No.12008 Estimated income tax prepayment
1 What is estimated income tax prepayment?
If the estimated income tax amount for the year, which is calculated based on your previous year's income and tax fixed as of May 15 of the year (hereinafter referred to as a “base amount of estimated income tax prepayment”), is ￥150,000 or more, you must make prepayments as a part of income tax for the year.
This system is called estimated income tax prepayment.
2 How to calculate the "base amount of estimated income tax prepayment"
The "base amount of estimated income tax prepayment" is calculated as follows.
- (1) Calculate the total income from your previous year's income fixed as of May 15 of the year. If you have incomes subject to separate taxation such as income from forestry or retirement income (excluding income from dividends of listed stocks, etc. for which you choose to use separate taxation), or capital gains, occasional income, miscellaneous income or temporary income to which average taxation is applied, those incomes should be excluded from the calculation of the total income.
- (2) Calculate the total taxable income by subtracting deductions from income of previous year from the total income described in (1).
- (3) Calculate the tax amount on the total taxable income described in (2). If you apply the credit for officially proclaimed natural disasters in the previous year, calculate the tax amount without applying this credit.
- (4) If a part or all of the total income described in (1) are subject to withholding tax, subtract the withholding tax amount of previous year on the total income (excluding withholding tax amount on the incomes which are excluded in the calculation of the total income described in (1))from the tax amount described in (3).
If the “base amount of estimated income tax prepayment”, the result of (4), is ￥150,000 or more, you need to pay estimated income tax prepayment. The notice of the amount of estimated income tax prepayment is to be sent to you by the district director of the tax office which has jurisdiction over your place for tax payment on or before June 15 of the year.
3 The amount and the period for payment of estimated income tax prepayment
You must pay one third of the "base amount of estimated income tax prepayment" in each installment. The first installment is to be paid from July 1 to July 31 and the second installment is to be paid from November 1 to November 30.
The amount of estimated income tax prepayment is to be settled by filing the final tax return for the year.
4 Application for reduction of estimated income tax prepayment
If the estimated income tax amount calculated by you based on the situation as of June 30 of the year is less than the “base amount of estimated income tax prepayment” for the reasons such as: closing or suspension of your business, unemployment, business depression, losses resulting from natural disasters, theft or embezzlement, medical expenses or an increase in the number of dependents, you can submit an “Application for reduction of estimated income tax prepayment” to the district director of the tax office which has jurisdiction over your place for tax payment by July 15.
And if the application is approved by the district director of the tax office, the amount of estimated income tax prepayment will be reduced.
When an application for reduction is only for the second installment, the application should be submitted by November 15 (In this case, you will calculate your estimated income tax amount based on the situation as of October 31 of the year.).
Note. If these due dates fall on Saturdays, Sundays or National Holidays etc., the days following these days will be the due date.
- Consultation service for national tax is available at the Phone Consultation Center of the Regional Taxation Bureaus. Please take a look at "IF YOU NEED FURTHER INFORMATION, PLEASE CONTACT" and try the phone consultation service.
