Medical expense deduction: payments minus reimbursements and JPY 100,000 or similar (up to JPY 2 million)In a year with big hospital bills, the tax calculation can take that into account
If the medical expenses you paid between January 1 and December 31 of the year for yourself or for a spouse or relatives who share your livelihood exceed a certain amount, you can receive an income deduction through a tax return filing (kakutei shinkoku). The deduction is the total medical expenses paid, minus reimbursements such as insurance benefits, minus JPY 100,000 (or 5% of total income for people whose total income is under JPY 2 million), up to a maximum of JPY 2 million.
- Total medical expenses actually paid
- A
- - Amount reimbursed by insurance benefits etc.
- B
- - JPY 100,000 (5% if income is under JPY 2 million)
- C
- Medical expense deduction (maximum JPY 2 million)
- A - B - C
Key points
- The requirements are that the expenses are medical expenses for yourself or a spouse or relative who shares your livelihood, and that they were paid within that year (unpaid medical expenses count in the year they are actually paid).
- Deduction = (total medical expenses paid - amounts reimbursed by insurance benefits etc.) - JPY 100,000 (maximum JPY 2 million). For people whose total income is under JPY 2 million, 5% of total income is used instead of JPY 100,000.
- Reimbursed amounts are subtracted only up to the medical expenses the benefit was meant for. Any amount that cannot be fully subtracted is not subtracted from other medical expenses.
- Attach the statement of medical expense deduction to the tax return. If you attach the medical expense notice from your health insurer, you can simplify the entries on the statement.
- You may be asked to show or submit receipts until the date five years after the tax return filing deadline.
What to do in practice
- Organize receipts so they can be kept for 5 years, and use the medical expense summary form or similar to keep track of the annual total.
- If you receive a medical expense notice, check whether it can be used to simplify the statement.
When your family's hospital and medicine costs add up to a lot in one year, the part over a certain amount can be subtracted from the base amount used to calculate your tax. You can use it by doing a procedure called a tax return (kakutei shinkoku). It is a system allowed by the rules, so you can use it with confidence.
- ○Applies: Your own hospital costs paid this year
- ○Applies: Hospital costs of a spouse or child in the same household
- ×Does not apply: Hospital costs you have not paid yet (they count in the year you pay)
- ×Does not apply: The part of hospital costs covered by insurance money (subtracted first)
Points
- Medical costs you and your family paid during one year (January to December) are covered
- Money you got from insurance is subtracted first
- When you file the tax return, you submit a record (statement) of the hospital costs. Keep the receipts for 5 years
What the words mean
- Tax return filing (kakutei shinkoku)
- A procedure where you report a year of income and spending and your taxes to the government yourself
- Medical expense notice
- A notice of a year of hospital costs sent by your health insurance organization or similar
- National Tax Agency (NTA): National Tax Agency: No.1120 When you have paid medical expenses (medical expense deduction)
Tax-saving information introduces systems permitted by law. Each has conditions for application, and this is not encouragement of tax avoidance. Please consult a tax accountant or other professional before applying.
This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.