Normally, at the end of each year, the National Tax Agency will issue documents related to the year-end tax adjustment declaration (年末調整). For newcomers, this matter seems to be hard to understand at a glance, so KUROFUNE will explain clearly below.

Income Tax and Dependents:

When working in Japan, there are 2 types of taxes that you are required to participate in, which are Resident tax (住民税) and Income tax (所得税).

Normally, when you work for a company and have an employment contract, the company will handle the tax procedures for you. If you work without an employment contract, you will have to file your tax return by yourself.

To avoid “Tax shock” when receiving tax invoices at the end of the year, the company will automatically deduct an amount from your monthly salary. This monthly tax deduction includes: Your taxes + Number of dependents.

Note: If you do not declare your dependents, the company will set the number of dependents to 0. The more dependents you claim, the less the taxes you have to pay.

Year-end tax adjustment declaration (年末調整):
General:

This declaration will be distributed to employees at the end of the year, its purposes are:

To confirm change of dependents.
To declare other tax deductions incurred in that year. For example, health insurance.

The National Tax Agency will check your declarations and finalize the amount you need to pay. If it is higher than the amount that the company has deducted monthly, you need to pay more. If it is lower, the taxes will be refunded.

How to claim dependents (扶養者):

When carrying out the 年末調整, the company will give you an Application for (Change in) Exemption for Dependents of Employment Income Earner (給与所得者の扶養控除等申告書):

Application for (Change in) Exemption for Dependents of Employment Income Earner

Fill in the following parts:

Part A: If you are living with your wife in Japan and your wife has an income of less than 103 man/year.
Part B: If your parents’ income in your home country is less than 103 man/year and you have to send money to your parents every month.
Part C: If you have dependents who are disabled, divorced or a student working part-time, circle the appropriate options.
Part D: If you share a dependent with another person. For example: You and your wife work together and have children under the age of 20, only one of you 2 will get a tax refund.
Part E: If you have dependents under the age of 16. Enter the person’s name.

Note: To prove that your parents are depending on you, you must provide:

Birth certificate (copy) or permanent residence: Notarize and have a Japanese translation of your documents to prove you have a relationship with your parents.
Proof of money transfer to your parents: This document is issued by the bank or financial company where you transfer the money.

Although there is no requirement, the minimum amount to be transferred should not be less than 20 man/year. Sending money 1 or many times in a year is acceptable and should be transferred before the procedure.

New Law on Dependents:

Laws are always added or revised over the years, so you should pay more attention to them. The new changes in 2017 you need to be careful are:

Do not transfer money to 1 person: You must transfer money to 2 separate accounts, one for your father and one for your mother. At the same time, the account holder’s name must be the same as the name of the dependent you have declared.
Do not transfer money without receipt: If you return home and give money in person, it will not be accepted. The new law requires you to have a money transfer receipt to prove that you send your dependents money.
Dependents (扶養): In addition to biological parents or parents-in-law, you can claim siblings or siblings-in-laws (3-generation relationship) as your dependents. For example, you send money to help your brother go to school at home. Usually, people who register parents-in-law as dependents have already reduced a lot of taxes.