Do kids pay capital gain taxes?

[alberto]

Does my kid (who is 5 years old) have to pay capital gain tax when selling stocks with profit? If so, is there any exempt amount?

I am considering selling some stocks with a profit of ~2,000 EUR (in our overseas broker).

Thanks!

[TokyoBoglehead]

Does my kid (who is 5 years old) have to pay capital gain tax when selling stocks with profit? If so, is there any exempt amount?

I am considering selling some stocks with a profit of ~2,000 EUR (in our overseas broker).

Thanks!

Yes. Ultimately either in Japan or your country, but not both.

This could have been avoided by using a Junior nISA.

[alberto]

Thank you!

About Junior NISA, in my case it could not have been avoided because I want to use the money for something else, and Junior NISA makes you pay taxes if you withdraw the money before the kid is 18.

[TokyoBoglehead]

Thank you!

About Junior NISA, in my case it could not have been avoided because I want to use the money for something else, and Junior NISA makes you pay taxes if you withdraw the money before the kid is 18.

That's is not the case now. However, i am now sure how the program was originally structured.

Good luck!

[sutebayashi]

Does my kid (who is 5 years old) have to pay capital gain tax when selling stocks with profit? If so, is there any exempt amount?

I am considering selling some stocks with a profit of ~2,000 EUR (in our overseas broker).

Thanks!

There is a useful rule that says you only need to report income if it exceeds 200,000 yens worth, if I am not mistaken.
So if you keep your (son’s) yen profits within that amount you can keep the 40,000 yen that would be due in tax.

[TokyoBoglehead]

Does my kid (who is 5 years old) have to pay capital gain tax when selling stocks with profit? If so, is there any exempt amount?

I am considering selling some stocks with a profit of ~2,000 EUR (in our overseas broker).

Thanks!

There is a useful rule that says you only need to report income if it exceeds 200,000 yens worth, if I am not mistaken.
So if you keep your (son’s) yen profits within that amount you can keep the 40,000 yen that would be due in tax.

This is the exception for full-time Japanese employees.... And you still need to file a tax return and pay 5% tax....

[sutebayashi]

That sounds like the rule I am thinking of, but my understanding is that one need not file a tax return if this non-salary income doesn’t exceed 200,000, and by extension not need to pay any tax on that income either. So I was thinking a 5 year old with no salary would effectively be looking at a 200,000 yen equivalent annual profit limit for capital gains before needing to report any income.

What 5% rate do you refer to?

[TokyoBoglehead]

That sounds like the rule I am thinking of, but my understanding is that one need not file a tax return if this non-salary income doesn’t exceed 200,000, and by extension not need to pay any tax on that income either. So I was thinking a 5 year old with no salary would effectively be looking at a 200,000 yen equivalent annual profit limit for capital gains before needing to report any income.

What 5% rate do you refer to?

The + 5% local tax you have to pay regardless of the 200,000 yen exception. The 200,000 exception is only for the 15% income tax.

[Beaglehound]

I was under the impression that capital gains can be accounted for as ordinary income, in which case a kid with no other income would be off the hook, assuming the gain is under the personal exemption limit (is it 480k these days?). I may be wrong though.

[TokyoBoglehead]

I was under the impression that capital gains can be accounted for as ordinary income, in which case a kid with no other income would be off the hook, assuming the gain is under the personal exemption limit (is it 480k these days?). I may be wrong though.

No, but in your defense most people seem to misunderstand this rule.

Does not apply to kids.

https://old.reddit.com/r/JapanFinance/c ... oth_a_tax/