How to do tax returns in Japan

There are so many expats working in Japan these days. They always face the difficulties of how to do their tax returns when they have their dependents in their countries.

It may be quite difficult for non-Japanese people to understand Japanese tax rules and standards, and the tax return procedure system.

I would like to explain this point easily as you can understand.

How to pay taxes

If you have been working for a Japanese company for over 1 year, you are judged as a resident of Japan and if you are a permanent resident in Japan, the scope of taxable income and taxation methods usually applied to Japanese nations are also applied to you.

In principal, you are taxed at sauce as often as you get paid by your company and your company will make the year-end tax adjustment for you at the end of the fiscal year.

However, if you want to apply

• dependent deduction
• spouse deduction
• spouse special deduction
• disability deduction

when you submit Application for Exemption for Dependents of Employment Income Earner to a salary payer, you also need to submit “Kinship documents”and “remittance documents” related to your family living outside Japan.

Kinship	Documents which verify non-resident relatives are your relatives and show name, date of birth, address of domicile and relation of the non-resident relatives、( i.e. family register, birth certificate,marriage certificate, and so )
Remittance	Documents which prove payments you made to non-resident relatives in the year for their living or education expense.

Reference:For those applying for an Exemption for Dependents, etc. with Regard to Non-resident Relatives

Except for non-permanent residents (who have no Japanese citizenship and have lived in Japan for 5 or less than 5 years in the past 10 years), even if you come from abroad, income you may gain from other countries is subject to taxation. Therefore, if you have real estate income in your home country, you need to declare your earnings for taxes.

How to do your tax returns

Due to the fact that you haven’t told your company that you have dependents in your home country, when the deduction item is not reflected in tax calculation on the year-end tax adjustment, you can do your tax returns on your own. The range of relatives is spouse, blood relatives within sixth degree of consanguinity, relatives by affinity within third degree of consanguinity.

Besides, if you calculate tax exemption limit of resident tax and disability deduction, relatives under 16 years old also need to prepare the same documents.

If you do your tax returns, you need to prepare the following documents below.

Moreover, if you have dependents outside Japan, you need to prepare the following documents additionally.

If you are only an employment income earner, you use the tax return form A

Things to be reminded about required documents for tax return

Checking your withholding slip

You, who receive payment of remuneration, check if your name and address are written correctly and the amount of taxes withheld is correct on your withholding slip. If you get withheld 20.42% from your income although you are a non-resident in Japan, you have to request the company to correct it. The year‐end tax adjustment is unnecessary for non-residents

In addition, if you get treated as a resident from a non-resident in the middle of the year, there is no return for refund because taxation is completed by withholding during the period of non-resident.

If you join a company mid-way, you just check if data on your withholding slip is mentioned correctly.

Resident	The term “resident” shall mean an individual who has a domicile in Japan, or has had a residence in Japan continuously for one year
Non-resident	You are considered as a non-resident in Japan for tax purposes unless you have a domicile or have had a residence continuously for one year or more in Japan

Residence card

A copy of your residence card should be attached on your tax return and you also take it with you to a tax office. If you moved in the middle of the year, you need to report notification of change of the address (moving-in notification) to the municipality where you moved to. If the address mentioned on your residence card and the one mentioned on your tax return are different, you prepare a lease contract document of your apartment or receipts of utility expenses.

If there was a period when you were a non-permanent resident, you need to submit”Confirmation of the type of resident status” and you transcribe the items mentioned on your residence card to this form.

Moreover, if you are a non-permanent resident, you complete the form of “Confirmation Table of the Period of Resident Status“. If you’ve had a domicile in Japan in the past 10 years, you just confirm it by the record of your passport.

Non-permanent resident	Non-permanent resident: This shall mean a resident who does not have Japanese nationality and who has had a domicile or a residence in Japan for not more than five years in total within the past ten years.

The documents of Kinship and remittance

The kinship documents

The document of Kinship is the one that corresponds to any of the following.

If you apply for exemption for dependents for your spouse’s grand parents, you prepare the birth certificate of spouse and spouse’s parents in addition to the marriage certificate.

The remittance documents

The document of remittance is the one that corresponds to any of the followings. This is the one that clarifies that you, who is a resident in Japan, remit to your family and relatives living outside Japan for the purpose of applying to living and education expenses every time required in the year. Therefore, if there are a number of dependents, you just take trouble to remit to each dependent bank account.

The tax return procedure for non-Japanese requires no Hanko but just your signature on the form.

If the documents of kinship and remittance are stated in other language than Japanese, you have to submit these translations along with the documents

The points of incomplete documents of kinship and remittance

I list here the points that you may make a mistake and misunderstand when you prepare the documents.

The document of Kinship

• A copy of the passports of your relatives and family is required to prepare along with a copy of the family register
• A copy of the passports of your relatives and family living outside Japan is required to have their names and their birth of dates
• Prepare documents that clarify your current last name if your last name stated on the documents is your previous name
• Only the driver’s license issued by a foreign government is not acceptable as the document of Kinship

The document of remittance

• If you remit to the person on behalf of your relatives and your family members, only the person will be applied to dependents deduction.
• Joint account that can’t produce evidence that you remit to individual relatives and family members is not acceptable
• If you satisfy the items mentioned on the remittance request document, dependents deduction can be acceptable
• The date of remittance with your credit card is judged not date of settlement but date of use

In principal, you need to prepare the documents of all the remittance you made but if you remit equal to or more than three times a year, you are allowed to just submit the document of the first remittance you made and the last one you made in the year.

Other notes

If you go back to you home country, you need to file a quasi-final tax return (income until you leave Japan) until you leave Japan unless you appoint a tax administrator. The judgement of deduction from your income depends on the situation before you leave Japan.

If you work as an overseas representative assigned in Japan and are planning to go back to your country within 5 years, you are judged as a non-permanent resident so that even if you gain an income provisionally in your country while you are in Japan, unless you receive the income in Japan by overseas remittance, the income will not be taxed in Japan.

You can file return for refund for the last 5 years. Foreign source income of your relatives and your family living outside Japan is not principally contained in total income amount in the judgement of dependents deduction.

To close

The requirements of dependents deduction for those who live outside Japan tend to be way more negative leniency than it used to be. It is desirable that you should make these preparations thoroughly at an early stage. For your reference, to get more information about tax return, you just go to the English page of the National Tax Agency from here