Time has come in October for year-end tax adjustment. You can lower your income tax by submitting documents of tax deductible expenses, e.g. for medicines, housing loans and insurance premium. Exemption for dependents is one of the largest tax deductions from income tax in amount.
Amount to be exempted depends on a type of dependent and income amount of a supporter, i.e. a taxpayer. In case of a dependent with no income, the amount starts from JPY 130,000 and can be as large as JPY 630,000 per dependent. The exempted amount within your income becomes free from income tax. (For details please visit a National Tax Agency (NTA) site (Japanese), which is the same as the Link #1 below).
The exemption can be claimed when a dependent meets all of the following qualifications. Among them, the “sharing the same livelihood” qualification does not require a dependent to live in the same house with a taxpayer. It requires for a dependent to be financially supported by a taxpayer by receiving living fund e.g. through periodical bank transfers.
- Being relatives (within the six degree of blood relatives or the three degree of relatives by marriage)
- Sharing the same livelihood
- Annual income being less than JPY 380,000 (or JPY 480,000 in 2020 and later). If a dependent’s income is only salary, then the salary should be JPY 1,030,000 or less.
- No salary received as a family employee of the “blue form return” (Aoiro-Shinkoku) program, or not a family employee of the “white form return” (Shioiro-Shinkoku”) program.
This means that the exemption can be claimed even for a non-resident dependent living outside of Japan, as long as the dependent is financially supported by a taxpayer in Japan.
For the claim, two types of documents have to be submitted: 1) “Documents concerning relatives” to demonstrate kin relationship between a dependent and a taxpayer, 2) “Documents concerning remittances” to demonstrate financial support by a taxpayer for a dependent.
For more details, please visit the following links of National Tax Agency (NTA) and/or get advice from a tax office or a tax accountant.
- Link: NTA Family and Taxation (Japanese)
- Link: NTA For Those Applying for an Exemption for Dependents, etc. with Regard to Non-resident Relatives (English)
- Link: NTA Roundup website on exemption for non-resident dependents (Japanese)