【Fuyou Koujou】How to save some money using Exemption for Dependents !If you work in Japan then you really need to check this out～2025 Newest Post

Recently, many people have asked me about tax deduction for dependents (Parents overseas) (Fuyou Koujou [扶養控除]) questions! I wanted to write a special article here about the [Exemption for Dependents]. This article will help everyone understand what (Fuyou Koujou [扶養控除]) is! Let’s save some money together.

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【Fuyou Koujou】[Exemption for Dependents]

What is a support deduction? For Expat people working in Japan, what is the Exemption for Dependents they can apply for? How to apply? What do you need to be aware of?

In this article, I’ll answer all these questions at once. Don’t think applying is difficult. It’s actually very simple. With just a few steps, you can save a lot of money.

【How is Tax Calculated in Japan?】

Before understanding [Exemption for Dependents], let’s first understand how [Income Tax/Resident Tax] is generated. This will help you understand what “deduction” means.

Income tax is generally based on the principle of “comprehensive taxation.” Comprehensive taxation means that all your income within a year is added together. The tax rate is calculated based on income brackets. Apart from comprehensive taxation, there is also a method called “separate taxation,” where income from sources like stock investments is separately taxed. The calculation process for our regular income under comprehensive taxation is as follows:

It may seem complicated, but simply put, it is (total income – total expenses – income deduction) × tax rate – tax deduction = income tax.

The government considers different family situations. It provides a system to reduce the income standard when calculating the tax rate. If income and expenses are unchanged, we can only reduce taxes through “income deduction” and “tax deduction.” In other words, the more income deduction and tax deduction, the less tax we need to pay!

There are a total of 14 items for income deduction, and the [Exemption for Dependents] mentioned in this article is one of the “income deductions” mentioned above.

[What is Exemption for Dependents]

Simply put, it means that the expenses incurred in supporting your family can be deducted from your income tax payments. This means that the money you earn in Japan and spend on your family in overseas won’t be taxed. Of course, since it’s the Japanese government’s money, you still need to meet the specified conditions and regulations to qualify for tax deductions!

【Conditions & Requirements】

According to the regulations of the National Tax Agency of Japan regarding overseas support deductions, the following conditions must be met for approval:

• The supported individual must be within the sixth degree of kinship or within the third degree of affinity outside of the spouse, or they must be a government-recognized adopted child or entrusted elderly care recipient.
• Sharing the same livelihood (even if not cohabitating, as long as financial support is provided, it is acceptable, hence foreigners are also eligible).
• The annual income of the supported individual must not exceed 480,000 yen (although it’s a bit of a gray area, the Japanese government cannot verify the annual income of foreigners).
• The supported individual must not receive any income from blue return filers, nor can they be white return filers (blue and white return filers typically refer to those who run their own businesses, so it doesn’t concern regular employees much).
• Starting from 2023, there has been a partial change, requiring the remittance for domestic family members to exceed 380,000 yen.

【How much money can you save from Exemption ?】

The exemption amount is the part that everyone is most concerned about. The table below shows the income tax and resident tax amounts that can be deducted for support. Income tax can be deducted between 380,000 to 630,000 yen, and resident tax can be deducted between 330,000 to 450,000 yen. If calculated at the minimum income tax rate of 5%, applying for a support deduction for one person can save around 35,500 to 54,000 yen.

[Document related to an exemption for dependents]

When applying for a support deduction, two documents must be submitted to the government.

If it is through the company’s year-end adjustment, submit the documents to the company’s general affairs department. If you are applying on your own, submit the documents online:

1. Family-related proof documents
2. Money transfer-related proof documents (Above 380,000 yen: Remember to transfer the money to the support recipient’s account)

[Family-related Document Japanese Translation]

1. Government-issued family proof document + the relative’s passport (if necessary, present the passport in addition to the original)
2. Foreign government-issued document stating name, date of birth, and address

[Money Transfer-related Proof Documents]

• Must be an official document from a financial institution, clearly stating that the institution has exchanged currency and transferred the money to the person being supported.
• Overseas credit card (family card) statement showing foreign transactions

These documents must indicate the recipient’s name and the date of the transfer. If the recipient is not the person being supported, it will not be recognized. For example, if you are applying for your mother as the supported person, the name of the payee on your money transfer document must be your mother’s name.

[Transfer Amount]

Starting from 2023, the transfer amount is set with a minimum of 380,000 yen

[Deadline and Application Period]

• Overseas remittance period: January 1st to December 31st
• Year-end adjustment: Typically around November for most companies
• Confirmed declaration: February 16th to March 15th of the following year

[Affordable Overseas Remittance Methods]

Traditionally, many people have used regular banks for overseas remittances. These often involve high fees, starting from a few thousand yen. Both parties may be charged. Therefore, in recent years, people have been interested in cost-effective and fast online remittance services. Although online remittance services are cheap and fast, if you use an unknown online organization for remittances, there is a considerable risk. So here are some popular online banks that you might find useful.

Paypay Bank : If you don’t have a Paypay bank account yet, you can register here: 【HAPITAS】
①Register for a Hapitas account and open a Paypay bank account to receive 1,500 yen.
②Paypay Bank : Open an account
※I personally use PAYPAY Bank

【How much tax can you actually save?】

We’ve introduced how much money can be deducted from your income above. However, I believe what everyone is most concerned about is how much money can actually be returned to their hands. Therefore, below is a quick reference table for everyone’s consideration:

Add the income tax refund amount from the table above to the resident tax refund amount. This is the quick calculation method. This total is the amount of tax the government will refund to you. For example, if person A supports their 50-year-old mother, and person A’s final income tax rate is 5%, then they can receive 19,000 + 38,000 = 57,000 Japanese yen. Saving 50,000 yen per year means saving 500,000 yen in 10 years! That’s a substantial amount that can be used for many things!

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【Conclusion】

There are many Tax deductions available for those who are working in Japan, these can significantly reduce our tax burden. Don’t overlook them just because they seem troublesome. We live in a society with various taxes. We must learn to protect our rights. We also need to ensure that we don’t lose out on what we’re entitled to. Especially for programs like this, you only need to do a little work and submit some documents. You can save a substantial amount of tax money. It’s definitely not something to miss out on!

As the team leader, I want to remind everyone of a few important points. When applying for overseas support deductions, ensure the remittance institution provides formal proof documents. Additionally, remember to prepare documents that can prove family relationships.

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