Leaving it up to the company is a big loss!　A “Surprising” Checklist for Salaried Workers to Get Their Taxes Back by Filing a Tax Return

Salaried workers who think that “the company will take care of everything for me” may be losing money without realizing it.

There are cases where even salaried workers should file an income tax return to recover taxes, such as when they are eligible for deductions that cannot be processed by year-end adjustments or when they incur losses from investments. What are those cases? Let’s check them out with the “Tax Return and Tax Reduction Checklist” for salaried workers.

Even company employees can get “tens of thousands of yen” back?　List of Tax Reduction

Year-end tax adjustment is a convenient system in which the company takes care of tax procedures on your behalf, but it does not mean that everything can be taken care of. To receive the following deductions, you need to file your own tax return.

First, before looking at the checklist, it is important to keep in mind that there are two groups of deductions: “[A] income tax credits” and“[B] tax credits.

Although the names are similar, their “destructiveness” is quite different. As it turns out, the [B] group, which appears in the latter half of the report, has by far the bigger tax-saving effect (cash back).

The mechanism is clear from the tax calculation formula.

Income tax = (income – [A] income tax credit) x tax rate – [B] tax credit

A] income tax credit (deduction for medical expenses, tax payment at home, etc.) … This is to reduce the “amount subject to taxation. After subtracting this [A] from the annual income, the tax is calculated by multiplying the remaining amount by the “tax rate (5%-45%). In other words, the effect is to reduce the “income before the tax rate is applied.

B] Tax credits (mortgage deduction, dividend deduction, etc.): These are deducted directly from the calculated ” tax itself. Even if the calculated tax amount is 100,000 yen, if [B] is 100,000 yen, the tax payable will be zero. In other words, 100,000 yen in [B] has the same value as “100,000 yen in cash” as it is.

So, which cards (deductions) do you have in your hand?　Let’s start with group [A].

The backdoor way to “cash in” pharmacy receipts

A. Deductions from income that must be reported on a tax return

A-1] Deduction for medical expenses A-1] Deduction for medical expenses

A deduction for medical expenses is allowed if the total amount of medical expenses paid for you or your spouse/relatives living with you in a given year, minus the amount compensated by insurance, exceeds 100,000 yen (or 5% of your gross income if your gross income for the year is less than 2,000,000 yen). The amount of the deduction is calculated as follows The deduction is calculated as follows (maximum 2 million yen).

Medical expenses eligible for the medical expense deduction include not only the cost of medical treatment, but also the cost of hospital visits and the purchase of medical equipment directly necessary for receiving treatment. On the other hand, expenses for the purpose of disease prevention, cosmetic purposes, and gratuities are not eligible.

To receive a deduction for medical expenses, a “certificate of deduction for medical expenses” summarizing eligible medical expenses must be submitted with the income tax return. The original is not required, but receipts must be kept for five years.

◇[A-2] Self-Medication Taxation System

If a person who takes certain measures to maintain and improve his/her health and prevent illness, such as medical checkups, physical examinations, and vaccinations, purchases qualifying pharmaceuticals exceeding 12,000 yen for himself/herself or for a spouse or relative who shares the same living arrangements with the person in question, the “Self-Medication Taxation Scheme Self-Medication Taxation” may be applied in place of a deduction for medical expenses.

A list of drugs eligible for the Self-Medication Taxation System is posted on the website of the Ministry of Health, Labor and Welfare, and the receipt for the purchase (receipt) will indicate that the drug is eligible for the tax credit.

To qualify for the Self-Medication Tax Credit, a “Self-Medication Tax Credit Certificate” summarizing the amount of purchases of eligible drugs must be submitted with the income tax return. The original copy is not required, but the receipt and documents that clearly show that certain efforts have been made must be kept for five years.

Common points of people who lose money by “hometown tax payment

A-3] Donation Deduction (such as “Furusato Tax”) A-3] Deduction for donations (such as “Furusato Tax”)

Those who have made “Furusato Tax Payment” without using the One-Stop Special Exception, or those who have donated to the national government, local governments, or specified public interest promotion corporations (corporations designated by the national government as significantly contributing to the promotion of public interest such as education, science promotion, cultural improvement, social welfare contribution, etc.), etc. can apply for donation deduction (officially called “donation deduction”) by filing a tax return. (officially called “donation deduction”) by filing a tax return. If the donation is a “specific donation” that is eligible for a donation deduction, the receipt will usually state that the donation is “eligible for a donation deduction.

In order to receive donation deductions, you need to fill in the items related to donation deductions on your tax return and attach or present at the time of filing a receipt of donation (receipt) issued by the organization, etc. to which you donated and the documents required according to the scope of donation (donation recipient).

■Furusato Tax “One-Stop Special Exception

The “One-Stop Special Exception” is an exception to the donation deduction for Furusato tax, which allows taxpayers to receive a donation deduction for Furusato tax without filing a final tax return if all of the following requirements are met.

• Requirements for using the “One-Stop Special Exception” for Furusato tax payment
• □ Salaried employee
• □ Paying salary from two or more sources You do not receive salary from two or more sources.
• □ Annual income (total annual salary income) is less than 20,000,000 yen. Annual income (total annual salary income) is less than 20 million yen.
• □ No income other than salaried income I have no income other than salary income.
• □ No income other than salaried income The number of municipalities to which you have donated this year is 5 or less (if you donate to the same municipality more than once, it is counted as one municipality)
• □ You do not plan to file a tax return. You do not plan to file a tax return.

If you meet the above requirements, you do not need to file a final tax return by applying for the “Furusato Tax One-Stop Special Exception” to each municipality where you pay your hometown tax. There are two ways to apply: online application using your My Number Card or by sending the required documents by mail.

Even if you have applied for the One-Stop Special Exception, your application will be invalidated if you file an income tax return or donate to more than six organizations. In this case, you must file a tax return for all donations in order to receive the deduction.

Suit expenses can also be deducted?　Deductions for Salaried Workers

A-4] Miscellaneous deductions A-4] Deduction for miscellaneous losses

If you or your spouse/relatives who make a living in the same household and whose income (gross income, etc.) is 480,000 yen or less for the year are damaged by a disaster, theft, or embezzlement, you can receive a “miscellaneous loss deduction” by filing an income tax return.

In order to qualify for the miscellaneous loss deduction, the taxpayer must include items related to the miscellaneous loss deduction in the tax return and attach or present receipts for unavoidable expenses related to the disaster, etc.

If the income for the year is 10 million yen or less, it is also possible to apply for “exemption from income tax under the Disaster Reduction and Exemption Act” (see below) in lieu of the miscellaneous loss deduction.

◇ ◇ A-5] Deduction for Specific Expenses

If a salaried worker incurs “specified expenditures” for work that fall under the following items (1) to (7) and the amount of such expenditures exceeds the amount equivalent to one half of the salary income deduction, he/she can receive an income tax deduction equivalent to the amount of such excess by filing a final income tax return.

• Expenditures that fall under the category of “specified expenditure” are as follows.
• (1) Commuting expenses Expenses for commuting to and from work that are considered to be necessary for an ordinary commuter.
• (ii) 《Traveling expenses for work (iii) “Travel expenses for duties”: Expenditures normally required for travel directly necessary for performing duties away from the place of work.
• (iii) (iii) Relocation expenses: Expenditures normally considered necessary for relocating to a new location due to a change in employment.
• (iv) Expenditure for training for the purpose of acquiring skills and knowledge directly necessary for the duties.
• (5) ⑤ Qualification acquisition expenses (v) Qualification acquisition expenses: Expenditures for acquiring qualifications directly required for the job
• ⑥. ⑥ 〔Traveling home expenses〕expenses normally required for travel between the place of work or residence and home, for example, for employees who are transferred alone.
• 7) Books, clothing, entertainment expenses, etc. necessary for work (up to 650,000 yen).

In order for these expenditures to be considered as specified expenditures, proof from the salary payer is required that they are directly necessary for the performance of duties (proof from a career consultant is acceptable for expenditures in (iv) or (v) related to education and training).

(4) or (5) related to education and training can be certified by a career consultant.) In addition, (1) the portion of these expenditures that is compensated by the payroll tax exemption, and (2) the portion for which “educational training benefits” or “educational training benefits to support self-reliance of single-mother (father and child) families” are provided are not included in the specified expenditures.

In order to receive the deduction for specified expenditures, the taxpayer must attach to the tax return a certificate that the specified expenditures are directly necessary for the performance of his/her duties, and attach or present documents proving the fact that the specified expenditures were incurred and the amount of the expenditures.

Tax Recovery through “Mortgage” and “Stocks

B] _Tax Credits for which a tax return is required

◇ ◇ [B-1] Mortgage Deduction (for the first year) B-1】Mortgage Loan Deduction (for the first year)

If you newly build, acquire, or extend or remodel your own home using a mortgage loan and meet certain requirements, you are eligible for the mortgage deduction (special deduction for housing loans, etc.) and can receive an income tax credit (if you cannot deduct the amount from your income tax, you can also deduct it from your resident tax in the following year). (If the deduction is not fully deductible from income tax, it can be deducted from the following year’s inhabitant’s tax.

The deduction is 0.7% of the balance of the mortgage loan for the acquisition of the house and the land on which the house is built. The maximum amount of the eligible mortgage balance varies depending on the environmental performance of the house, etc. For households moving in during 2013 and 2014, the maximum amount is 45 million yen (50 million yen for households raising children under the age of 19 and young married couples where one of the spouses is under the age of 40), with a maximum deduction period of 50 million yen), and the maximum deduction period is 13 years (10 years for existing homes).

In applying for the mortgage deduction in the first year, taxpayers are required to attach documents according to the classification of the house to their tax return. Specific required documents can be found on the National Tax Agency’s website.

For the second and subsequent years, the deduction can be claimed through year-end adjustment by submitting the “Mortgage Deduction Certificate” issued by the tax office to the employer.

◇ ◇ ◇ B-2] Dividend Deduction

Dividends from stocks and mutual funds are treated as “dividend income” and tax is withheld at the time of receipt, so in principle, no final tax return is required.

However, there are cases in which it is advantageous to file an income tax return. These are: (1) cases where a loss (loss on transfer) is incurred from the purchase or sale of stocks or investment trusts, and the tax will be refunded if the loss is offset (through profit or loss) against the dividend income (see below), and (2) cases where the income tax rate is lower if the dividend is combined with other income.

In the case of (2), you can receive the “dividend tax credit” by filing an income tax return and selecting “general taxation” as the taxation method for dividend income.

In the case of (3), the taxable income including dividends is less than 6,950,000 yen.

Taxable income is the amount of income including dividends after deductions for employment income, spouse, and basic income, which is different from the face value of annual income. If one’s income is only salary, the taxable income amount would be 6.95 million yen, which is around 10 million yen per year (the amount may vary depending on the amount of income deductions).

Depending on the amount of dividends, salaried workers with annual income (salary income) of less than 10 million yen are likely to have an advantage if they file a tax return and choose the comprehensive taxation as the taxation method for dividend income.

B-3】Foreign Tax Credit B-3] Foreign Tax Credit

If a Japanese resident is taxed locally on income earned abroad (including dividends from foreign stocks*) and is also taxed in Japan, the tax paid locally can be deducted from the amount of income tax (including special income tax for reconstruction) for the year by filing a tax return. This is called a “foreign tax credit.

When filing a tax return for the foreign tax credit, it is necessary to submit a “statement of foreign tax credit” and “documents proving that the amount of foreign income tax was imposed” with the tax return.

*Gains from the sale of foreign stocks are not taxed locally in many countries, such as the U.S., but only in Japan, due to tax treaties. Therefore, they are not eligible for the foreign tax credit. On the other hand, dividends from foreign stocks are taxed locally and the after-tax amount is taxed in Japan, making them eligible for the foreign tax credit.

◇ ◇ ◇ B-4】Special Deduction for Donations

Among the donations that are eligible for the tax deduction for donations, certain donations are eligible for the special deduction* for donations, which is a tax deduction, instead of the deduction for donations as an income tax deduction (*”Special deduction for donations to political parties,” “Special deduction for donations to authorized NPOs,” “Special deduction for donations to public interest incorporated associations,” and “Special deduction for donations to public interest incorporated associations”). (*There are three types of tax deductions.)

For donations that are eligible for the “special deduction for donations,” which is a tax deduction, the receipt will usually indicate that the donation is eligible for the “special deduction for donations.

In order to qualify for the special deduction for donations, it is necessary to make an entry on the tax return for the amount to be deducted for that deduction and submit a “statement of calculation” according to the recipient of the donation, along with supporting documentation.

If you have made a donation that qualifies for both a donation deduction (income tax credit) and a special donation deduction (tax credit), you can use the National Tax Agency’s “Final Tax Return Preparation Corner” to prepare your final tax return.

The following is a list of the deductions that can be made. B-5] Income Tax Reduction and Exemption under the Disaster Relief Act

If the amount of damage to a house or household goods caused by a disaster is more than half of the market value of the house or goods, excluding the amount compensated by insurance, and the total income for the year of the disaster is 10 million yen or less, and if the “deduction for miscellaneous losses” is not applied to the amount of loss, the taxpayer can receive an income tax reduction or exemption under the Disaster Relief and Exemption Act. or exemption under the Disaster Reduction and Exemption Act.

In order to be eligible for income tax reduction and exemption under the Disaster Reduction and Exemption Act, you must file a final income tax return, stating that you are eligible for the exemption, the circumstances of the damage, and the amount of the damage.

Deductions that you forgot to report in the year-end tax adjustment can be claimed by filing an income tax return

Losses from investments can be aggregated and carried forward by filing a tax return.

In principle, you do not need to file an income tax return if you are using a special account with withholding tax, even if you have profits from trading stocks and other securities. However, if you have losses, you can offset the profits and losses in another brokerage account (profit and loss totalization) or carry over the losses to the next year or later by filing an income tax return.

If the profit and loss are combined to reduce the taxable profit, the tax will be reduced (withholding taxes, if any, will be refunded). Also, the loss carried forward can be offset against the profit generated in the following year or later, which can be expected to have the same tax-saving effect. The tax savings will only be realized if the total profit is profitable and tax must be paid, and will not be effective if the business is not profitable.

If the “income” from a side job exceeds 200,000 yen, a tax return must be filed.

If the “income” from a side business exceeds 200,000 yen, you “must” file an income tax return. This tax return is not to be filed “voluntarily” to save taxes, but to fulfill the “obligation” to pay taxes.

Please note that the standard is not “income,” but “earned income,” which is the income minus the necessary expenses incurred to earn that income.

Complete the process on your smartphone! A “quick at home” refund!

Tax returns can be filed from home with a smartphone or computer and a My Number card.

To prepare a tax return, simply access the “Tax Return Preparation Corner” available on the National Tax Agency’s website and follow the on-screen instructions to enter the necessary information. Using the “MyNa Portal Linkage,” data such as withholding tax, medical expenses, and hometown tax payments can be obtained at once and automatically entered.

Once the necessary information is entered, the amount of income, deductions, and taxes are automatically calculated, so there is no need to do the calculations yourself. The prepared tax return can be submitted (sent) as-is to the tax office.

Tax returns can be filed for tax refunds for a period of five years from January 1 of the year following the year in which the tax is imposed. As a general rule, tax returns for the aggregation of investment losses and carry-forward deductions, as well as tax returns for income from side businesses (for which tax payments are required), must be filed between February 16 and March 15 of the year following the year of taxation (or the following Monday if the first or last day falls on a Saturday or Sunday) (see the following table). (If the first or last day of the month falls on a Saturday or Sunday, the following Monday is the due date.)

Although there is still time to file for a tax refund, do not put it off until later.

The information in this article is based on the taxation system and laws and regulations as of February2014.