Tax Refund Scenarios for Remittances to Dependents Abroad in Japan

Tax Refund Scenarios for Remittances to Dependents Abroad in Japan

This report provides a simplified analysis of potential tax refunds for a taxpayer in Japan who is financially supporting a dependent living abroad. The refund is not on the remitted amount itself, but is a result of a tax deduction (扶養控除, fuyō kōjo) claimed by the taxpayer.

Key Assumptions for These Scenarios

For the purpose of these calculations, we assume the following:

  • Taxpayer Status: The taxpayer is a resident of Japan and a single person with no other dependents besides the one being claimed abroad.
  • Dependent: A single dependent relative aged 16 or older who is not a spouse or an elderly dependent.
  • Dependent Deduction Amount: A standard deduction of ¥380,000 is applied for the non-resident dependent.
  • Social Insurance Premiums: Estimated at approximately 15% of the gross annual salary. This is a common simplification for demonstration purposes.
  • Basic Deduction: The standard basic deduction of ¥480,000 is applied.
  • Residence Tax: Calculated at a flat rate of 10% on taxable income, plus a per capita amount of ¥5,000.

The calculation process is as follows:

  1. Taxable Income (before deduction): Gross Salary – Employment Income Deduction – Basic Deduction – Social Insurance Premiums
  2. Taxable Income (with deduction): Taxable Income (before deduction) – Dependent Deduction
  3. Income Tax Refund: (Income Tax Rate * Taxable Income before deduction) – (Income Tax Rate * Taxable Income with deduction)
  4. Residence Tax Refund: (10% * Taxable Income before deduction) – (10% * Taxable Income with deduction)
  5. Total Tax Refund: Income Tax Refund + Residence Tax Refund

Scenario Analysis: Tax Refund per Yearly Salary

1. Annual Salary: ¥1,500,000

  • Employment Income Deduction: ¥550,000
  • Estimated Social Insurance: ¥225,000
  • Taxable Income (before deduction): ¥1,500,000 – ¥550,000 – ¥480,000 – ¥225,000 = ¥245,000
  • Taxable Income (with deduction): ¥245,000 – ¥380,000 = ¥0 (Taxable income cannot be negative)
  • Resulting Tax Refund: The dependent deduction reduces the taxable income to zero. The full amount of income and residence tax withheld from the taxable portion of the salary would be returned.
    • Approximate Tax Refund: ~¥24,500

2. Annual Salary: ¥2,000,000

  • Employment Income Deduction: ¥700,000
  • Estimated Social Insurance: ¥300,000
  • Taxable Income (before deduction): ¥2,000,000 – ¥700,000 – ¥480,000 – ¥300,000 = ¥520,000
  • Taxable Income (with deduction): ¥520,000 – ¥380,000 = ¥140,000
  • Income Tax Refund: ¥380,000 * 5% (tax rate) = ¥19,000
  • Residence Tax Refund: ¥380,000 * 10% (tax rate) = ¥38,000
  • Total Approximate Tax Refund: ¥57,000

3. Annual Salary: ¥3,500,000

  • Employment Income Deduction: ¥1,180,000
  • Estimated Social Insurance: ¥525,000
  • Taxable Income (before deduction): ¥3,500,000 – ¥1,180,000 – ¥480,000 – ¥525,000 = ¥1,315,000
  • Taxable Income (with deduction): ¥1,315,000 – ¥380,000 = ¥935,000
  • Income Tax Refund: ¥380,000 * 5% = ¥19,000
  • Residence Tax Refund: ¥380,000 * 10% = ¥38,000
  • Total Approximate Tax Refund: ¥57,000

4. Annual Salary: ¥4,000,000

  • Employment Income Deduction: ¥1,240,000
  • Estimated Social Insurance: ¥600,000
  • Taxable Income (before deduction): ¥4,000,000 – ¥1,240,000 – ¥480,000 – ¥600,000 = ¥1,680,000
  • Taxable Income (with deduction): ¥1,680,000 – ¥380,000 = ¥1,300,000
  • Income Tax Refund: ¥380,000 * 5% = ¥19,000
  • Residence Tax Refund: ¥380,000 * 10% = ¥38,000
  • Total Approximate Tax Refund: ¥57,000

5. Annual Salary: ¥4,500,000

  • Employment Income Deduction: ¥1,300,000
  • Estimated Social Insurance: ¥675,000
  • Taxable Income (before deduction): ¥4,500,000 – ¥1,300,000 – ¥480,000 – ¥675,000 = ¥2,045,000
  • Taxable Income (with deduction): ¥2,045,000 – ¥380,000 = ¥1,665,000
  • Income Tax Refund: ¥380,000 * 10% = ¥38,000
  • Residence Tax Refund: ¥380,000 * 10% = ¥38,000
  • Total Approximate Tax Refund: ¥76,000

6. Annual Salary: ¥5,000,000

  • Employment Income Deduction: ¥1,360,000
  • Estimated Social Insurance: ¥750,000
  • Taxable Income (before deduction): ¥5,000,000 – ¥1,360,000 – ¥480,000 – ¥750,000 = ¥2,410,000
  • Taxable Income (with deduction): ¥2,410,000 – ¥380,000 = ¥2,030,000
  • Income Tax Refund: ¥380,000 * 10% = ¥38,000
  • Residence Tax Refund: ¥380,000 * 10% = ¥38,000
  • Total Approximate Tax Refund: ¥76,000

7. Annual Salary: ¥5,500,000

  • Employment Income Deduction: ¥1,420,000
  • Estimated Social Insurance: ¥825,000
  • Taxable Income (before deduction): ¥5,500,000 – ¥1,420,000 – ¥480,000 – ¥825,000 = ¥2,775,000
  • Taxable Income (with deduction): ¥2,775,000 – ¥380,000 = ¥2,395,000
  • Income Tax Refund: ¥380,000 * 10% = ¥38,000
  • Residence Tax Refund: ¥380,000 * 10% = ¥38,000
  • Total Approximate Tax Refund: ¥76,000

Disclaimer: These calculations are simplified estimates based on general assumptions and should not be considered legal or professional tax advice. The actual refund amount will vary depending on your specific circumstances, including your other income, family structure, and deductions for social insurance, life insurance, medical expenses, etc.