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Change of amount of Income Tax Deduction of Japan

Reduction in Income tax deduction of Japan 

According to alternation to tax related law of Japan, amount of income tax deduction was changed.

It is applied to tax filing in 2021.

If you are going to submit tax filing in 2021, you can read through this information.

In the case tax payers prepare double entry accounting book (Fukushiki Boki. sell below), Balance sheet, Profit and loss statement etc. and submit a paper to tax office named ”青色申告の承認申請書”, they can apply for a kind of income tax deduction.

Double entry accounting book

If they can use this income tax deduction, they can reduce amount of taxable income.

Assumed that amount of taxable income was 2 million yen.
If they could use this deduction, they could reduce amount of taxable income by 650,000 yen.
Then it would reduce amount of income tax.

However according to change of law, this amount of income tax deduction was changed to 550,000 yen.

So amount of your income tax will increase.

On the other hand, amount of basic deduction for income tax was changed from 380,000 yen to 480,000 yen.

Assumed that amount of taxable income (before income tax deduction) is 2 million yen

Before change of law : 2 million yen – 650,000 – 380,000 = 970,000 yen.

After change of law : 2 million yen – 550,000 – 480,000 = 970,000 yen.

So there is not a change in the result.

However if you file tax return by e-tax, you can still use income tax deduction of 650,000 yen instead of 550,000 yen.

In that case, even after change of law : 2 million yen – 650,000 – 480,000 = 870,000 yen.

You can save 100,000 yen.

Depending on amount of your taxable income, rate of income tax may be 40%.

So you may be able to save 40,000 yen by filing tax return by e-tax.

What is E-tax of Japan

Government of Japan tries to recommend tax payers to file tax return by internet.

So taxpayers can prepare “My number card” and use website of National tax agency to submit tax filing.

Japan e-tax