Can someone briefly explain how resident tax work…?
I’ve been working here for 8 years and never really paid attention, I just noticed that i didn’t have residence tax deducted from my salary until this year’s July for some reasons…
2 years ago I changed job from a company that didn’t provide Defined Contribution Plan to one that did, then back to the company that doesn’t have it, so i had to start doing ideco.
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When you changed job you are supposed to provide your new employer information about your resident tax payment method. If you do not request them to do deductions from your salary, then it is your responsibility to pay them directly using the payment slip.
You should ask HR in your company about how your resident tax handling is registered.
/r/japanfinance?
If you moved a lot then it might not have caught up to you. They will likely eventually figure it out and you’ll have to pay taxes on the years you didn’t.
Resident tax:
Japan’s tax year is January 1st to December 31st (we will define this as *current year*).
Total Income you earn within the tax year, then has tax deductibles applies to it. The output of total income – tax deductibles = taxable income
Your resident tax is ~10% of your taxable income
Then *current year* resident tax is billed from June (current year+1) to May (current year+2)
Some employees have their resident tax withheld monthly from their salary. This is called “special collection”. The monthly amount would be 1/12th of your bill.
People who don’t have special collection. Get sent bills from their billing municipality via post to pay at the convenience store.
Billing municipality = municipality you were a registered resident of as of January 1st (current year+1)
If you change jobs, the outcome will vary. You can see Question 3 on page 2 here: https://www.soumu.go.jp/main_content/000679118.pdf
But in general if you change jobs after June 1st, you will either pay what remains of your bill from your final salary OR you will get sent a bill from your billing municipality to pay what remains.
IDeCo/DC:
When you ended with the company that had you enrolled in a company DC, you need to perform a “rollover” within 6 months. You rollover the account either into another Company DC (if you join a company that provides company DC) or to an iDeCo.
Failure to rollover within 6 months will mean that “automatic rollover” will occur. Automatic rollover converts your account to cash and moves the cash over to the NPFA (national pension fund association https://www.npfa.or.jp/) This slide outlines it well: https://www.rk.sjdc.co.jp/en/retirement/chapter02/index.html
BUT you should check the “vest period” your (now ex) employer had on the account. If you were not with the company for very long your ex employer may have taken back what they contributed. But what you may contributed they wouldn’t be able to take back though.