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Deduction for spouse and dependent in Japan

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Dependent Deduction of Japan (2021)
Spouse deduction = Haigusha Kojo of Japan (2021)
Increase of Spouse’s salary and Taxpayer’s income tax
Spouse Special Deduction
Spouse’s Health Insurance 

Dependent Deduction of Japan (2021)

Assumed a resident of Japan ( hereinafter referred to as ” Taxpayer ” ) has income in Japan.
Taxpayer pays money to sustain his dependent relatives ( Fuyo shinzoku = 扶養親族 ).
Taxpayer needs to spend money to support his dependent relatives.
So amount of his tax should be reduced by government.

Dependent relative is defined as:
1 Taxpayer’s relative is aged 16 or over 16 years.
2 Relative who depends on taxpayer’s earnings.
3 If the dependent relative has salaried income, his/her annual salary should be less than 1,030,000 yen.
4 Relative who is not a family employee.
5 Relative who is not a spouse of the taxpayer.

If the taxpayer has relative/s who meets these conditions, taxpayer can deduct specific amount from his taxable income.
In this way, Japanese government tries to support taxpayers who sustain his relatives.

Amount of deduction differs depending on which category they fall.

Relative’s age ( As of end of year ) is 16 or over 16 years old. : 380,000 yen

Relative’s age ( As of end of year ) is 19 or over 19 years and below 23 years old. : 630,000 yen.

Spouse deduction = Haigusha Kojo of Japan (2021)

A spouse is not considered as a dependent relative.

However, there is a system of deduction for spouse deduction ( Haigusha kojo ) .

Age of Spouse ( As of end of year ) is below 70 years. : the amount of deduction is 380,000 yen.

This amount can be deducted from the Taxpayer’s Taxable Income.

Age of Spouse ( As of end of year ) is 70 years or over 70 years. : the amount of deduction is 480,000 yen.

This amount can be deducted from Taxpayer’s Taxable Income.

These deductions are applicable even if the taxpayer’s relative or spouse does not live in Japan.

So, a taxpayer could use this deduction by pretending that taxpayer sustained his / her relative who might be living in a foreign country.

A taxpayer could pretend that he had dependent relatives or spouse outside of Japan.
And if the number of relatives is 10, he could deduct for a total of 3,800,000 yen, (380,000 yen x 10)

So, the taxpayer in Japan could reduce 3,800,000 yen from the taxpayer’s taxable income.

Of course, this is tax evasion.

However, the taxpayer cannot use this method now.

Now, if the taxpayer’s relatives or spouse are non residents of Japan, taxpayer has to provide a proof.

The taxpayer must provide:
1 A certificate issued by the foreign government stating that the person is actually the taxpayer’s dependent or spouse.
2 A document or proof of remittance sent by the taxpayer to his/her dependent or spouse.
(For example, scanned copy of bank book)

Non residents of Japan cannot apply deduction for dependent and spouse.

If a taxpayer in Japan is a non resident (even if a person is a non resident of Japan as long as he has earnings emerged in Japan), he still has to pay income tax.. He cannot use deduction for dependent and spouse.

Non residents can apply basic deduction of 380,000 yen.
( June, 2021 ) 

Increase of Spouse’s salary and Taxpayer’s income tax

If a taxpayer (Breadwinner, Salaried Worker) has an annual salary of less than 11.2 million yen and supports his spouse, on calculation of amount of his income tax of Japan, 380,000 yen can be deducted from his taxable income.

If his rate of income tax is 20%, he can reduce his income tax by 76,000 yen (380,000 yen * 20% = 76,000 yen).

If amount of his salary is high, he cannot apply for spouse deduction of 380,000 yen.

If his salary (Non taxable income) ranges between 11.2 million yen – 11.7 million yen, he can use spouse deduction of 260,000 yen instead of 380, 000 yen.

If his salary (Non taxable income) ranges between 11.7 million yen – 12.20 million yen, he can use spouse deduction of 130,000 yen instead of 380,000 yen.

As mentioned above, in order to apply for Spouse Deduction, his/her annual salary should be less than 1,030,000 yen.

(Amount of basic deduction 480,000 yen + salaried income deduction 550,000 yen = 1,030,000 yen)

Spouse Special Deduction = Haigusha Tokubetsu Kojo

If her annual salary is more than 1,030,000 yen, taxpayer CANNOT apply for this Spouse deduction.

However he may be able to apply for Spouse Special Deduction as long as her annual salary is less than 2,016,000 yen.

In order to apply for Spouse Special Deduction of 380000 yen, amount of Taxpayer’s annual salary should be less than 11.2 million yen and amount of spouse’s salary is more than 1,030,000 and less than 1,500,000 yen.
(if it is less than 1,030,000 yen, he can use Spouse Deduction)

If the taxpayer can meet this requirement, he can apply for Spouse Special Deduction and the amount of deduction is 380,000 yen.
(It is same as Spouse deduction)

So 380,000 yen can be deducted from Taxpayer’s taxable income.

If the taxpayer’s annual salary is less than 12.2 million yen and amount of spouse’s salary is more than 1,030,000 yen but less than 2,016,000 yen, Taxpayer can still apply for Spouse special deduction.

However amount of deduction is not 380,000 yen. It is reduced in stages.

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Health insurance and Pension tax and Spouse

If the spouse of the taxpayer’s annual salary is less than 1,300,000 yen (who is a salaried worker), the spouse can be covered by the Taxpayer’s Health Insurance (Kenko Hoken) and employee’s pension (Kosei Nenkin).

So the spouse does not need to pay Health insurance tax and Employee’s Pension by herself.

Therefore, if her annual salary is 2 million yen (It means more than 1,300,000 yen) and taxpayer’s salary is less than 9 million yen, taxpayer can use Spouse Special Deduction though she needs to pay health insurance and employee’s pension by herself.

Spouse deduction for tax wise and Spouse deduction for Social insurance wise are completely different matters.

In the case of Spouse deduction for tax, taxpayer can receive advantage. On the other hand, in the case of Spouse deduction for Social insurance, spouse can receive advantage.

However if she is working in a company where the number of employees is more than 500 and the monthly salary is 88,000 yen, she needs to join health insurance and employee’s pension of her workplace.