１． Introduction
In this News, we will mention points to note regarding the year-end tax adjustment for 2024 (Nenmatsu-chosei), including the settlement of fixed-amount tax reduction.
２．Fixed-Amount Tax Reduction
In line with Tax Reform for 2024, the fixed-amount tax reduction was implemented as a tax credit to reduce the burden on national income tax and local inhabitant tax.
Employers are required to perform the following two types of procedures:
(1) Monthly-tax reduction procedure
(2) Year-end tax reduction procedure
As for (2), employers need to settle the fixed-amount tax reduction for their employees based on the status of their spouse or dependents at the time of year-end tax adjustment.
３．Points to note for the year-end tax adjustment
In the year-end tax adjustment process for 2024, the following should be noted, including the settlement of fixed-amount tax reduction.
(1) Confirmation of eligible persons
Employees who are subject to the year-end tax adjustment are in principle eligible for the year-end tax reduction, except for the cases where the employee’s income exceeds a certain amount.
In the year-end tax reduction mentioned in 2(2), employers need to recalculate an employee’s fixed-amount tax reduction if additional tax reduction is available for their spouse or dependents at the time of year-end tax adjustment. In this case, employers need to confirm if there are any changes in the presence/absence of a spouse or the number of dependents based on the information the employee has provided.
(2) Required documents for the year-end tax adjustment
In the year-end tax adjustment process, employees are required to fill out some forms such as a dependent exemption form and an insurance exemption form.
For each form, an employee should calculate the amounts accurately and make sure that there are no mistakes in it.
(3) Confirmation of deductions
In the year-end tax adjustment process, in case an employee wants to apply for several deductions, he or she should make sure that certain conditions are met in each deduction. It is also important to fill out the forms for deductions without any mistakes.
(4) Requirements for filing individual income tax returns
An employer should make a list of employees who need to file individual income tax returns. For example, employers should inform employees who want to declare a special credit for housing loans for the first time or a medical expense deduction that they need to file individual income tax returns.
４．Flow of operations
When conducting the year-end tax adjustment, an employer should review the flow of their operations carefully. Especially in 2024, the settlement of the year-end tax reduction should be included in the process. The whole documents for deductions should also be reflected precisely in the final calculation of individual income tax.
５．Conclusion
In this News, we mentioned “Fix-Amount Tax Reduction and Year-End Tax Adjustment.”
Please note that this News only introduces general outlines and does not include professional advice. So please make sure not to make any decisions without taking professional advice individually. If you have any questions, please feel free to contact us below.
（Reference）
Guide for Flat-amount Cut of Personal Income Tax for FY2024 Pertaining to Withholding Tax System for Salaries, etc.
（Accessed on 2024/11/27）
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