[2021] List of income deductions available at year-end tax adjustment and tax return filing [Don't lose out]

Hello, this is Sakashita from the Administration Department

This is a busy time for everyone as we approach the end of the year

I'm sure you're busy collecting documents for year-end tax adjustments and tax returns

"I know about year-end tax adjustments and tax returns, but I only have a basic understanding of the types of income deductions available."

For those who say, "I don't even know what deductions I can receive from my income,"

This time, we have compiled a list by type to make it easy to understand what kind of income deductions you can receive when making year-end adjustments or filing your tax return

What is an income tax deduction?

Income tax deduction is a system that allows you to deduct (subtract) a certain amount from your income when calculating your income tax if you meet certain requirements

Income tax deductions can help reduce your tax burden!

List of available deductions

There are 15 types of income deductions, and the more types and amounts of deductions you can apply, the more tax-saving you can achieve

In other words, the more you deduct from your income, the less tax you will have to pay, as your taxable income will be reduced accordingly

Basic deduction

The basic deduction is, in principle, available to all taxpayers whose total income is 24 million yen or less

The amount of deduction varies depending on the total amount of income

Miscellaneous loss deduction

Miscellaneous loss deductions are deductions that apply when losses are incurred due to natural disasters, theft, embezzlement, etc

In addition to natural disasters such as earthquakes, typhoons, heavy snowfall, and lightning strikes, the policy also covers cases such as fires, thefts and burglaries, employee embezzlement, and extermination of termite damage

Miscellaneous loss deductions cannot be applied for through year-end adjustment procedures, so you must file a tax return to apply for them

In addition, if the amount of damage is large and cannot be deducted from the income of that year, it can be carried forward and deducted from the income of the following three years

medical expense deduction

Medical expense deductions are deductions that can be applied when medical expenses are incurred due to illness or injury

Medical expenses of spouses and other relatives who share the same household as the taxpayer can also be deducted together, so in addition to the medical expenses of wives and sons who live together, medical expenses of parents who live separately but send money home are also eligible.

The amount that can be deducted is the amount obtained by subtracting 100,000 yen from the medical expenses paid minus the insurance payments and benefits received

As a general rule, if you pay more than 100,000 yen in medical expenses in a year, you are eligible for a medical expense deduction

Medical expenses that are eligible for medical expense deductions include medical expenses when you go to the hospital, prescription drug costs, and the cost of purchasing over-the-counter medicines such as cold medicine

Like miscellaneous loss deductions, medical expenses deductions cannot be applied for through year-end adjustment procedures, so you must file a tax return to apply for them

Social insurance premium deduction

Social insurance premium deductions are deductions that apply when you pay social insurance premiums such as national health insurance premiums, national pension insurance premiums, employee pension insurance premiums, long-term care insurance premiums, and insurance premiums for the elderly

Even if you pay social insurance premiums that should be paid by your spouse or relatives who live with you, you can receive an income deduction based on the amount you paid, and the entire amount can be deducted from your own income

The following social insurance premiums are deductible:

Small business mutual aid premium deduction

The small business financial contribution deduction is a deduction that applies when you pay small business mutual aid premiums

The deductible contributions are as follows:

Individual pension plan contributions are called "iDeCo," and those who participate in iDeCo can receive deductions for contributions to small business mutual aid associations, etc

The deduction applies to the total amount paid in one year

Life insurance premium deduction

The life insurance premium deduction is a deduction that applies when you pay life insurance premiums, nursing care insurance premiums, and personal pension insurance premiums

There is a maximum deduction amount set for each type of insurance contract, and the handling of life insurance premium deductions differs between old contracts concluded before December 31, 2011 and new contracts concluded after that date

The method for calculating the deduction amount also differs between the old and new contracts, but the maximum deduction amount is 120,000 yen

If you are unable to complete your year-end adjustment in time, you can apply for a life insurance premium deduction by filing a refund claim

Earthquake insurance premium deduction

The earthquake insurance premium deduction is a deduction that applies when earthquake insurance premiums, etc. are paid

Earthquake insurance premiums paid and long-term property insurance premiums subject to transitional measures are eligible for deduction

The amount of the deduction is determined based on the amount of insurance premiums paid that year, but the maximum deduction amount is 50,000 yen

Donation deduction

A donation deduction is a deduction that applies when you make a donation to the national government, prefectures, cities, towns, and villages

Income deductions or tax credits are allowed for income tax, local taxes, etc

Hometown tax donations are also eligible for donation deductions, and donations made by individuals to the Red Feather Community Chest are also eligible for donation deductions

The deduction amount is the lesser of the following amounts minus 2,000 yen:

If a salaried worker makes a hometown tax donation and receives a tax deduction for the donation, they must file a tax return unless they use the one-stop tax payment system

In addition, when filing your tax return, you will need to submit a receipt for the donation you received from the organization to which you donated

Keep the receipt!

Disability deduction

The disability deduction is a deduction that applies when the taxpayer, their spouse, or dependents living in the same household are disabled

It also applies if you have dependent relatives under the age of 16 who are not eligible for dependent deductions

The amount of the deduction varies depending on the category of deductor, but a maximum deduction of 750,000 yen can be received

Widow's deduction

The widow's deduction is a deduction that applies if you are divorced or widowed

The conditions for the deduction are that the current situation as of December 31st of that year does not qualify for the single parent deduction,

After the death of her husband, she has dependents and her total income is less than 5 million yen

Or, this applies to people who have lost their husband and whose total income is less than 5 million yen

This is only available to women, but they can receive a flat deduction of 270,000 yen

Single parent deduction

The single parent deduction is a deduction that applies if the taxpayer is a single parent

This is a deduction that has been applied since 2020 (Reiwa 2). In this case, a single parent can be either a male or female parent

In principle, the scope of people eligible for the single parent deduction is certain people who, as of December 31st of that year, are unmarried or whose spouse's whereabouts are unknown, and who meet all of the following three requirements:

Anyone who meets all the requirements will be eligible for a flat deduction of 350,000 yen

Working student deduction

The working student deduction is available to working students whose total annual income is 750,000 yen or less

Students who meet the requirements for the working student deduction and have a salary income of 1.3 million yen or less, and whose income other than salary income is 100,000 yen or less, can receive this deduction

The deduction amount is a flat 270,000 yen

Spouse deduction

The spouse deduction is available if you have a spouse whose annual income is 480,000 yen or less (1,030,000 yen or less if your income is solely from employment)

The spouse deduction is a deduction that applies if you have a spouse whose annual income is 48 yen or less

The amount deducted from the taxpayer's income will decrease in stages depending on the taxpayer's income: 380,000 yen, 260,000 yen, and 130,000 yen

In addition, if the taxpayer's own income exceeds 10 million yen, the spouse deduction will not be applicable

Special spouse deduction

Even if your spouse's annual income exceeds 480,000 yen and you are not eligible for the spouse deduction, you can still qualify for the special spouse deduction if your spouse's annual income is 1.33 million yen or less (2.016 million yen if your spouse only has salary income)

The amount deducted from the taxpayer's income ranges from 380,000 yen to 10,000 yen depending on the taxpayer's annual income and the spouse's annual income

As with spouse income, if the taxpayer's own income exceeds 10 million yen, the special spouse deduction will not be applicable

Dependent deduction

Dependent deductions are deductions that apply if you have dependent family members

Relatives eligible for dependent deductions are those who are 16 years of age or older as of December 31st of that year, and the classification varies depending on age

The amount of the deduction varies depending on the dependent's category, age, and whether or not they live with you, but can be up to 630,000 yen

What deductions cannot be claimed during year-end tax adjustment?

Finally, among the deductions mentioned above, the following deductions cannot be claimed at the time of year-end adjustment

In this case, you can recover any overpaid income tax by filing a tax return after completing your year-end adjustment

Income deductions are a system designed to ensure fair tax burdens by taking into account the individual family circumstances of each taxpayer

However, medical expenses and donations are not necessarily deductible if paid

Some items cannot be deducted depending on the content, so please consult with the tax office when filing your tax return

Regarding hometown tax donations, those who can use the one-stop special system are:

There is no need to file a tax return, so please check for yourself

Also, although the home loan deduction does not qualify as an income deduction, it is a tax deduction that can be deducted further after applying the above income deductions

In order to receive the home loan deduction, you will need to file a tax return in the first year, but from the second year onwards you can complete the procedure along with your year-end adjustment

summary

What did you think?

There are various deductions available, and some can be easily claimed by simply preparing and filling out paperwork during year-end tax adjustments

Make sure you understand the deductions you are eligible for and check them in advance to make sure you receive them without any loss!