Year end tax adjustment for foreign employees: dependents living abroad
Every year as December approaches, foreign employees ask us the same thing: can I claim my family back home as dependents? The answer depends on each relative's age and on the employee's remittance records, and without the right papers the deduction is not allowed. This guide follows the National Tax Agency (NTA) handbook "How to do the year end adjustment for 2026" (in Japanese) and lists what employers should check.
Residency decides it, not nationality
The year end adjustment (nenmatsu chosei) is in principle done for every employee who has submitted the Application for (Change in) Exemption for Dependents. The NTA handbook states that a foreign worker who has an address in Japan, or has stayed in Japan for one year or more, is a resident for tax purposes and is judged by the same rules as anyone else.
Non-residents are not covered. If an employee becomes a non-resident during the year, for example after a transfer to an overseas branch, the adjustment is done at that point rather than in December. Most employees who leave the company partway through the year are also outside the adjustment (people who leave after receiving their December salary are one exception) and settle their tax by filing a return themselves. If someone plans to go home, talk about the tax side when you talk about the leaving date.
Relatives abroad aged 30 to 69 qualify only in narrow cases
For relatives living in Japan, dependents aged 16 or older can be claimed. For relatives who are non-residents, meaning family living abroad, the NTA handbook sets these rules:
| Age of the relative abroad | Birth dates for 2026 | Can be claimed |
|---|---|---|
| 16 to 29 | January 2, 1997 to January 1, 2011 | Yes |
| 30 to 69 | January 2, 1957 to January 1, 1997 | Only in the cases below |
| 70 or older | January 1, 1957 or earlier | Yes |
A relative aged 30 to 69 living abroad counts only if they:
- left Japan to study abroad
- have a disability
- received 380,000 yen or more from the employee that year for living or education costs
So parents in their forties or fifties who are still working at home cannot be claimed unless they have a disability or received at least 380,000 yen that year. Children under 16 are never claimed as dependents for income tax, wherever they live, but they still go in the local tax section of the dependents form.
Which documents, and when
To claim a dependent or disability deduction for a relative abroad, the employee must hand in or show these documents to the employer. Anything in a foreign language needs a Japanese translation.
- Relationship documents go in with the dependents form. They are a document issued by a Japanese national or local government, such as a copy of the family register supplement, together with a copy of the relative's passport; or a document issued by a foreign government showing the relative's name, date of birth and address.
- Student visa documents are needed only when claiming on the study abroad ground, also with the dependents form. They are a copy of the visa or residence card from the country where the relative studies.
- Remittance documents are needed at the year end adjustment. They are bank transfer records, statements from a credit card company for a family card the relative used, or records from an electronic payment provider, showing that the employee paid living or education costs that year.
- 380,000 yen remittance documents are needed at the year end adjustment when claiming on that ground. They are the remittance documents that show the year's payments to that relative add up to 380,000 yen or more.
The detail that trips people up is that remittance records must show payments made to each relative as needed, and the 380,000 yen test is applied to each relative separately. If an employee sends one transfer to their father to cover the whole family, check with the tax office before December how those payments can be counted. At adjustment time, the employee also adds the amount sent that year to the "facts of shared livelihood" column of the dependents form already submitted, or submits a new form with that column filled in.
The higher basic deduction for 2026
The fiscal 2026 tax reform raised the income tax basic deduction. According to the NTA handbook, the change takes effect in principle on December 1, 2026 and applies to income tax for 2026. The basic deduction under the Income Tax Act becomes 620,000 yen (up from 580,000 yen), with extra amounts depending on income, and those extra amounts apply only to residents.
The income limit for dependents also rose from 580,000 yen to 620,000 yen in total income. For someone whose only income is salary, that means annual pay of up to 1.36 million yen instead of 1.23 million yen. Monthly withholding through November does not change; the December adjustment recalculates the full year with the new deduction. If a family member newly qualifies as a dependent under the higher limit, the employee needs to submit the dependents form for them.
What to tell employees before the adjustment
- Check the birth date of each relative abroad and whether they are 30 to 69
- Gather the relationship documents, with Japanese translations where needed
- Collect this year's remittance records for each relative separately
- Tell HR if they plan to leave the company or Japan before the end of the year
For tax calculations and individual cases, please ask the tax office or a tax accountant. Sincero Global supports foreign workers in several languages and can help explain the year end paperwork to your employees. Reach us by phone at +81 90 7841 8887, by email at info@sinceroglobal.jp, or on LINE.
