What is Year-End Tax Adjustment?

The year-end tax adjustment is a procedure carried out by companies and employers to reconcile the withholding tax on income that has been deducted from the salaries of officers and employees throughout the year. The purpose of this adjustment is to match the total amount of withholding tax collected over the year with the actual amount of tax owed. Generally, salaried workers who have submitted the "Exemption from Withholding Tax for Dependents" declaration form are eligible. However, those whose annual salary exceeds 20 million yen are not eligible. The specific steps of the year-end tax adjustment are as follows. - Add up all salary payments made from January 1 to December 31. - Calculate the amount after the employment income deduction. - Subtract income deductions such as dependent deductions. - Apply the income tax rate to calculate the tax amount. - If the special deduction for housing loan, etc. applies, subtract that amount. - Multiply the resulting tax amount by 102.1% to determine the final tax amount to be paid. - If the withholding tax already collected exceeds the final amount, a refund is issued; if it falls short, the difference is collected. --- Source: 国税庁 "タックスアンサー" https://www.nta.go.jp/taxes/shiraberu/taxanswer/index2.htm This article was reorganized by ＳＩＡデジタルテクノロジー株式会社 based on the above source. ※This language version is a machine translation from the Japanese version (ＳＩＡデジタルテクノロジー株式会社).