Current itemized deductions
Assuming that the non-taxable expatriate allowances are discontinued, expatriates in China can then only avail of the current itemized deductions.
The following items summarize the itemized deductions available to Chinese nationals only:
Children’s education expenses
For children three years old and above, each parent may claim half of the deduction each. Otherwise, only one parent may claim the full amount. This is applicable to pre-school education, primary school, middle school, high school, and higher educations. For each child, the itemized duction amount is RMB 1,000.
Continuing education expenses
For a maximum period of 48 months, the parent may claim the deduction of RMB 400 per month instead of the undergraduate taxpayer. For those taking professional (masters) degrees, they can avail of deductions amounting to RMB 3,600 per year given that they present an official certificate.
Medical expenses for critical illnesses
For medical expenses greater than RMB 15,000, employees can claim the actual amount of expense given that it doesn’t exceed RMB 80,000. Moreover, the taxpayer or their spouse (or the parents of minors) should file the deduction in the same year of occurrence.
Interest expenses for mortgages
A couple (one of them) can fully claim RMB 1,000 per month for up to 240 months (20 years), given that they own the property jointly. If each of the spouses had already taken out the first mortgage before marriage, they may still each claim half of the RMB 1,000 each, or choose 100 percent for one of them. The interest expense for mortgages is applicable only to one (the first) property only.
The amount claims depend on whether the taxpayer lives in a major city, or a city with greater than or less than 1 million residents. A couple (one of them) can claim a full deduction of house rental expense if it is jointly made. If the spouses work in a different city and the couple does not own any house in either city, then they may both enjoy the full deduction applicable to them.
- Major cities or municipalities directly under the Central Government, provincial capitals, etc. – RMB 1,500 per month
- A city with a population of more than 1 million – RMB 1,100 per month
- A city with a population of less than 1 million – RMB 800 per month
Expenses on dependent elderly
Siblings split the allowable deduction of RMB 2,000 per month and the maximum claim per sibling is RMB 1,000 per month. This is applicable only if the taxpayer has parents over 60 years old or other legally dependent elderly.