JPN-Journal.com News/Laws for Foreigners Working in Japan.

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Income Deductions


• Casualty Loss Deduction


A resident taxpayer suffering losses from damage to nonbusiness property of the taxpayer, his/her spouse, or relatives in the same household, may be able to deduct losses attributable to disaster, theft, or embezzlement.

The deduction does not cover losses related to assets not regarded as essential for living such as paintings, antiques, precious metals, and second houses. The deduction also does not cover losses related to business properties such as warehouse and inventory.

The amount of allowable deduction is the greater of the following:


1. [(Fair market value of the property immediately before the event) + (expenses incurred to tear down and/or remove damaged property) - (insurance proceeds)] - (total ordinary, retirement, and forestry income) x 10%
2. (Expenses incurred to tear down and/or remove damaged property) - JPY 50,000

Unused casualty loss deduction may be carried forward three years.

Taxpayer whose total income in 2009 is less than JPY 10,000,000 and who sustained damage extending to half or more of his/her residence and household may elect the exemption under the "Act on Reduction or Release, Deferment of Collection and Other Measures Related to Tax Imposed on Disaster Victims" over the casualty loss deduction if doing so would be beneficial.

Casualty loss deduction is available for non-resident taxpayers only for assets located within Japan while under the non-resident status. The deduction is otherwise not applicable.



• Medical Expense Deduction


Medical expenses paid for the care of resident taxpayer, his/her spouse, or relatives living in the same household may be deducted from income to the extent the expenses are not reimbursed through insurance and by other means.

The amount of allowable deduction is computed as follows. The latter formula is used for taxpayers with total ordinary, retirement, and forestry income of less than JPY 2,000,000:


1. (Medical expenses) - (reimbursements through insurance and by other means) - JPY 100,000
2. (Medical expenses) - (reimbursements through insurance and by other means) - (total ordinary, retirement, and forestry income) x 5%



• Social Insurance Premiums Deduction


If a resident taxpayer, his/her spouse, or relatives living in the same household pays premiums or had premiums deducted from salary for national insurance (tax), national pensions, long-term care insurance, or nursing-care insurance, that amount is deductible from income.

Premiums for national health insurance (tax), long-term care insurance, or nursing-care insurance deducted from pensions received by a taxpayer, his/her spouse, or relatives living in the same household, however, may not be claimed as deductions for social insurance premiums.



• Small Business Mutual Aid Premiums Deduction


If a resident taxpayer pays mutual aid premiums under contract with the Small Business Mutual Aid Corporation or with the Physically Handicapped or Mentally Retarded Persons Mutual Aid Programs operated by local governments, that amount is deductible from income.



• Life Insurance Premiums Deduction


If a resident taxpayer pays insurance premiums on life insurance contracts under which the recipient of insurance proceeds is him or herself, a spouse, or other relatives living in the same household, amount remaining after subtracting policy holder dividends from the total payments made is deductible from income. Classification of premiums (insurance or individual pension plan) is indicated in the certification issued by insurance companies.



Life Insurance Premiums Deduction (units in JPY)
Total Premiums Paid	Deductible Amount
Less than 25,000	Total Premiums Paid
Over 25,000 less than 50,000	(Total Premiums Paid)/2 + 12,500
Over 50,000 less than 100,000	(Total Premiums Paid)/4 + 25,000
Over 100,000	50,000




• Earthquake Casualty Insurance Premiums Deduction


If a resident taxpayer pays premiums for casualty insurance policies and if an earthquake accident insurance is a component of the policy, amount remaining after subtracting policy holder dividends from corresponding payments made is deductible from income. Classification of insurance policies is indicated in the certification issued by nonlife insurance companies.



Earthquake Casualty Insurance Premiums Deduction (units in JPY)
Classification	Total Premiums Paid	Deductible Amount
(1) Earthquake Insurance Premium	Less than 50,000	All Premiums Paid
	Over 50,000	50,000
(2)Former Long-Term Casualty Insurance Premiums	Less than 10,000	All Premiums Paid
	Over 10,000 less than 20,000	(Total Premiums Paid)/2 + 5,000
	Over 20,000	15,000
When both (1) & (2) exist		Total of deductible amounts separately calculated for (1) & (2) limited to 50,000




• Donations and Contributions Deduction


Resident and non-resident taxpayers may deduct from income certain contributions and donations made to national and local governmental bodies, social welfare institutions, certified NPOs, approved specified regional employment promotion bodies stipulated in accordance with Regional Revitalization Law, and may also deduct amount needed to acquire stocks issued by special new small and medium enterprises and certain political donations and donations as a trust estate for certain specified chartiable trusts.

In the case of certain political donations, a resident taxpayer may choose between this deduction or the credit for contribution to political parties, whichever is more beneficial.

The amount of allowable deduction is the lesser of the following:
1. Total contributions / donations made
2. 40% of total income



• Disability Deduction


If a resident taxpayer, a qualified spouse, or qualified dependent is disabled as of December 31 of the tax year, a deduction from income can be claimed.

Disability is defined as those who have received an identification booklet for the physically handicapped, war invalids, or mentally ill, those who are judged as intellectually handicapped persons by an appointed doctor for mental health, or those who are 65 years or older and certified by the head of a local public body that their level of disability is no less than that of the disabled or those with other physical or mental disabilities.

Those with special disabilities are defined as those whose disability is diagnosed as first or second degree in their identification booklets, whose disabilities are diagnosed as first degree in their identification booklets for the physically handicapped, and who are judged as having a severe mental disability and are continuously bedridden and thus require complex nursing care.

Amount of allowable deduction is JPY 270,000 per disabled person and JPY 400,000 per specially disabled person.



• Widows/Widowers Deduction


A resident taxpayer may be eligible to claim this deduction if he/she is a widow or widower.

A widow is defined as a taxpayer who satisfies one of the following conditions as of December 31 of a tax year:


1. A woman who has divorced but not remarried, or whose husband is dead or it is unclear whether he is alive or not, and who has a dependent or a child living in the same household whose total income in 2009 was not more than JPY 380,000, and are not a spouse of dependent of another taxpayer.
2. A woman who has divorced but not remarried or whose husband is dead or it is unclear whether he is alive or not, and whose total amount of income in 2009 was not more than JPY 5,000,000.

Special widow is defined as a taxpayer who satisfies all of the following conditions:


1. A woman who has divorced but not remarried or whose husband is dead or it is unclear whether he is alive or not,
2. there is a dependent or a child living in the same household whose total income in 2009 was not more than JPY 380,000, and
3. total amount of income in 2009 was not more than JPY 5,000,000.

Amount of allowable deduction is JPY 270,000 for widow and JPY 350,000 for special widow.

A widower is defined as a man who has divorced but not remarried, or whose wife is dead or it is unclear whether she is alive or not, and whose total income in 2009 was not more than JPY 5,000,000 and who has a child living in the same household whose total income in 2009 was not more than JPY 380,000.

Amount of allowable deduction for widower is JPY 270,000.



• Working Students Deduction


A resident taxpayer may be eligible to claim this deduction if he/she is a working student. A working student is deinfed as a taxpayer who satisfies all of the following conditions:


1. Has employment income or other income from labor,
2. amount of total income in 2009 was less than JPY 650,000 and income other than that from 1 above in 2009 was less than JPY 100,000, and
3. is a student of a specified educational institution.

Amount of allowable deduction is JPY 270,000.



• Spouse Deduction


A resident taxpayer may claim this deduction if he/she has a qualifying spouse. A qualifying spouse is defined as one living in the same household as the taxpayer as of December 31 of a tax year and whose total amount of income in 2009 did not exceed JPY 380,000. Taxpayer claiming a spouse deduction may not claim a special spouse deduction.



Spouse Deduction (units in JPY)
	Ordinary Qualifying Spouse	Elderly Qualifying Spouse
Spouse with special disabilities	730,000	830,000
Other	380,000	480,000




• Special Spouse Deduction


A taxpayer ineligible for the spouse deduction because the spouse's amount of total income in 2009 exceeded JPY 380,000 may still qualify for the special spouse deduction if the spouse's total income for the year exceeds JPY 380,000 but is less than JPY 760,000.



Special Spouse Deduction (units in JPY)
Spouse's Amount of Total Income	Allowable Special Spouse Deduction
Over 380,000 under 400,000	380,000
more than 400,000 under 450,000	360,000
more than 450,000 under 500,000	310,000
more than 500,000 under 550,000	260,000
more than 550,000 under 600,000	210,000
more than 600,000 under 650,000	160,000
more than 650,000 under 700,000	110,000
more than 700,000 under 750,000	60,000
more than 750,000 under 760,000	30,000
more than 760,000	0




• Dependents Deduction


A resident taxpayer may be eligible to claim this deduction if he/she has dependents. Dependents include relatives, foster children or elderly persons legally entrusted or fostered by the prefectural or municipal governor and who lives in the same household as the taxpayer as of December 31 of a tax year, and whose total amount of income did not exceed JPY 380,000 in 2009.



Dependent Deduction (units in JPY)
		Dependent with special disabilities and living with the taxpayer	Other
Ordinary qualified dependent		730,000	380,000
Specific qualified dependent		980,000	630,000
Elderly qualified dependent	Not living with taxpayer	830,000	480,000
	Living with taxpayer	930,000	580,000




• Basic Deduction


Basic deduction of JPY 380,000 is available to both resident and non-resident taxpayers. No special requirements need be satisfied.