2022 Furusato Nozei Question Thread

[mototothemax]

There are now just 21 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, 2022.

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?​

• Estimate your own taxable income.
• If you do one-stop or your taxable income is less than 1.95 million yen, any of the regular FN donation limit calculation sites -- such as this one or the more advanced, but accurate one -- should be fine. Otherwise, use this tool to calculate your FN donation limit accurately.
• If you have a residential mortgage tax credit and don’t do one-stop, avoid the regular calculation sites unless your taxable income is at least 10x larger than your tax credit (e.g., if you are eligible for a 200,000 yen credit, your taxable income should be at least 2,000,000 yen).

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 2022 will be zero, because you are not a resident on Jan 1st 2023, 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 10th 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 and FuruSato.COM also regularly compares a large number of donation sites and cost-performance

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 2022?​

We got this great post from /@kristhuy about the limits of FN:

https://www.reddit.com/r/JapanFinance/comments/zgr11k

Previous year's thread​

• 2021 -
  https://www.reddit.com/r/JapanFinance/comments/r8puxs

 

[rzim]

@mototothemax First year I'm considering trying out Furusato Nozei but I picked a pesky year because I'm moving literally next week. Does that throw any wrenches into my plans?

I am moving from Kanagawa prefecture to Tokyo (part of the 23 wards). (actual distance is roughly ~35km)

Would it be better to wait until next year when I won't have any moves/change of address in a calendar year?

 

[eterna]

@rzim No need to waste this year amount, just don't order anything from either cities and make sure you have all deliveries to your new address. Most stuff takes time to deliver, but if you have some stuff that might be delivered very quickly just press the button just before you move. As long as you pay this year you are fine.

 

[peble]

@rzim Just tell them that you moved and they will send to your new address.

 

[rogueebear]

@rzim It could cause some issues with getting “one stop” process because should you be residing in Tokyo as of January 1st your billing municipality will change from KanagawaA to TokyoB.

So if you’re doing “one stop” for any donations made pre-move you may need to inform them.

Other than “one stop” I think that the only time moving affects your donation is if you ended up donating to a municipality you end up moving to.

For example say you live in MunicipalityX but donate to MunicipalityY during 2022. But you then move to municipalityY December 2022 and thus reside there January 1st 2023 then your donation for 2022 technically should not count. Because you cannot donate to your own billing municipality.

 

[samuelpautu]

@mototothemax Sorry for my ignorance but when do you get back your “donated” amount? After when do they deduct it from your taxes?

 

[phillev]

@samuelpautu Your residence tax is billed from June of every year. You’ll see your new residence tax amount for the year from then. Note that the month of June is usually slightly higher than the other months due to rounding up.

 

[mototothemax]

@samuelpautu I am most familiar with non-one-stop where you will get a portion back on income tax filing, and then from August or so, your residence tax is reduced (depends on your municipality).

 

[phillev]

@mototothemax It’s June, and it doesn’t depend on your municipality.

 

[mototothemax]

@phillev It starts from June, but I never get my adjusted amount notice until far later. It depends on how quickly your municipality processes it.

 

[phillev]

@mototothemax I see, then the wording was confusing. “…then from August or so, your residence tax is reduced” implies that the payment amount is changed from August.

Getting notice of the adjusted amount later than May is strange, though, as companies need to know how much to withhold for the following year (June to May schedule). They’ll also be receiving the actual payment form at the end of May, so they can input it into their HR software and pay it.

In fact, I checked my previous records and I did indeed receive my notice of the new residence tax on May 20th this year. That would make sense, as they shouldn’t be giving you your notice after you’ve actually paid…

Perhaps we’re talking about a different form? 住民税決定通知書, right?

 

[kristhuy]

@phillev

Getting notice of the adjusted amount later than May is strange

I hadn't heard of it until the last couple of years, but it seems like it has been a common occurrence, at least in some municipalities. I'm not sure if the cause is reduced municipal staffing hours due to covid (this is the explanation I've seen cited most) or just the increase in the number of employees declaring furusato nozei donations.

Either way, what happens is that the municipality calculates the employee's residence tax solely on the basis of the annual salary payment report that the employer sent them in December, and sends a payment schedule in late-May/early-June. Then eventually they get around to processing the taxpayer's tax return (after receiving it from the NTA), and recalculate the employee's residence tax bill (reflecting FN donations, etc.), sending out a corrected payment schedule later in the year.

Obviously the corrected payment schedule incorporates the payments that the employee has already made. So if you made a lot of furusato nozei donations, you can end up paying much higher residence tax bills in June, July, August, for example, than you pay during the remainder of the billing cycle.

 

[phillev]

@kristhuy Wow, that would really screw up my accounting… I’m very surprised to hear that. I know many city halls outsource this kind of data input and calculation, so I presumed larger cities (with more of a budget to outsource) would have been well covered and smaller cities wouldn’t have enough of a population to fall behind… do you happen to know whether this is more common in large cities or rural towns?

 

[kristhuy]

@phillev

do you happen to know whether this is more common in large cities or rural towns?

I don't know, but I've experienced it myself in a municipality in one of those categories and heard of it happening in municipalities in the other category, so I'm not sure it's even possible to generalize. If the cause was covid, though, hopefully it was just a temporary issue and won't be as common in the future.

 

[mototothemax]

@kristhuy Unfortunately, I can confirm this happened with my very first year doing Furusato Nozei, before COVID, in one of the 23-ku.

 

[kristhuy]

@mototothemax

before COVID

(T_T)

 

[rogueebear]

@kristhuy Bet that can be a bit of a nightmare for people who prefer to pay all their resident tax off in June.

It would likely mean having to wait for months for the municipality to refund you.

 

[kristhuy]

@rogueebear

people who prefer to pay all their resident tax off in June

Time value of money! No one should be paying their full bill in June!

 

[rogueebear]

@kristhuy Haha… some people do

 

[sadmamacat]

@mototothemax I'm a full-time salaried employee, will get the residential mortgage tax credit, have dividends and capital gains in a taxable IBKR account. Every year I file a tax return because of that additional income. What is my best route for doing furusato nozei?