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Tax Confusion
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Aelric



Joined: 16 Dec 2009
Posts: 72

PostPosted: Sun Mar 30, 2014 11:28 am    Post subject: Tax Confusion Reply with quote

So, even if this has been asked before, I think I need a detailed breakdown just to be clear. I'm trying to determine what my take home pay is every month.

So, my salary is going to be 16000. acording to what I've read, my tax rate is 25%, but not of the total, but rather from that adjusted by -4800 as an expat deduction, then another quick deduction by my income level of -1005. Basically it becomes 16000-4800=11200*.25=2800-1005=1795. So, 1795 should be my taxes, right?

Now, second part of the question: that does not include required social insurance payment, right. So I'll have to pay, I believe, 1327 each month on my social insurance, which is the half that employees pay while the company pays the other half, right? So, that means my total taxes and insurance should come to about 3122. Now, to be clear, I'm not 100% on these numbers, I'm getting some of my information from my own calculations and some from this calculator on here:

http://www.sjgrand.cn/individual-income-tax-calculator

So, the real question is this: out of my 16000, I should expect to have about 3000 taken out of it, right? and the social thing might as well be a tax because it's unavoidable, right?

Also, we get most of these taxes back when we leave the country, right? How about paying tax in the US for this income. In my two years in Korea, I used up my '2 years tax free' thing, and in Thailand for three years I wasn't technically legal, so it's better if I never mention that income. I've heard that unless it's over $80,000USD per year, I don't have to declare it, but there are conflicting accounts on that one. There are conflicting accounts on all of this.

It seems like a rather high rate for this level of income, but I guess it's a nice salary by Chinese standards. Anyway, any verification or clarification would be appreciated.
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Guerciotti



Joined: 13 Feb 2009
Posts: 660
Location: In a sleazy bar killing all the bad guys.

PostPosted: Sun Mar 30, 2014 2:11 pm    Post subject: Reply with quote

I also use the S.J. Grand site. For further confusion, try this one:

http://shanghaihalfpat.com/income-tax-for-foreigners-in-china

One point I want to make: does your contract say you will pay your income taxes, or all (both) the employee-paid taxes? That might make a difference.

Ask someone at the school. Hopefully you get a better answer than
"The tax is the same for all foreigners."

I agree this should be a no-brainer but TIC.

Hell I wish I could figure out the net on my future salary! I prefer a net salary, but the school I'm looking at quotes gross.

OK, next question @ U.S. taxes. You're tax free on foreign income up to @ $93,000 if you stay out of the country for 335/365 days. So ... yea.
Otherwise, you can ask the school for proof of your Chinese taxes paid and pass that along to the IRS as a pdf I guess to avoid double taxation. Your school might maybe perhaps possibly understate your income to reduce the tax, but so long as you have that double red stamped official paper, you're good.

Ummmm no, AFAIK we will get nada - that's none of this money back ever. Sorry, that's my understanding. I sincerely hope I am wrong.

Cool
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choudoufu



Joined: 25 May 2010
Posts: 3325
Location: Mao-berry, PRC

PostPosted: Sun Mar 30, 2014 2:47 pm    Post subject: Re: Tax Confusion Reply with quote

Aelric wrote:
Also, we get most of these taxes back when we leave the country, right? .......I've heard that unless it's over $80,000USD per year, I don't have to declare it....



no on the first part. you don't get your taxes back. you *might* get
back some of your social security contributions. in the very few places
where you pay that, it should be 11% of your salary, covering retirement
and health and unemployment. of that, 8% (of your salary) is supposed
to be returned if you file for it. i'm not aware of anyone getting that
refunded.

no on the second part. the us tax system is evil. you are required to
file tax returns on all income (legal or illegal) earned anywhere in the
world. the current exemption of overseas income is over $90K. but
you must file a tax return in order to claim the exemption. otherwise,
upon return, or on applying for a new passport, or just about any
interaction with the gub'mint, the minions of sauron could discover
you haven't filed taxes for xx years. now you got interest and penalties
to pay. just file your damn taxes, ok? it's free, takes less'n an hour.
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ESLreturnee



Joined: 06 Mar 2014
Posts: 10

PostPosted: Sun Mar 30, 2014 11:29 pm    Post subject: Reply with quote

The taxes confuse me, too. As do the rules on whether or not we're required to pay social insurance. Some sources say foreigners are exempt and some say we're required to pay out.
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NoBillyNO



Joined: 11 Jun 2012
Posts: 1762

PostPosted: Mon Mar 31, 2014 12:12 am    Post subject: Reply with quote

There is a 9000 $ limit ... any more than that you should file... not sure what the penlites are but since proof over in China is hard to get and the gov will only release earnings on file for major tax cases, you pretty safe in reporting of back logged filings if you made less than 9K.... but just go to the website and read the regs...the overseas exemption is currently in effect but may not be for long... the USA needs money and as they often due, they go after easy targets, such as wage earners and service industry folk.
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Bud Powell



Joined: 11 Jul 2013
Posts: 1367

PostPosted: Mon Mar 31, 2014 1:51 am    Post subject: Reply with quote

I am unsure if this applicable (or even necessary to mention), but tax form 2555 says that Americans working overseas have a $97,600.00 exclusion.
(http://www.irs.gov/pub/irs-pdf/f2555.pdf).
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NoBillyNO



Joined: 11 Jun 2012
Posts: 1762

PostPosted: Mon Mar 31, 2014 3:05 am    Post subject: Reply with quote

there is an exclusion and as I understand the code if you make under 9K usd you don't need to file but over that even with an exclusion, you need to fie.
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Bud Powell



Joined: 11 Jul 2013
Posts: 1367

PostPosted: Mon Mar 31, 2014 3:23 am    Post subject: Reply with quote

NoBillyNO wrote:
there is an exclusion and as I understand the code if you make under 9K usd you don't need to file but over that even with an exclusion, you need to fie.


I wonder if that could be keeping FT pay at public universities low. Some Public universities in Jiangsu are paying teachers by direct bank deposit, but I've always been paid cash. I have NEVER been able to get an FAO to give me a wage statement for me to submit to the IRS. And I KNOW the schools have never paid income taxes on me.
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Aelric



Joined: 16 Dec 2009
Posts: 72

PostPosted: Mon Mar 31, 2014 5:23 am    Post subject: Reply with quote

Well, I'm confident that I didn't need to file while in Thailand, then, because I didn't make nearly that much, plus I bounced between crappy school to crappy school each semester while I was there and thus never got paid for the summers, meaning I made even less. Well below 9K. I started filing again last year due to a part time Job in California I took at a language center and I didn't get any red flags or fines or notices, so I'll just quietly let that segment of my life float by as under the required limit for now and file from this point onward.

The social insurance is what is throwing me. It's almost as high as the total regular taxes and unless that is going to my medical insurance or I get a refund for it, I assume I'm not getting any benefit out of it. I mean, it's not the worst cost, I'll still be getting a decent salary for Panyu, Guangzhou (where my center is going to be. Yes, jeer now, I'm working at Wall Street English starting next month).

As far as stipulations in my contract, I'm actually awaiting it in the mail now, I've got the job but I'm not technically committed yet, so I'll review it once it arrives before I head to the embassy. Hopfully it's clear things up, but if any of you work at Wall Street, maybe you could clear it up with what they take out of your paycheck each month?
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NoBillyNO



Joined: 11 Jun 2012
Posts: 1762

PostPosted: Mon Mar 31, 2014 5:28 am    Post subject: Reply with quote

also determined by the length of time while in the states.
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johntpartee



Joined: 02 Mar 2010
Posts: 3231

PostPosted: Mon Mar 31, 2014 7:41 am    Post subject: Reply with quote

Quote:
there is an exclusion and as I understand the code if you make under 9K usd you don't need to file but over that even with an exclusion, you need to fie.


Wrong. Even if you don't earn anything, you are still required to file; doesn't matter if you're home or abroad.

Quote:
I am unsure if this applicable (or even necessary to mention), but tax form 2555 says that Americans working overseas have a $97,600.00 exclusion.


Correct. Exclusion from taxable income, NOT exclusion from filing a return.
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choudoufu



Joined: 25 May 2010
Posts: 3325
Location: Mao-berry, PRC

PostPosted: Mon Mar 31, 2014 8:12 am    Post subject: Reply with quote

Aelric wrote:
....I assume I'm not getting any benefit out of it. I mean, it's not the worst cost, I'll still be getting a decent salary for Panyu, Guangzhou ...

.... but if any of you work at Wall Street, maybe you could clear it up with what they take out of your paycheck each month?


why not "reach out" to a teacher currently on location? they can tell you
exactly how much will be deduced. no point in asking random strangers
in random provinces at random schools about their deductions.

if the school won't give you a contact email, well...............
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Aelric



Joined: 16 Dec 2009
Posts: 72

PostPosted: Tue Apr 01, 2014 4:37 pm    Post subject: Reply with quote

I asked my HR dept about it, my total taxes and social insurance comes out to this figure: 16250(GROSS) –1334.13(SI) - 1523.97(TAX) = 13391.9(NET)


So, my original figure was about right, and it seems to be what the consensus here is.

Still, the whole taxing only a part of your incomes, but jacking up the rate seems like a needless complication. Why not lower the percentage and tax the whole? I dunno, taxes man, who the hell really understands them except the folks receiving them.
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MisterButtkins



Joined: 03 Oct 2009
Posts: 1215

PostPosted: Thu Apr 03, 2014 12:43 pm    Post subject: Reply with quote

Aelric wrote:


Still, the whole taxing only a part of your incomes, but jacking up the rate seems like a needless complication. Why not lower the percentage and tax the whole? I dunno, taxes man, who the hell really understands them except the folks receiving them.


This is the way income taxes are done everywhere. Basically, since the income tax is higher for higher income brackets, they have to calculate it that way to prevent people staying in a lower bracket to make more money. I don't feel like typing the math out, but I'm sure you can find an example online.

Consider the example of someone who makes 101 k a year and has to pay a higher rate than someone who makes 99 k a year. If they just applied the gross amount to the taxation calculation, the 101k person might end up with less money to take home than the 99k person. Do you see? So basically different portions of the income get different tax rates.
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tin man



Joined: 18 Jun 2010
Posts: 77

PostPosted: Thu Apr 03, 2014 2:32 pm    Post subject: Reply with quote

sounds like it is also a good idea to keep less than 10K in the bank overseas to avoid having to file your bank with the govt:

https://www.ffiec.gov/bsa_aml_infobase/documents/forms/f9022-1_fbar.pdf
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