1. Introduction
In cases where a resident individual claims an exemption for dependents, etc. (an exemption for dependents or spouses, a special exemption for spouses, or an exemption for the disabled) with regard to his/her overseas family members (non-resident relatives) in the process of withholding at source for salary or the year-end adjustment, the resident is required to submit or present “Documents concerning relatives” and “Documents concerning remittances” to the payer of salary.
In addition, on or after January, 2023, if a resident individual claims an exemption for dependents under certain conditions, the resident is also required to submit or present “Documents concerning visa for studying abroad” or “380,000 yen remittance documents” to the payer of salary. In this News, we will mention the new standards for taking a dependent deduction for non-resident relatives for income tax purposes.
2. Points of tax reform
Starting on or after January, 2023, the age standard and other conditions of non-resident relatives qualified for an income tax deduction became more stringent. In detail, those family members who fall under the following ① and do not fall under any of the following ② a)～c) are excluded from the scope of dependents qualified for an income tax deduction.
① Non-residents who are 30 years of age or older and under 70 years of age
② a) Persons who no longer have a domicile or residence in Japan due to studying abroad
b) Disabled persons
c) Persons who received 380,000 yen or more to cover living or education expenses from the taxpayer
In addition, in cases where a resident individual claims an exemption for dependents with regard to his/her non-resident relatives who fall under both the above ① and one of ② a)～c) in the process of year-end adjustment, the resident is required to submit or present certain documents proving the above together with Application for Exemption for Dependents, etc. to the payer of salary before the date when receiving the last salary for the year.
3. Documents required for the dependent deduction
In cases where a resident individual claims an exemption for dependents with regard to his/her non-resident relatives who fall under both 2 ① and one of ② a)～c), the resident is required to submit or present the following documents to the payer of salary, depending on the following categories.
a) Persons who no longer have a domicile or residence in Japan due to studying abroad
●Necessary documents when submitting Application for Exemption for Dependents, etc.
“Documents concerning relatives” and “Documents concerning visa for studying abroad
● Necessary documents when submitting year-end adjustment
“Documents concerning remittances”
b) Disabled persons
● Necessary documents when submitting Application for Exemption for Dependents, etc.
“Documents concerning relatives”
● Necessary documents when submitting year-end adjustment
“Documents concerning remittances”
c) Persons who received 380,000 yen or more to cover living or education expenses from the taxpayer
● Necessary documents when submitting Application for Exemption for Dependents, etc.
“Documents concerning relatives”
● Necessary documents when submitting year-end adjustment
“380,000 yen remittance documents”
※ “380,000 yen remittance documents” mean remittance documents which prove that the taxpayer made payments of 380,000 yen or more to each member of his/her non-resident relatives such as a copy of foreign remittance request form or a credit card statement
4. Conclusion
In this News, we mentioned “Tax Reform of Dependent Deduction for Non-Resident Relatives.” The new standards have already been applied. The payer of salary has to collect necessary documents in submitting Application for Exemption for Dependents, etc. at the time of the employee’s entry to the company or the payment of January salary.
Please note that this News only introduces general outlines and does not include professional advice. So please make sure not to make any decisions without taking professional advice individually. If you have any questions, please feel free to contact us.
(Reference / in English)
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