When you receive a refund in your tax return, I recommend filing it early [you can file from the beginning of the year]

A final tax return is a tax return to determine the previous year’s income.

Depending on your income, you may have to pay tax, you may not have to pay tax, or you may receive a refund.

The main tax systems that will give you a refund when you file a final tax return are:

・Housing loan deduction

・Hometown tax payment

・Medical expense deduction

This time, I will write about refund application.

What is a refund declaration?

If you belong to a company and receive a salary, income tax is deducted.

The company pays the income tax every month.

Annual income and annual income tax amount are then calculated at the year-end adjustment.

The difference between the annual income tax amount and the monthly income tax amount will be collected or refunded.

However, as mentioned at the beginning,

・Housing loan deduction (First time. It can be applied from the second year onwards through year-end adjustment)

・Hometown tax payment (excluding cases receiving one-stop special provision)

・Medical expense deduction

will not be applied in the year-end adjustment.

You need to file a tax return.

If the income tax is to be refunded after applying the above three systems, a refund declaration should be filed.

Benefits of filing your refund early

1. You can receive your refund early.

The sooner you can get your money back, the better.

If you get the same refund no matter when you file your tax return, you can effectively utilize the amount you get back sooner.

Considering the present value of future cash flows, the longer a refund is postponed, the more its value is discounted (reduced).

For example, if you invest 100,000 yen in a 1% foreign currency deposit,

If you get 100,000 yen in January, you will be better off by investing 100,000 yen at 1% between January and March than if you get 100,000 yen in April.

2. Refund process is fast.

During the period from February 16th to March 15th, the number of final tax returns will be concentrated.

It will take about a month for the refund to be issued after filing.

However, until February 15, only refund applications are eligible.

The number of final tax returns is not so many compared to after February 16th.

Therefore, refund procedures will be processed faster than usual.

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都築太郎税理士事務所/Tsuzuki Taro Tax Accountant Office

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