[2021] What is year-end adjustment? What are the changes this year? [Easy and easy to understand explanation]

Hello, this is Sakashita from the management department.

It's almost time for year-end adjustments!

"Year-end adjustment is a hassle every year..."

"This is the first year I'll be making year-end adjustments, so I don't really understand..."

For those of you, we will explain what the year-end adjustment is in a simple and easy-to-understand manner.

What is year-end adjustment?

Year-end adjustment is a procedure to settle income taxes automatically deducted from an employee's salary during the period of one year (January to December).

The amount of income tax is determined based on the amount of income earned in a year, but it is designed to be deducted in advance from the monthly salary as a withholding tax, rather than being deducted as a lump sum tax at the end of the year.

However, the amount of income tax is calculated by your employer based on your previous year's income and information.

Therefore, workplaces can calculate accurate income tax amounts only by collecting information from individuals on applicable "income deductions" and "tax credits."

Year-end adjustment is the process of adjusting the difference between the accurate income tax amount and the estimated income tax amount that was deducted from your salary.

・If more income tax is withheld from your salary than you should pay, it will be refunded.

・On the other hand, if the income tax to be paid is insufficient, additional tax will be collected.

Most people go through the process of getting their overpaid taxes back!

People who are not subject to year-end adjustment

*Year-end adjustment is not required, but you will need to submit a dependent deduction form for next year!

People subject to year-end adjustment

On the other hand, those who are eligible for the year-end adjustment must, in principle, be other than those who are not subject to the year-end adjustment.

How is it different from a final tax return?

Final tax return is the process by which an individual or corporation declares the amount of tax to be paid to the tax office.

However, as a general rule, company employees are not required to file a final tax return.

The company pays income tax from the employee's monthly salary and bonus on behalf of the employee,

This is because the difference between the amount of withholding tax paid and the amount of withholding tax paid is adjusted (year-end adjustment) using the salary for December (or January of the following year).

However, year-end adjustments are not made for people whose salary income exceeds 20 million yen or those who quit their jobs in the middle of the year.

You must file your tax return yourself.

Various deductions can also be made on your final tax return.

What are the changes to the year-end adjustment for 2021?

1. No need to stamp the year-end adjustment documents

From 2021, employees no longer need to affix their seals to withholding income tax-related documents submitted to the director of the tax office, etc.

Due to the promotion of digitalization, many tax-related documents that previously required a seal have been changed, and year-end tax adjustments are no longer required to be stamped.

For this reason, employees who have received related documents such as "Application for Insurance Premium Deduction for Salary Earners", "Application for Basic Deduction for Salary Earners, Application for Spousal Deduction, etc. for Salary Earners, and Declaration for Income Amount Adjustment Deduction" There is no need to stamp any documents.

2. No approval required due to electronic year-end adjustment procedures

In order to digitize the year-end adjustment, until March 2021, employees will need to obtain the approval of the tax office director in advance to submit data such as dependent deduction returns via electromagnetic means and submit them to the tax office. It was.

Due to the revision, the approval of the tax director will no longer be required from April 2021.

Don't forget the year-end adjustment!

Year-end adjustments are made around November, and tax returns are filed between February and March of the following year.

There are things that can only be declared during the year-end adjustment, and things that can be declared either way.

It varies, so don't forget to declare it!