How to reduce tax income with Furusato Nozei - Japanese Hometown Tax

04:20 04/15/2024

Doing taxes is something that all residents residing and working in Japan have to deal with. The amount that one has to pay is dependent on their income, thus how to reduce one’s tax bill has always been a topic of great interest, especially those with higher income.

One popular way to do this is to apply for the Furusato Nozei - Hometown tax. Under this system, not only will you be able to get a part of your tax money back but also able to enjoy Japanese local produce and products! In this article, GoEMON will introduce you to, as well as teach you how to do Furusato Nozei! 

1. What is Hometown Tax - Furusato Nozei?

Furusato Nozei (ふるさと納税) is not a compulsory tax payment but a system where taxpayers can get tax reductions for making cash donations to regions of their choice. They will also get local produce and products as gifts from said regions as thanks for having made the donations. 

The reduced amount can be calculated as follows: 

Tax deduction = Donated amount – 2000 yen

2. About the Furusato Nozei tax system

You still have to submit the full amount of tax money for a year but will get a tax deduction later on. It is also of note that only 5 municipalities can be chosen at a time. 

You are free to choose whichever municipality you wish to, even those that you have no connection with. Additionally, you also get to decide how you want the money to be used, with different initiatives to pick from such as support for the elderly, traffic safety for kids, and so on. 

3. How to apply for Furusato Nozei

Step 1: Access the Furusato Nozei website:

There are several websites that you can access to apply for Furusato Nozei:

Step 2: Look up your maximum donation: 

Before donating, make sure to look up your maximum donation to donate accordingly. A larger donation does not necessarily mean more tax deductions as the maximum donation and accordingly approximate maximum deduction. It depends on your annual income, family structure, and several other factors. Thus, make sure to look up the amount and donate accordingly to receive maximum benefits from the Furusato Nozei system! 

You can look up ふるさと納税寄付上限額 かんたんシミュレーション on Google to find calculation tools that will make the calculation easier. 

Step 3: Choose the municipalities you wish to support as well as your desired thank-you gifts

The budget for this would be your donated amount - 2000 yen. Keep in mind that you can only choose a maximum of 5 municipalities. 

Step 4: Enter your shipping address and double-check all information before finalizing the donation 

Make sure that all the information is correct!

Step 5: Receive the thank-you gifts and donation certification from the municipalities

The municipalities will send the thank-you gifts and donation certification to your registered address. 

Step 6: File your donation

After having received the donation, you still have to file your Final Income tax return and apply for the tax deduction according to the deadline for the deduction to be applicable in the following year. 

This was GoEMON’s guide on how to apply for the Furusato Nozei tax program. If you have any other questions, feel free to comment down below! We will get to you as soon as possible. 

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