Points to note when declaring dividends

When filing a dividend, we would be eligible for an income tax refund by taking advantage of the following provisions:

• Dividend deduction
  (a certain amount can be deducted from your income tax amount)
• Offset of capital losses on listed stocks
  (offsetting losses on listed stocks incurred in the current year against dividend income)
• Carryover deduction of capital losses on listed stocks
  (offsetting losses on listed stocks incurred within the past three years against capital gains from listed stocks and dividend income in the current year)

While filing a dividend may seem advantageous due to the refund, there are some points to keep in mind.

It is added to the total income amount

Income tax and local resident tax are withheld from dividends at the time of payment.

Therefore, in principle, there is no need to file a tax return.

You can still file a tax return in order to be subject to the dividend regulations mentioned above.

However, the declared dividend income will be added to your total income.

What this means is that it will affect:

• Income determination for dependent status
• Calculation of national health insurance, nursing care insurance premiums, and late-stage elderly insurance premiums.

These are determined and calculated using the total income figure.

In other words, there are cases where filing a dividend return means:

• You are no longer considered a dependent
• Your burden for national health insurance, nursing care insurance premiums, and late-stage elderly insurance premiums increases.

Here's a question.

You might think that if the capital loss on listed stocks and dividend income are offset, then there won't be any impact on total income.

If capital loss incurred during the current year is offset against dividend income, the total income will be the amount after the offset.

However, in the case of carryover deductions to offset past losses, the amount before the special exemption is applied is used.

As a result, the dividend income before the offset will be the amount that is added, and the effects described above will apply.

Conclusion

When filing dividend returns, we recommend that you calculate whether your tax and insurance burdens will be reduced overall before making a decision to file.

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

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