みなと国際会計事務所 Accounting Intelligence blog by a CPA in Tokyo

みなと国際会計事務所 Accounting Intelligence blog by a CPA in Tokyo, tax tips, accounting, running business

Deduction for dependents living overseas

time 2017/01/09

You can claim your family members or relatives living overseas as your dependents. You will reduce your taxable income by 380,000 yen per person. It has a significant impact on your tax to pay.

I had a client who came from an African county and he claimed about 10 dependents living over there. By claiming 10 people, he reduced his taxable income by 3.8 million yen, which almost wiped out his taxable income. I thought his claim was genuine because the reason why he lives here is because he wanted to support himself as well as his family back there. The cost of living was very low (more than 5 or 10 times) at that time.

It became very strict since 2016. The tax office has nothing to oppose against to support our family members overseas but at the same time, they hate that taxable income flee from Japan. They did not have much measures to verify that dependent claims were genuine because they do not have income information of those dependent people overseas. There was even no way to check whether they actually exist!

The tax office introduced the requirement from since 2016 of the two documents.

1) Document to prove family relation.
a) copy of passport
b) A document issued by the government of your nationality that shows name, birth date, address of your relatives.

2) Document or its copy issued by a financial institutions to prove that you transferred money to them back in their home country. It can be a credit card statement that shows records of expenses to cover their living. Tricky point here is that you need to send money to EACH dependents. For example, if you want to claim your wife and children as your dependents, it may sound none-sense but you need to send money to EACH one of them.

The below is the original source of informatoin from National Tax Agency.
NTA Website

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