What Is a Withholding Tax Certificate (Gensen Choshuhyo)? How to Read It, When You Get It, and How to Submit It When Changing Jobs

The withholding tax certificate (gensen choshuhyo) you receive at year-end or when leaving a job—many people just file it away without knowing where to look. The withholding tax certificate is an important document that shows your annual income and the income tax you paid, and it is needed for job changes, tax returns, loan screenings, and more. This article clearly explains how to read the withholding tax certificate, when you receive it, how to submit it when changing jobs, and how to have it reissued.

What is a withholding tax certificate?

A withholding tax certificate is a document that states the total salary paid by a company over one year (January 1 to December 31), the amount of income tax paid, and the various deductions applied. "Tax withholding" is the system by which a company deducts income tax from an employee's salary and pays it on the employee's behalf; the withholding tax certificate is a summary of one year's breakdown of that.

Companies are obliged to issue the withholding tax certificate, and in principle it is issued by January 31 of the following year, after the year-end adjustment; if you have left the company, it is issued within one month of your departure date. Note that because the withholding tax certificate is a document concerning income tax, it does not list resident tax.

How to read it | four key items

There are many items listed, but the four amounts you especially want to check are the following.

1. Payment amount

This is the total of salary, bonuses, and various allowances paid by the company over one year—the so-called "gross annual income." It is the amount before taxes and social insurance are deducted and does not include the tax-exempt commuting allowance. If you joined mid-year, the amount paid by your previous employer is also included.

2. Amount after the employment income deduction

This is the amount after subtracting the "employment income deduction" (a deduction corresponding to an employee's necessary expenses) from the payment amount. This figure is the "employment income" that serves as the basis for calculating income tax, and it is sometimes simply called "income."

3. Total amount of income deductions

This is the total of the various deductions subtracted in addition to the employment income deduction. It includes the social insurance deduction, life insurance deduction, spouse deduction, dependent deduction, basic deduction, and so on. The results of the year-end adjustment are reflected here.

4. Amount of tax withheld

This is the total income tax paid over one year. It is calculated by applying the tax rate corresponding to income to the taxable income obtained by subtracting the "total amount of income deductions" from the "amount after the employment income deduction."

Note: On a withholding tax certificate issued before the year-end adjustment—for example, when you leave mid-year—item 2, the "amount after the employment income deduction," and item 3, the "total amount of income deductions," are left blank. This is because the year-end adjustment has not been completed.

When you receive the withholding tax certificate

The issuance timing differs depending on the type of withholding tax certificate.

• Withholding tax certificate for employment income: after the year-end adjustment, from December to the following January. It is often received together with the December pay slip.
• Withholding tax certificate for retirement income: within one month of leaving, if retirement pay was paid.
• Withholding tax certificate for public pensions, etc.: issued around mid-January.

How to submit it when changing jobs

If you change jobs, you submit the withholding tax certificate for employment income from your previous job to your new workplace. Your new employer needs this document in order to perform the year-end adjustment including the salary from your previous job.

1. Receive the withholding tax certificate from your previous job at (or after) departure
2. Submit it to the HR/general affairs department at your new job
3. Your new employer performs the year-end adjustment by combining it with the previous job's amount

If you received salary from both your previous and new jobs within the year, your new employer cannot correctly perform the year-end adjustment without the previous job's withholding tax certificate. Be sure to receive it when you leave and store it carefully.

Situations where the withholding tax certificate is needed

• Year-end adjustment at your new job
• Tax return (medical expense deduction, the first year of the mortgage deduction, when you have side-job income, etc.)
• Income proof for a mortgage, car loan, and the like
• Application for a nursery school
• Checking the deduction cap for furusato nozei (hometown tax donations)

Note that submitting the withholding tax certificate is no longer required for a tax return, but since you copy its contents to prepare the return, you need to have it on hand.

How to have the withholding tax certificate reissued

Even if you lose your withholding tax certificate, it can be reissued. Because the company is obliged to issue it, you can request reissuance as many times as needed.

• Request from the company, whether employed or after leaving: ask the HR/general affairs/accounting department of your employer (or your previous job if you have left) to reissue it.
• Download it yourself if issued electronically: if your company issues it electronically, you may be able to download past copies yourself. Check before requesting.
• If the company has gone bankrupt: ask the bankruptcy trustee to issue it, or submit a "report on non-issuance of a withholding tax certificate" to the tax office and consult them.

Reissuance can take effort and time. Because it is an important document that proves your income and tax paid, it is recommended to keep several years' worth.

Summary

The withholding tax certificate is an important document that shows your annual income, income tax amount, and deductions for the year. Grasp the basics of how to read it and store it so you can use it right away when needed.

• The four items to look at are the payment amount, the amount after the employment income deduction, the total amount of income deductions, and the amount of tax withheld
• The withholding tax certificate for employment income is issued from December to the following January, after the year-end adjustment
• When changing jobs, submit the previous job's withholding tax certificate to your new employer for the year-end adjustment
• It is also needed for tax returns, loan screenings, nursery school applications, and more
• Even if lost, it can be reissued by requesting it from the company

Understanding the meaning of the withholding tax certificate you receive each year makes it easier to grasp your income and taxes. Check its contents so you won't be caught off guard during a job change or various procedures.