April 15th is a real dread in US, another tax return to file with the damn IRS. Good news is that the dread is much lighter in Japan. In Japan, in December of each year, employees’ salaries throughout the year undergo something called year-end adjustment performed by the HR in your company or whomever your company outsourced its payroll functions to. For most people, this year-end adjustment is in itself the tax return.
Because year-end adjustments are performed by your HR (or by another person or entity your company outsourced its payroll functions to), you don’t have to touch a thing. All that is asked of you is to give the necessary information to the HR by an internally designated date (usually mid November to early December). In most cases these information are your (1) life and non-life insurance premium payments, (2) social insurance premiums (usually National Pension Insurance premiums) you paid for your family members and dependents, and (3) mortgage payments.
Where can you get these information yourself? (1) Proof of life insurance and non-life insurance premium payments are sent to you by your insurance companies (if you’re looking for insurance companies, here are some helpful sites: Insurance Clinic and Medical Insurance).
towards the end of the year. (2) You receive a receipt every time you pay social insurance premiums so keep these till year-end. (3) Proof of mortgage payments are sent to you by your mortgage company, usually a bank in Japan. After you gather these information, you enter the amounts into a designated form called Insurance Premium Deductions for Salaried Personnel and Special Spouse Deduction for Salaried Personnel (給与所得者の保険料控除申告書兼給与所得者の配偶者特別控除申告書), print your name and address on the bottom, and stamp your seal. Many companies also ask you to complete Declaration of Dependents for Salaries Personnel (給与所得者の扶養控除等（異動）申告書) to confirm your dependents for deduction purposes. You probably have completed the same form at the beginning of the year (and might ask why you have to do it again). The purpose is to reflect the most updated information in the year-end process because your family structure might have changed during the year.
After you submit all necessary forms and information, your HR will punch out your tax liability for the year and compare it against how much has already been withhold from your monthly salary. If withholdings exceeds tax liability (which is most likely the case) you’ll receive a refund on your December paycheck. If your tax liability exceeds withholdings (does happen once in a while) you’ll see more tax deducted from your paycheck than normal months. Together with your January pay slip your HR will provide you something called 源泉徴収票 which is an official copy of the details of your year-end adjustment.
Thinking about working in Japan? Preparing to move overseas almost becomes a full-time job in the final weeks of your departure. Many people quit their jobs weeks before so they can devote their time to preparation. But what about your health insurance? Short-term health insurance plans are a great solution. ↓
Below are links to Certified Social Insurance and Labor Consultants providing services in English. Also below are useful links related to working in Japan and links to women balancing career and personal happiness. WJA realizes and promotes women's increasing value in the labor market.