It is furusato nozei season again. If you would like to get hometown tax deduction from your residence tax next year, you should apply to furusato nozei until the year ends.
What is Furusato Nozei System
In Japanese furusato nozei means Hometown tax payment. It is a tax incentive system introduced to help out small town municipalities that suffer from lack off population and cannot collect enough tax because all their population has moved to bigger cities. Normally residence tax is paid based on the income of the previous year and paid to the city of residence. Cities with less population get less tax and crowded cities get most of it. With hometown tax payment system people can direct a portion of their residence tax to their hometown or to a city that they want to support.
Advantage of Furusato Nozei
Municipalities that receive the hometown tax donations send very generous thank-you gifts of locally produced items. Fans of furusato nozei use this system to exchange a portion of their tax with gifts. There are shopping websites that specialized on Furusato Nozei so taxpayers can basically shop for local gifts and pay it with their residence tax for the next year. Quality meat and seafood are popular choices and Hokkaido notoriously scoops a good portion of the hometown tax donations with its attractive gifts. You can also choose where your tax goes or how it is used. You can choose from categories like education, support for the elderly, promotion of organic agriculture, or tourism activities.
Furusato Nozei for Beginners
Financial advice gurus of YouTube would tell you to buy a year's worth of tissue paper or toilet paper with your hometown tax allowance to maximize your savings but there is no fun in it. I prefer to buy monthly delivery of local vegetables. Every month I look forward to receiving and opening my big vegetable box. I use Rakuten to spend my furusato nozei that way I can also get Rakuten points as well. There are websites to calculate how much you should spend for Furusato Nozei based on your salary and other factors. Be careful to not spend more than your tax deduction limit or it will be just a donation.
For normal salary workers who do Year-End Tax Adjustments instead of personal tax declaration one-stop system is the easiest way to receive deductions. If you choose this option when choosing your gifts on the shopping website the municipality that you directed your residence tax will send you a form to fill out and send back. If you do it correctly you will get a tax deduction from your residence tax for the following year -2000 yen for fees.
It is a fun system to choose where your taxes are spent and get awesome thank-you gifts in return. Make sure to check how much you can donate and finish your procedures before the year ends to get a deduction next year. Author K
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