your allowance is treated as a non-refundable donation.

There is a much more detailed calculator here where you put in your tax return details for a more precise idea of your allowance: https://www.furusato-tax.jp/about/simulation

It might be worth playing with the simulator, bumping up your medical deduction, and seeing what happens.

[TokyoWart]

I would probably not do furusato nozei if the allowed amount was just 10,000 yen because you cannot claim 2000 yen of the amount spent. The typical "thanks gift" benefit is around 30% of the donation so you would get 3000 yen of goods but have net paid 2000 yen for it which is too narrow a margin of benefit.

[Tkydon]

The maximum amount of tax credit deductible for Furusato Nouzei is 20% of the total amount of Residential Taxes, which in turn is probably 10% of Total Taxable Income after allowances and deductions, so probably 2% of Total Taxable Salary, after allowances and deductions. (See Below).

However, if you have a large allowance for Medical Expenses in the year (first of all you must do Kakuetei Shinkoku if you combine claiming Medical Expense Allowances and Deductions along with Furusato Nouzei), but that would reduce your Residential Taxes, and hence the amount you can use for Furusato Nozei.

Also, if some income is doubtful for this tax year, than you should probably limit your Furusato Nouzei purchases in this year to the limit of Tax you can guaranty. If the income comes through, then you can make your purchases at the last minute.

You probably need to go through the motions of doing a dummy Kakutei Shinkoku to determine the amount of your Taxable Income and Residential Taxes to determine your Furusato Nouzei limit.

Residential Taxes are
10% of Aggregate Income under the Aggregate Taxation Method. (So 2% of this income)
5% of Dividend and Interest Income and (Long-Term) Capital Gains under the Separate Taxation Method. (So Only 1% of this income)
9% of Pension Income under the Separate Taxation Method. (So Only 1.8% of this income)
10% of Other Income under the Separate Taxation Method. (So 2% of this income)