Individual tax: Q&A on annual settlement of personal income tax

1. What options are available to taxpayers for the annual settlement of their comprehensive income for individual income tax?

(1) Handle the annual settlement on their own.

(2) Handle it on behalf of themselves through their employer (including the organization that withholds and prepays individual income tax on income from remuneration for labor services under the cumulative withholding method).

(3) Entrust tax-related professional service companies or other organizations and individuals to handle, for which a signed authorization letter with the trustee is needed.

2. What channels are available to taxpayers for the annual settlement of their comprehensive income for individual income tax?

The first is to handle it online. It is recommended that taxpayers handle their annual settlement through the Individual Electronic Tax Services, especially the Individual Income Tax APP. The tax authorities provide a pre-filling service for return blanks, and taxpayers can quickly handle the annual settlement after choosing to use the pre-filling service and confirming the truthfulness, accuracy, and completeness of the declared data.

In addition, resident individuals who have overseas income can select the overseas income declaration function on the webpage of Individual Electronic Tax Services to handle the annual settlement.

The second way is to handle it by mail. If taxpayers are not able to use the Internet, they can also mail the declaration form for annual settlement.

The third is to do it in the taxpayer service hall. If taxpayers are not able to use the Internet or mail, they can also go to the taxpayer service hall of the competent tax authority for annual settlement.

3. What documents do taxpayers need to submit and how long do they need to keep them for the annual settlement of their comprehensive income for individual income tax?

For annual settlement, taxpayers are required to file an annual settlement sheet. If taxpayers need to amend their basic information and add new deductions or tax benefits, they should also file the relevant information according to the regulations.

In order to facilitate the follow-up service and management, taxpayers and the entities that handle the annual settlement on their behalf need to keep the relevant documents of the annual settlement for five years from the date of the end of the annual settlement period.

4. A taxpayers earns less than 60,000 yuan in income, however, they have an overseas income. Can the taxpayer use the simplified method to declare?

No. Individuals who have received income from abroad are required to use the Annual Self-Tax Return for Individual Income Tax (Form B) and the Detailed Individual Income Tax Credit for Income from Abroad for filing the declaration.

5. How do you choose the place for the annual settlement of comprehensive income?

The tax authorities responsible for accepting taxpayers' annual settlement declarations are divided into three main situations:

First, during the annual settlement period, the taxpayers themselves or the trustees handle the annual settlement for the taxpayers on behalf of the taxpayers.

1. For whom there is a serving and employed entity, the declaration is made to the competent tax authority in the place where the serving and employed entity is located; for whom there are two or more serving and employed entities, the declaration is chosen to be made to one of them.

2. For whom there is no employment entity, the declaration shall be made to the tax authority in charge of the place of domicile, habitual residence, or main source of income.

Second, during the annual settlement period, if the employer is responsible for handling the annual settlement on behalf of the taxpayer during the annual settlement period, the declaration shall be made to the competent tax authority of the employer.

Third, after the completion of the annual settlement, the tax authorities will determine the competent tax authorities for taxpayers who have not yet applied for the annual settlement.

6. How is the annual bonus pre-declared? How is it included in the annual settlement of Individual Income Tax?

If taxpayers have only one annual bonus that is taxed separately, the bonus can be excluded from the annual settlement.

If taxpayers have more than one annual bonus, taxpayers can only choose one excluded from the annual settlement, and the others should be included in the comprehensive income for tax calculation.

When taxpayers use the Internet to declare, taxpayers can choose to incorporate the separately taxable annual bonus into taxpayers comprehensive income in the [Selection of Taxation Method for Bonus] under [Salary] in the declaration form.

Please note that the taxable amount will generally change when taxpayers change the tax calculation method of the annual bonus. Taxpayers can choose the appropriate tax calculation method according to the changes before and after the adjustment.

7. What is remuneration for labor services for individual income tax purposes?

Income from remuneration for labor services refers to income from labor services, including design, decoration, installation, drafting, laboratory, testing, medical, legal, accounting, consulting, lecturing, translating, reviewing, painting, calligraphy, sculpting, film and television, sound recording, video recording, performance, acting, advertisement, exhibition, technical services, referral services, brokerage services, agency services, and other income from labor services.

8. What is the prepayment method for commission income earned by insurance marketers and securities brokers?

For commission income earned by insurance marketers and securities brokers, the withholding entity shall calculate the withholding individual income tax in accordance with the cumulative withholding method.

9. What are the special deductions that can be subtracted from comprehensive income?

Special deductions include social insurance fees such as basic old-age insurance, basic medical insurance, unemployment insurance, and housing provident funds paid by individual residents in accordance with the scope and standard stipulated by the state.

10. How do taxpayers get information about their insurance and benefits?

If taxpayers' basic old-age insurance, basic medical insurance, unemployment insurance, and housing provident fund are paid through taxpayers' entity (or entrusted to taxpayers' entity), they can check their pay stubs or ask taxpayers' entity for inquiry. If taxpayers are paying on their own, the amount of their contribution will be indicated on the bill.

Taxpayers can also inquire at the social (medical) insurance office window where taxpayers are insured, at the social (medical) insurance self-service inquiry machine, or by logging on to the National Social Insurance Public Service Platform (http://si.12333.gov.cn, or the online social insurance service platform of taxpayers' province) or calling the 12333 hotline service number.

11. How do taxpayers get information about commercial health insurance?

If the taxpayer has eligible commercial health insurance, check the appropriate documentation from the time of purchase or fee payment, or consult with the insurance company from which the insurance was purchased.

12. How do taxpayers check whether the donor is eligible for a pre-tax deduction for public welfare donations?

Taxpayers can check the list of public welfare social organizations qualified for pre-tax deduction of public welfare donations and the list of public welfare mass groups through the official websites of finance, taxation, and civil affairs departments. The qualification for pre-tax deduction for public welfare donations is valid nationwide for three years.

13. What are the circumstances that can result in a tax refund audit failing or a tax refund failing?

If one of the following circumstances exists, it may result in the tax refund audit failing or the tax refund failing:

(1) Taxpayers' identity information is incorrect;

(2) The bank account information taxpayers submitted is incorrect or invalid, resulting in the tax not being refunded;

(3) There are errors or doubts in taxpayers' declaration data;

(4) The tax authority finds that there is information needed for further verifying with taxpayers, but taxpayers have not provided contact information or the contact information provided is incorrect, so it is not possible to contact taxpayers;

(5) The tax authority requires information confirmation from taxpayers, but taxpayers have not yet confirmed or explained it.

14. Can taxpayers check the progress of their individual income tax refund?

Yes. After submitting the tax refund application, taxpayers can inquire about the progress of the tax refund through the Individual Income Tax APP and the web terminal of the Individual Electronic Tax Services. If the declaration is made by mail or at the Taxpayer Service Hall, the refund can also be inquired about through the above channels. The system will prompt a reason as well as the solution for those who fail to pass the refund.

15. What does "exempt from a declaration" mean at the last step of the annual settlement?

Under the premise of prepayment of individual income tax in accordance with the law, if the annual income of a taxpayer is less than 120,000 yuan with overdue taxes, or the annual income of a taxpayer is more than 120,000 yuan but the amount of overdue tax is less than 400 yuan, the taxpayer is exempted from the annual settlement, he/she can choose the "exempt from declaration" during the operation of the settlement declaration and does not need to pay the tax after the submission.

16. How do taxpayers handle the annual settlement through the Individual Income Tax APP?

If the taxpayer needs to pay overdue tax and does not meet the circumstances that can be exempted from annual settlement, the annual settlement declaration should be completed before June 30 and the tax should be paid in time. Taxpayers can make tax payments through online banking and non-bank payment organizations (third-party payment such as WeChat, Alipay, Unionpay, etc.) after logging in to the Individual Income Tax APP. If the tax payment is made in instalments, it is necessary to use the "partial payment" function provided by the system.

Taxpayers are required to pay all taxes within the declaration period, and late payment fees will be incurred for any taxes not paid in time.

17. How do taxpayers know if the annual settlement has been finished?

Taxpayers can check the declaration through the Individual Income Tax APP and the website of the Individual Electronic Tax Services. If the declaration record is displayed on the "Completed" page, it means that the annual settlement has been completed. If the declaration record is displayed on the "Not Completed" page, it means that the annual settlement has not been completed and needs further operations.

18. Which declaration method should taxpayers choose for the special addition deduction when they ask their employer to do the annual settlement on their behalf?

If taxpayers choose to entrust their employer to declare the annual settlement on their behalf, please check the special additional deduction information that they have already declared in the Individual Income Tax APP and the webpage of Individual Electronic Tax Services. Confirm that the declaration method is "through withholding entity," and select the entity that will declare the annual settlement on their behalf.