2021 Furusato Nozei Question Thread

[mototothemax]

There are now just 27 days left in the year for you to furiously finish using up your Furusato Nozei (ふるさと納税) allowance, which must be paid for before midnight, December 31st, 2021.

There are often a bunch of questions about Furusato Nozei allowances, the one-stop system, how to figure out what your limits are, or Furusato Nozei in general around this time, so we have decided to open up a questions thread dedicated to the topic. We'll keep the thread stickied for as long as there seems to be demand for it.

What is Furusato Nozei?​

Furusato Nozei, or the home-town tax program, offers tax-paying residents an opportunity to donate a portion of their residence tax to the "hometown" of their choice, generally in exchange for a gift worth approximately 30% of the donation amount.

What is the cost?​

The cost to use the furusato-nozei programme is ¥2000; the rest of the donations will return on your income and residence tax returns, assuming you do not exceed your limits.

What are the limits?​

Use a calculator, like this one or the more advanced, but accurate one to determine the maximum amount of residence tax you can donate.

Please note also that there is an annual exemption to "temporary income" of ¥500,000, and that Furusato Nozei gifts count as "temporary income". This means, using the 30% guideline for the value of gifts to donations, if you donate more than ¥1,666,667, or you have other "temporary income" (lottery wins, insurance payouts, etc), you will be taxed on that income.

So, what if I do exceed my limits?​

You are essentially gifting money to the municipality as charity (although you will get whatever gift they send you). WE DO NOT RECOMMEND EXCEEDING YOUR LIMITS

Do I have residence tax this year?​

Residence tax for year n is determined by (a) your income in year n (b) on your residency on Jan 1 in year n + 1. This is why in people's first year in Japan, they pay no residence tax because their income in year n - 1 is zero. If you are leaving before Dec 31st, your residence tax for 2021 will be zero, because you are not a resident on Jan 1st 2022, and you should not use Furusato-Nozei.

What is One-Stop?​

If you gift 5 or fewer municipalities, and you are not required to file a tax return (because the basic YETA covers you / you do not have special circumstances), you can elect to do the "onestop" system, which allows you to avoid having to file a tax return.

You will need to:

• Ask for one-stop at the time you make your donation(s)
• Mail the one-stop application to the municipality before January 15th of the following year for each donation

If you do not use onestop, you must save the receipts that are sent to you for tax filing time, or file using e-tax where they are not required.

What are some sites I can use?​

There are myriad sites which offer easy furusato-nozei options; the most popular are:

• https://www.furusato-tax.jp/
• https://event.rakuten.co.jp/furusato/
• FuruToku.Red also regularly compares a large number of donation sites

How do I file my tax return next year with Furusato Nozei?​

• Step by Step guide to tax filing if you cannot do one-stop
• How to verify your residence tax discount the next summer

What's new in 2021?​

New in 2021, most Furusato-Nozei shopping sites will send you a single consolidated reporting statement for your taxes. See this post for more information.

What's new right now?​

Amazon x Furusato choice are doing an Amazon pay promotion worth around 7%, see https://pay.amazon.co.jp/shop/campaign/furusatochoice202112 (h/t /@tristatervrepair)

Rakuten is doing a super sale, if you prefer to use them for your platform, you can get a significant number of points for your Furusato Nozei purchases, within their limits.

 

[resjudicata]

@mototothemax I cut it quite close this year with the one stop system.

Is their a way to confirm if the places receive it on Jan 10?

 

[helpmeplease26]

@resjudicata I had been thinking it was January 15 for some reason and suddenly (on Friday) looked at the fine print and discovered that it's 1/10, and that with the weekend there was no way my paper form would get to the municipality on time.

Should have done it sooner but I had gone abroad, stuffed in a hotel, et cetera, and just didn't think of it until it was too late.

I'm thinking of calling them tomorrow (Monday 1/11) and asking if they'll allow for an extension. If they don't, I'll have to figure out how to do the filing myself. This is honestly the main reason I never tried furusato nozei until last year -- the possibility of having purchased extremely expensive goods (57,000 yen) that I would never have bought if not for this system, while not being able to divert any of my taxes, makes me feel like a stupid, incompetent dupe. Last year I did it correctly and everything worked out, so I foolishly assumed I'd be able to navigate the process this year too.

 

[resjudicata]

@helpmeplease26 Ended up paying extra for next day delivery last Friday. A thousand yen for not going to the tax office is enough

 

[mototothemax]

@resjudicata No.

You could ring em up?

 

[llerrad11]

@mototothemax In early 2021 I've ordered Furusato gifts about 2 times, registered with the one-stop system. In mid-2021 I vested an amount of RSU which bumped my income to exceed 2,000万円 which I believe I'll have to file tax myself. In December 2021 (After RSU vested), I've ordered more Furusato gifts but not using the one-stop system.

Question: What shall I do with the gifts that were registered under the one-stop system? When filing tax during 2022, should I file for all the gifts during 2021 even though some of them are with the one-stop system?

 

[mototothemax]

@llerrad11 Final tax return trumps all --you should file it with all your donations deducted.

 

[virginia1981]

@mototothemax How exactly does the one-stop system work to reduce taxes? Do you get a refund in March or does it just reduce your federal & residential tax withholding for the next year?

 

[kristhuy]

@virginia1981 Unlike income tax, residence tax cannot be withheld from salary income. What looks like residence tax withholding is actually the payment via instalments of the previous year's bill. (Your income tax bill from the previous year is supposed to be fully settled by March 15, but your residence tax bill is not issued until around June and doesn't have to be paid in full until the following year.)

If you use the one-stop system during 2021 then your donated amount (minus 2,000 yen) will be subtracted from your residence tax bill when it is issued in May/June 2022. If you are paying your residence tax bill via instalments taken from your paycheck, then your instalments between June 2022 and May 2023 will be reduced as a result of your donation.

 

[virginia1981]

@kristhuy Thank you, that's super clear. Any impact on the national income tax by choosing to use one-stop? I was of the impression that furusato nozei also counts as a donation and hence is eligible as a deduction.

 

[kristhuy]

@virginia1981 Choosing to use one-stop = choosing not to claim the donation as a deduction for income tax purposes. If you want to claim the donation as a deduction for income tax purposes, you can't use one-stop.

But assuming you don't exceed your furusato nozei limit, there is no real benefit to claiming the donation as a deduction for income tax purposes, because if you claim the donation as a deduction for income tax purposes, your FN residence tax credit will be reduced by the exact amount that the donation deduction reduced your income tax bill (to ensure the same overall refund in both the one-stop and two-stop scenarios).

The only slight benefit to claiming the deduction for income tax purposes (i.e., not using one-stop) is that part of the donated amount is refunded to you earlier. For example, if you use one-stop, then you effectively receive 100% of your refund over the following June-May. Whereas if you don't use one-stop (i.e., you file an income tax return), you could receive 5-45% of your refund (percentage depends on your marginal tax rate) around February-April (2-4 weeks after you file your income tax return), and the remaining 95-55% over the following June-May. In both cases your refund is the same size, but the timing is slightly different.

 

[virginia1981]

@kristhuy Thank you again! For the first time I finally can say I understand how this dastardly complicated system works

 

[mototothemax]

@virginia1981 I believe, since you don't file a final return, it reduces your residence tax withholding from "summer" the next year (exact timing depends on municipality etc). When you get your new residence tax estimation you should see it taken out.

 

[ashkan]

@mototothemax I don't have anything of note to add in this post except how much I love this wacky system and hope it continue as is forever.

 

[ozora]

@mototothemax Bought all my stuff. I did this knowing there'll be some complications as I've bought some ski passes which I'm assuming will be sent ASAP. However... I won't be in Japan until January 15th and then likely have a 2 week quarantine. I've sent a message to each of them on Rakuten to let them know, but has anyone else been in a similar position before?

 

[rogueebear]

@ozora Any chances for the ski pass links? Might go for them next year if they are within in my allowance

 

[ozora]

@rogueebear On rakuten if you search for ふるさと納税 リフト券 you'll get a tonne come up! I got 5 days in Hakuba and 4 days in Nozawa onsen. They also have Niseko so if you ski a lot (and have the budget) you can offset a lot of the costs!

 

[rogueebear]

@ozora

ふるさと納税 リフト券

Thanks a lot!

For anyone who does not want to Google, found this one: https://www.furusato-tax.jp/search/157

Edit: New Furusato Nozei allowance (2022) started January 1st 2022

 

[mototothemax]

@ozora Sounds like you won't be able to use one stop and will need to file a final tax return.

That's pretty easy with etax though.

 

[rogueebear]

@mototothemax Just remember that if you file your tax return via etax I.e do a final tax return. Then you must include ALL your taxable events on it for that tax year (even what has already had your employer’s end of year tax adjustment applied to it).

That’s because a final tax return supersedes all other declarations.