RetireJapan

So my wife has recently got a decent job she enjoys at a tea ceremony place. She’s only there part time, and is on a dependent visa.
I have a question about the dependent income limit as I have no idea how it works.
She is being guaranteed 24 hours a week, at ¥1200 an hour. This would put her total yearly income (before any employment insurance and travel costs) at ¥1,382,400.
My understanding is that the dependent limit is ¥1,300,000.
Obviously this wouldn’t be a problem next year as she hasn’t actually started getting them many hours yet.
But what would that mean for 2025?
If hypothetically she earned that much in 2024, how would that affect us in 2025? Does it massively increase our health insurance/residence tax?
Is it worth the extra income? Or better to reduce her weekly hours to something like 21/22 to make sure her total income falls under that limit?

And do I have to declare all her income on my nenmatsuchosei? Or will she have to do it at her company now too?
For context my company isn’t a company and I’m technically self employed so have to do the form myself and give it to my boss. My wife hasn’t had to do one before and I don’t know the circumstances under which she would have to do one.
We are on national health insurance and national pension.

Thanks in advance.

The benefit you get for claiming her as a dependent, especially in a relatively low tax bracket, never comes close to the economic benefit she gets from that level of income. You are comparing over 1 million yen in added income for your household to the fractional tax benefit from subtracting 480,000 from your taxable income. Her tax return would be prepared by her employer unless she also has additional income that must be declared.

TokyoWart wrote: ↑Thu Nov 30, 2023 9:59 am The benefit you get for claiming her as a dependent, especially in a relatively low tax bracket, never comes close to the economic benefit she gets from that level of income. You are comparing over 1 million yen in added income for your household to the fractional tax benefit from subtracting 480,000 from your taxable income. Her tax return would be prepared by her employer unless she also has additional income that must be declared.

I’m not asking if she should work or not. I just didn’t know if there was much downside to her earning slightly over that limit or if it would be better to stay just under that limit by reducing her weekly hours by 2. I’m just curious as to how much it would actually change our finances as I don’t understand this system at all.
Of course I’m incredibly happy and better off that she’s getting over a million yen a year and doing a job she actually likes.

That's great that your wife has found something that suits her
I think you might be referring to the shakai hoken limit of 1.3m, but you indicate that you are on national pension and health insurance. This means the dependent limit for this doesn't apply in your circumstances. You will likely see a rise in health insurance premiums but a minimal one given her level of income. And I reckon she will still qualify as your dependent for residents and income tax at that level of income, though I don't recall the exact figures applicable. Others will be able to advise.

KCLenny wrote: ↑Thu Nov 30, 2023 10:20 am

TokyoWart wrote: ↑Thu Nov 30, 2023 9:59 am The benefit you get for claiming her as a dependent, especially in a relatively low tax bracket, never comes close to the economic benefit she gets from that level of income. You are comparing over 1 million yen in added income for your household to the fractional tax benefit from subtracting 480,000 from your taxable income. Her tax return would be prepared by her employer unless she also has additional income that must be declared.

I’m not asking if she should work or not. I just didn’t know if there was much downside to her earning slightly over that limit or if it would be better to stay just under that limit by reducing her weekly hours by 2. I’m just curious as to how much it would actually change our finances as I don’t understand this system at all.
Of course I’m incredibly happy and better off that she’s getting over a million yen a year and doing a job she actually likes.

I am not offering an opinion on whether or not she should work, only trying to answer your question about whether you lose more in your current tax benefits than she would realize in net income. I would not recommend trying to work just below the limit because her salary could change during the year and many small businesses give an unexpected bonus if it's been a good year. You could see your plans to stay just under a cutoff accidentally ruined because her employer paid her a little extra. My wife has had similar jobs here and the realized salary was always more than expected.

KCLenny wrote: ↑Thu Nov 30, 2023 9:45 am So my wife has recently got a decent job she enjoys at a tea ceremony place. She’s only there part time, and is on a dependent visa.
I have a question about the dependent income limit as I have no idea how it works.
She is being guaranteed 24 hours a week, at ¥1200 an hour. This would put her total yearly income (before any employment insurance and travel costs) at ¥1,382,400.
My understanding is that the dependent limit is ¥1,300,000.
Obviously this wouldn’t be a problem next year as she hasn’t actually started getting them many hours yet.
But what would that mean for 2025?
If hypothetically she earned that much in 2024, how would that affect us in 2025? Does it massively increase our health insurance/residence tax?
Is it worth the extra income? Or better to reduce her weekly hours to something like 21/22 to make sure her total income falls under that limit?

And do I have to declare all her income on my nenmatsuchosei? Or will she have to do it at her company now too?
For context my company isn’t a company and I’m technically self employed so have to do the form myself and give it to my boss. My wife hasn’t had to do one before and I don’t know the circumstances under which she would have to do one.
We are on national health insurance and national pension.

Thanks in advance.

Congratulations! I'm glad your wife found something she likes: this should help your household finances too.

Now be careful: you seem to be mixing up the dependent visa (can work up to 25 hours a week, income doesn't matter) and a dependent for shakai hoken and company allowance purposes.

Unless your employer has enrolled you in shakai hoken and/or has company allowances for dependent spouses the latter has no bearing on your situation.

There are several different and distinct issues here:

1. Under the conditions of her visa, there is a limit to how many hours she is entitled to work and how much she can earn. This is not directly related to tax...

2. Under the tax law there is a different, and lower limit to the amount she can earn and still be included on your return as your dependent.
If she earns more than Y1,030,000 (edited) per year, then you can no longer include her income on your return as your dependent, 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...

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

National Employee Pension Insurance is also related to income, at 18.3%, with minimum and maximum payments, but the employee pays half (minimum Y8,052) 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

RetireJapan wrote: ↑Thu Nov 30, 2023 1:06 pm Congratulations! I'm glad your wife found something she likes: this should help your household finances too.

Now be careful: you seem to be mixing up the dependent visa (can work up to 25 hours a week, income doesn't matter) and a dependent for shakai hoken and company allowance purposes.

Unless your employer has enrolled you in shakai hoken and/or has company allowances for dependent spouses the latter has no bearing on your situation.

Ah I see. No shakai Hoken for me unfortunately.
But I thought dependent visa was up to 28 hours a week? Is that wrong?

Tkydon wrote: ↑Thu Nov 30, 2023 2:16 pm There are several different and distinct issues here:

1. Under the conditions of her visa, there is a limit how many hours she can work and how much she can earn. This is not directly related to tax...

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.

Tkydon wrote: ↑Thu Nov 30, 2023 2:16 pm 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.

Tkydon wrote: ↑Thu Nov 30, 2023 2:16 pm 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

I have zero idea what you just said. I’m so sorry this is all so complicated for me.

Tkydon wrote: ↑Thu Nov 30, 2023 2:16 pm 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.

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

KCLenny wrote: ↑Thu Nov 30, 2023 3:01 pm But I thought dependent visa was up to 28 hours a week? Is that wrong?

No, my mistake. Sorry!