RetireJapan

Hello. Long time lurker, first time poster. And as others said, thank you for this amazing website

About me: 31(M) Married. Both non-American Foreigners and both working full time salarymen.
Nisa already set-up, but still contemplating on opening iDeco because still not sure whether to retire here in Japan.

Question 1:
So I checked my tax savings estimate from http://dc-center.jp/checker/ and it resulted to a tax savings of 82k annual saving.
I checked my income tax for the year 2019 and it is around 90k. Does this mean my annual income tax will be only around 8k?
Am I understanding this correctly? or the 82k annual saving also includes the resident tax?

Question 2:
Regarding the max monthly contribution, do I qualify for the 23k max(as an employee) or 20k max(as an employee with corporate DC)?
My company has a defined contribution plan but it was optional. And I did not availed it when the company introduced it 2years ago because quite frankly, I did not understood it that time. So basically I don't have a company DC, but my company offers it.

Welcome! Great question for a first post

The iDeCo calculator is a very blunt instrument. What iDeCo does is lower you taxable income, so how much tax you end up paying is going to depend on all your other deductions, etc. The best way to figure out what it will do is to run it by your accountant, or maybe try the online tax return: https://www.e-tax.nta.go.jp/en/index.html

However, I am far too lazy to do something like that. You can also guesstimate by looking at your marginal tax rate:
https://www.jetro.go.jp/en/invest/setti ... page7.html

You can find your taxable income on your end of year statement.

As for the DC scheme, I am not sure of the answer. I can't imagine a scheme you are not enrolled in affecting your eligibility, but stranger things have happened!

Just in case, I would take another look at the DC scheme. Some of them are very attractive, with employer matches and similar.

Your HR department should be able to help you with both of those (what the DC scheme consists of and how much iDeCo you can do).

Anyone else?

RetireJapan wrote: ↑Sun Jun 28, 2020 7:26 am

You can find your taxable income on your end of year statement.

I just got my end of year statement. Which kanji am I looking for to find my taxable income?

Is this correct?　源泉徴収税額

I am contemplating opening a IDECO account but want see whether it is worth it or not. The IDECO calculator said I would get an annual yield of 20% (though tax savings) which sounds too good to be true so wanted to make sure by looking at actual figures.

OkiBum wrote: ↑Fri Jan 15, 2021 1:55 am I just got my end of year statement. Which kanji am I looking for to find my taxable income?

Is this correct?　源泉徴収税額

I am contemplating opening a IDECO account but want see whether it is worth it or not. The IDECO calculator said I would get an annual yield of 20% (though tax savings) which sounds too good to be true so wanted to make sure by looking at actual figures.

I don't think it's written directly. You can calculate it by taxable income = "salary after the standard wage deduction" minus "total of other deductions". These two figures are written in the boxes to the right of your total income.
(課税所得の額＝給与所得控除後の金額 ー所得控除の額の合計額)

OkiBum wrote: ↑Fri Jan 15, 2021 1:55 am The IDECO calculator said I would get an annual yield of 20% (though tax savings) which sounds too good to be true so wanted to make sure by looking at actual figures.

You'll get an immediate return of whatever your marginal tax rate is. This comes from reducing your taxable income and thus the amount of income tax you have to pay. It's a one-off though, and sadly doesn't repeat every year

fools_gold wrote: ↑Fri Jan 15, 2021 3:30 am I don't think it's written directly. You can calculate it by taxable income = "salary after the standard wage deduction" minus "total of other deductions". These two figures are written in the boxes to the right of your total income.
(課税所得の額＝給与所得控除後の金額 ー所得控除の額の合計額)

Ok, I found those two numbers and I did the math. So out of this total which is the taxable income, what percent do I save on through IDECO? If that makes any sense.

After subtracting those two numbers I end up with around 650,000. If I am eligible to contribute 23,000 every month that equals to 276,000.

Does that mean that I will only be taxed on 650,000 - 276,000? Or am I missing something in the equation?

Hi, I just posted elsewhere on the forum some information on reading your end of year tax form if this helps with your calculations and kanji reading

viewtopic.php?f=8&t=1270

Gareth wrote: ↑Fri Jan 15, 2021 2:05 pm Hi, I just posted elsewhere on the forum some information on reading your end of year tax form if this helps with your calculations and kanji reading

viewtopic.php?f=8&t=1270

Thanks, I will have a look at it.