Taxpayers in Japan Tax Deductions for Family Living Abroad

Aki Japan Tax Services | Your Income and Corporate Tax Specialists | Taxpayers in Japan Tax Deductions for Family Living Abroad

Author Aki Kojima

Certified Public Tax Accountant with an MBA, member of the Association of Micro M&A Professionals, and licensed real estate agent. I provide tax advisory services, asset management consulting, and support for business owners, freelancers, and sole proprietors. I have extensive experience in international sales, accounting, labor relations, recruiting, and IT management. In addition to my professional work, I write articles and books on taxation and financial education. I enjoy swimming, reading, photography, and spending time in nature with my two children.

January 11, 2024

January 11, 2024

Today, I’m excited to share a valuable system that can help reduce your Japanese income tax when you send money to your family living abroad. This includes grandparents, children, or other relatives. Many worry about balancing family financial support with their tax obligations. Fortunately, there are specific rules in place that can help you manage both effectively.

Tax Reduction for Remittances to Elderly Family Members

One key aspect of this system is the tax reduction you can get by remitting money to family members over 69. For instance, with an income tax rate of 5% and a 10% resident tax, sending a certain amount can legally reduce your taxes by 62,000 yen. This falls under the exemption for dependents related to overseas relatives.

Navigating the Recent Changes and Requirements

It’s important to note that proving eligibility for this income tax deduction has become more stringent due to past misuse. To ensure compliance and benefit from this system, you must be aware of the recent revisions and the necessary documentation.

Who is Eligible?

Eligibility for remittance tax deductions includes:

  1. Blood relatives up to the sixth degree of kinship and in-laws up to the third degree.
  2. The taxpayer and their family must live together in the same livelihood.
  3. The total annual income of the family member should be equal to or less than 480,000 yen.

Documentation Needed

To qualify, you’ll need to provide:

  1. Proof of relationship, such as a copy of the family register or passport.
  2. Documents from financial institutions or credit card issuers showing the remittance.

Additional documents are essential if the family members are between 30 and 69.

  1. For students studying abroad, a student visa is required.
  2. For disabled family members, no additional documents are needed but he/she needs to be categorized under Japanese laws.
  3. For others, a remittance document of 380,000 yen or more is necessary.

Important Considerations

  • Hand-delivered cash is not applicable; you need a certificate of money transfer.
  • The age limitation for dependents has been revised.
  • Ensure proper calculation and preparation of documentation to avoid issues, primarily if your company handles the tax adjustments.

Conclusion

Understanding and utilizing this tax deduction system can significantly benefit those supporting family members abroad. It’s crucial to stay informed about the Japanese taxation system and ensure all requirements are met. By doing so, you can support your family while managing your tax liabilities effectively.

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