Kakutei Shinkoku – Income Tax Return in Japan

Have you ever wondered how to declare or refund income tax in Japan? In this article, we will explain how income tax is handled for residents of Japan. In Japan, the income declaration is called Kakutei Shinkoku [確定申告].

In Japan, the income tax declaration period usually goes until mid-March. For those who work in companies that do the year-end adjustment, it is not necessary to declare income tax unless they want to add information.

Where to make the declaration? The municipalities provide information about the locations or temporary service points, with support from staff in your language. If you know Japanese, it is possible to make an online declaration through E-tax.

Who needs to declare income tax in Japan?

Everyone who falls into any of the situations below must declare income tax kakutei shinkoku:

• Employees who receive an income above 20,000,000 yen;
• Employees who did not do a year-end adjustment;
• Self-employed individuals (declaration of income and expenses);
• Those who wish to change amounts (more than one source of income);
• Those who wish to change the content of deductions (dependents);
• People enrolled in National Health Insurance (Kokumin Kenko Hoken);
• If the number of dependents increased;
• If medical expenses exceed 100,000 yen;
• If they send remittances to family members abroad who do not have income;

In other words, those who receive a salary from more than two companies need to declare the kakutei shinkoku. Some who participate in part-time jobs (arubaito) also qualify for receiving more than one source of income.

If a person stops working in the middle of the previous year and changes companies, they also need to declare. Those who spent up to 100,000 yen on medical expenses per family are not required to declare that amount.

Not all people with dependents, or who have taken out loans or mortgages, need to declare income tax. Remember that a dependent should not earn more than 380,000 yen per year.

It is possible to send money abroad and list the recipient as a dependent, but this requires documentation for the dependent. It is best to check with the municipality for all the details about the income tax declaration in Japan, which may change annually.

Gensen Tyoushuu – Tax Withheld at Source and Year-End Adjustment

Taxpayers who work in companies usually have income tax withheld from their salaries monthly. This is called “Gensen Choshu“ (withholding at source). This is good because it eliminates the need for annual declarations.

At the end of the year, the process called “Nenmatsu Chosei“ (year-end tax adjustment) is carried out, calculating the difference between the total amount of tax withheld at source and the annual tax amount, which is calculated based on the salary for one year.

This adjustment is calculated, and the employer provides all the details and information to the employee in December and January, in order to correctly adjust the excess or missing amount. Keep all the information you receive.

Those with dependents can include them in the withholding at source, eliminating the need to make an annual income tax update. Remember that the lack of dependents can make the tax more expensive.

What do you need to declare Kakutei Shinkoku?

Before declaring the income tax Kakutei Shinkoku, you need to ensure you have the following documents:

1. Gensen choshuhyo – Provided by the contracting company;
2. Foreign resident registration (Zairyu Card) or passport;
3. Marriage and birth certificates (for dependents);
4. Bankbook (for crediting refunds, if any);
5. Personal seal (inkan);
6. Proof of remittances abroad (if any)
7. All medical expense receipts for the year (if any);
8. Dependent documents;
9. Documents related to national health insurance tax
10. Pension or private insurance documents;

Now just go to the indicated location and present all the documents and follow the steps with the support to make your declaration. Otherwise, you can leave everything to the responsibility of an accountant.

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