Charitable donations

[TBS]

This is a summary of the tax treatment of charitable donations in Japan. No, not the usual furusato nozei type in order that your family gets Yamato truckloads of free food and gifts. But the traditional, support a cause or charity you believe in type.

If you donate to certified NPOs, you can use the donations as a deduction against income tax by filing a tax return (確定申告). There are two options:

1. Using the charity donation tax deduction to reduce your taxable income (寄付金控除（所得控除）):
This is the traditional option. The deduction amount = total donated - 2000 yen. The amount you save on income tax then depends on your marginal income tax rate. Max donation limit is 40% of gross total income.

2. Using the special credit for donations to certified NPOs (寄付金特別控除（税額控除）):
This option has been available since 2011. Instead of reducing the taxable income, the method is to calculation the total amount of income tax due, then you can use the credit to reduce the amount of income tax you pay.

The credit amount = (total amount donated - 2000 yen) * 40%.
Max donation limit is 40% of gross total income and 25% of the initial total income tax due.


Option 2 is a fantastic system as it means people in the lower tax bands can still donate to charity and receive 40% of their donation back via lower income taxes. Option 1 is better for those with higher marginal tax rates, as then 40%+ may be returned to you. The great thing is NTA's online tax return filing system (確定申告書等作成コーナー) will suggest which of option 1 or 2 is best for you when doing your tax return

The above is just about national income tax. If the NPO is located in your prefecture or city, up to another 10% of the donated amount can be returned via lower inhabitant's (residents) taxes. The rules for which NPOs qualify for this vary by prefecture and city, so Google first if you want to save on your residents tax bill as well.

Both option 1 & 2 can be used in conjunction with furusato nozei. Just beware of the limits - ideally pre-calculate beforehand to make sure your total donations (furusato nozei + NPO) don't push you over them.

These are nice summaries in Japanese:
https://hoken.niaeru.com/media/social-s ... duction/2/
https://kifunavi.jp/procedure/hometown-tax/


TLDR: most tax payers in Japan can receive 40% back from donations to certified NPO charities by filing a tax return and paying lower income tax. More can come back if the charity is located in your city or if you are in a high marginal tax band. Beware of limits for the deductions, a good way to think about it is that is can charitable donations can share your furusato nozei donation limit (roughly).

[adamu]

Great info. Last I checked you have a wiki account.

I would like to eventually have articles for all the different tax deductions that are available. So far we've only got the Medical Expenses Deduction article started.

[TBS]

Great info. Last I checked you have a wiki account.

Thanks, yes writing for the wiki is on my to do list. Just need some free time

[Haystack]

Fabulous! Just donated to Second Harvest / セカンドハーベスト・ジャパン

They are a certified NPO, so I will try out #2 and see how it goes.

[RetireJapan]

Huh, Second Harvest is one of my regular charities, so I should probably check this out

[jcherni]

Sorry if this is such a simple question, but...

I donate every year to Red Cross from my winter bonus. I never really did my 確定申告 but I thought I would try this year.

The donation itself was done around December 10th, 2021, but the donation certificate (for tax purposes) is dated as of January 31st, 2022.
This means I should apply for tax deductions on next year, is that correct?

[TBS]

I donate every year to Red Cross from my winter bonus. I never really did my 確定申告 but I thought I would try this year.

The donation itself was done around December 10th, 2021, but the donation certificate (for tax purposes) is dated as of January 31st, 2022.
This means I should apply for tax deductions on next year, is that correct?

Does the donation certificate also state the date the donation was made, i.e. December 10th, 2021?

It should be the donation date that determines the tax year, rather than the date of issue of the donation certificate. That said, for furusato nozei some municipalities set the donation date as the date they receive the money (e.g. from the credit card company or payment system supplier), rather than the date of the original donation.

Maybe the Red Cross did something similar in this case?

https://furusapo.fururi.jp/article/furu ... -timelimit

寄付の方法によって「寄附金受領証明書」の日付が変わる

ふるさと納税をする際の注意点として、寄付の方法や自治体によって寄附金受領証明書の日付が変わる点が挙げられます。

クレジットカードで寄付をした場合は決済をした日になることがほとんどですが、自治体によってはカード会社から自治体への入金日を寄附金受領証明書の日付とするところもあるので注意が必要です。

また、銀行振替や納付書払にした場合は指定口座に支払いをした日、現金書留の場合は自治体側で受領した日を寄附金受領証明書の日付とするケースが多いようなので、締め切り日の毎年12月31日までに受領確定となるように気を付けましょう。

[jcherni]

for furusato nozei some municipalities set the donation date as the date they receive the money (e.g. from the credit card company or payment system supplier), rather than the date of the original donation.

Maybe the Red Cross did something similar in this case?

Correct. Afterwards I searched on their website and found out that they do use the receipt date for the donations...


Having said that, I also found out that you actually don't need to attach the receipt of the donation as long as you fill in the information.
(if I'm understanding correctly)
https://www.e-tax.nta.go.jp/toiawase/qa ... empu01.htm

So I could just fill in the donation date and move forward potentially, but I think I'll do it next year anyway.

[TBS]

Having said that, I also found out that you actually don't need to attach the receipt of the donation as long as you fill in the information.
(if I'm understanding correctly)
https://www.e-tax.nta.go.jp/toiawase/qa ... empu01.htm

So I could just fill in the donation date and move forward potentially, but I think I'll do it next year anyway.

If you file via e-tax, then yes, you don't need to attach/upload the original donation certificate. Note however they may ask to see it if there is an audit in future, so putting it on next year's tax return is the right option if that's what the 受領日 on the certificate indicates.

[jcherni]

Note however they may ask to see it if there is an audit in future, so putting it on next year's tax return is the right option if that's what the 受領日 on the certificate indicates.

Yeah, that's why I decided to fill in next year to prevent any issues.