Topics | Yurakucho CPA Office (Ginza, Tokyo, Japan)
Need a proof he/she is your dependent.
Dependent (Spouse) deductions give you JPY 380,000 - JPY 630,000. This is a very basic deduction you can get. You live with your spouse or children? Then you probably get the deduction. It does not matter if you are an employee or self-employed individual.
You can get deductions even if your dependents live in foreign countries. However, you need some documents to get this if your dependents (spouse) live in foreign countries.
What is dependent deduction?
Deductions basically lead to lowering your individual income taxes, so it is important that you know what kind of deductions you are able to get. Dependent (Spouse) deduction is a well-known deduction. For example, you work at a Japanese company and live with your wife (not working) and child. You get a salary on monthly basis and probably you are aware that income tax is deducted from your salary. You do not need to know the details of income tax calculation, but your tax amount may be different from that of your colleague (even if you and your colleague get the same gross salary) as different deductions may apply. You have two persons (wife and child) you financially support, so two Dependent (Spouse) deductions are available, and the deductions reduce the amount of income tax (deducted from your monthly income). The amount of deduction is JPY 380,000 - JPY 630,000 for each (income deduction), depending on the age and other conditions of your dependents.
Your dependents live in foreign countries?
It is not required that you live with your dependents as long as you financially support them. You come to Japan and are expected to work here for several years as your foreign-based company sends you to Japan for business purpose. And your family may not come with you and continue to live in foreign countries. This is fine. You can still get dependent deductions. However, it is hard for Japanese tax authorities to see whether your family is your dependents or not. Thus you need to prove it to get dependent deductions.
What you need to do is
You need to have two types of documents to prove that your family living in foreign countries is your dependents.
1. Verification showing that he/she is your dependent
You need some official document issued by foreign government that proves he/she is your family.
2.Verification showing that you send certain amount of money (required for your dependents' daily life) to your dependents.
Actually, this new tax rule has more details (e.g. you cannot send money to your two dependents at once, if verification is not Japanese language, it should be translated into Japanese, etc...), so you need to be well-prepared for this.
If you have any questions about this revision, feel free to ask us.