This is a beta course, so its structure, chapters, and examples may continue to change.
Individual Income Tax
The core of individual income tax: work out the “taxable income”, make full use of the “special additional deductions”, and complete the “annual reconciliation and settlement” on time.
- Comprehensive income of resident individuals: wages and salaries, remuneration for personal services, royalties, and royalties for the use of rights (reconciled annually).
- Income from business operations: operating profits of sole proprietorships and sole proprietorship enterprises (calculated separately, on a different rate table).
- Occasional income / transfer of property: subject to a separate rate or a proportional rate.
- Aggregate the income: wages, remuneration for personal services, royalties, and royalties for the use of rights.
- Subtract the basic allowance: 5,000 yuan per month (60,000 yuan for the year).
- Special deductions: the three social insurances and the housing fund.
- Special additional deductions: children’s education, continuing education, serious illness treatment, housing loan interest or rent, and support for the elderly.
- Other deductions allowed by law: such as commercial health insurance and the deferred pension insurance pilot scheme (depending on the policy in force).
- Apply the rate table: comprehensive income is subject to a 7-tier progressive tax rate on the annual amount.
- Subtract tax credits: qualifying reductions and incentives.
- Timing: usually March to June of the following year; the announcement of the tax authority prevails.
- Who it applies to: taxpayers who had tax withheld during the year but need a refund or a top-up payment.
- Documents to prepare: the year’s income, the tax already withheld, the special additional deduction information, and where necessary contracts and invoices.
- Outcome: you may owe more tax or be entitled to a refund; additional tax has to be paid by the deadline, and a refund requires you to provide a receiving account.
- Forgetting to update the special additional deductions (such as new children’s education or a change in rent), which leads to overpaying or having to pay the difference later.
- Incorrectly merging occasional income or business income into comprehensive income.
- Failing to keep payroll sheets, service contracts, invoices, and other supporting documents for inspection.