A simplified procedure that allows you to receive the Furusato Nouzei donation deduction without filing a final tax return. It is available to salaried workers who donate to no more than 5 municipalities per year, requiring only the submission of an application form to each municipality for each donation. Introduced in 2015, it has significantly contributed to the expansion of Furusato Nouzei usage.
Eligibility Requirements and Application Procedure
To use the One-Stop Special System, three conditions must be met. First, you must be a salaried worker who is not required to file a final tax return. If your side income exceeds 200,000 yen or you need to claim medical expense deductions, a final tax return is required, making the One-Stop Special System unavailable. Second, you must donate to no more than 5 municipalities per year. Multiple donations to the same municipality count as one. Third, you must submit the application form to each recipient municipality by January 10 of the following year for each donation.
The application procedure involves filling out the "Special Application Form for Donation Tax Credit" that arrives after completing a donation, attaching a copy of your My Number identification documents, and mailing it to the recipient municipality. Recently, more municipalities support online applications, allowing the process to be completed in minutes with a My Number Card and smartphone. The submission deadline is January 10 of the following year (sincerely), so be aware that last-minute donations in late December risk the mail not arriving in time.
Pitfalls of the One-Stop Special System and When to Choose Final Tax Return Instead
The One-Stop Special System has commonly overlooked caveats. The most frequent mistake is that if you file a final tax return for medical expense deductions or the first year of mortgage deductions, all One-Stop Special applications become void. When filing a final tax return, you must re-apply for the Furusato Nouzei donation deduction through the return. Many people lose their deductions by not knowing about this "override rule."
Additionally, under the One-Stop Special System, the entire deduction is applied to resident tax, whereas with a final tax return, it is split between an income tax refund and a resident tax deduction. The total deduction amount is the same, but since the income tax refund is deposited into your bank account within 1-2 months after filing, the final tax return may be more advantageous from a cash flow perspective. If you want to donate to 6 or more municipalities or combine with other deductions, choosing the final tax return from the start is more reliable.
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