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Salary deductions

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Re: Salary deductions

Postby Abacus » 15 Jul 2016, 13:27

regarding the benefit of rent as an expense - Everyone gets a standard income exemption of 85,000 and a standard deduction of 90,000. You can use your rent expense to replace the 90K standard deduction in addition to other itemized deductions (pg 52 of the Taiwan tax booklet). So if your yearly rent is higher than 90K or if you have other deductions then it is a benefit to you. It is a little unclear however if you might get your landlord in trouble if you claim rent as a deduction. Some (or many) landlords don't claim rental income as income and I think the tax office will contact your landlord about this income and expect them to pay taxes. You aren't doing anything wrong but this could cause poor relations between you and the landlord and either your rent will go up or you won't be able to renew your lease. Just a word of caution.

In addition to the 85,000 and the 90,000 you also get a 128,000 salary/wages deduction. Overall it is about 300K of non-taxable income for a single tax filer with no dependents.

The benefit of your parents being dependent on you is an additional 85,000 of non taxable income (age 60-70) or 127,000 (age 70+) per parent. That is a refund of 10-15,000/parent if you are in the 12% tax bracket. I do not know what documentation is needed to claim them as dependents since I do not do this. My parents are 60 and 62 now but I would feel a little conflicted about claiming them since I don't support them financially at all. Perhaps later on but both still work. This was one thing that came up in an off topic conversation while I was recently at home. Health insurance (US) is still way too expensive for them until they reach age 67 (Medicare) for them to not work (I didn't ask any questions nor will I offer advice).

You get your money back the following August after you file your taxes. So for the 2015 income taxes you get your refund in August 2016.

ilikecoffee listed all of the possible deductions but those are only if your company provides you with something like housing. The deductions from your paycheck should only be for income taxes, NHI (around <1000NT if you earn 60,000/mo), and labor insurance (a little more than NHI I think). Pension (and the deduction for it) is only available to those that are married to a Taiwanese spouse AFAIK.

The numbers above are from the 2015 tax booklet. All deductions have increased a little this year but I don't have that booklet linked yet.
https://www.pwc.tw/en/publications/asse ... k-2015.pdf
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Re: Salary deductions

Postby headhonchoII » 15 Jul 2016, 13:58

Proof for support of overseas parents is dependent on where you come from as to what they want to see. In practice I have been able to get deduction from a notarized declaration from my home country. aFAIK taiwanese do not need to show money transfer to parents to claim this deductible.
Good summary Abacus!
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Re: Salary deductions

Postby afterspivak » 15 Jul 2016, 14:26

Yes, this a very good summary. To claim lineal ascendants (aka parents!) I have needed to provide proof that I've wired funds to them--and that these funds match or exceed the amount claimed. At least this is what the tax office in Taipei City has requested--I have heard that other tax offices elsewhere in Taiwan will just take your word for it!

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Re: Salary deductions

Postby lostinasia » 15 Jul 2016, 14:54

afterspivak wrote:Yes, this a very good summary. To claim lineal ascendants (aka parents!) I have needed to provide proof that I've wired funds to them--and that these funds match or exceed the amount claimed. At least this is what the tax office in Taipei City has requested--I have heard that other tax offices elsewhere in Taiwan will just take your word for it!

Yeah, I haven't needed that out where I live: photocopies of their passports, with birth dates; my birth certificate, with their names on it; and some kind of evidence they were financially active in the relevant tax year - we've just printed out scans of an insurance bill that has both their names on it. No notarization or anything.
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Re: Salary deductions

Postby SuperS54 » 15 Jul 2016, 16:10

I haven't had to provide proof of transferring funds and would strongly object if it is requested as it is not a requirement for Taiwanese citizens and it's supposed to be a non-discriminatory system...I do have to provide proof of life every year, actually every 2 years if you time it correctly, I get a copy of my parent's car insurance certificate for this year which "proves" they are still around and can use it for 2015 taxes processed this year and also 2016 taxes processed next year, I'll get a fresh one in early 2017 to do another 2 years. Taiwanese don't have to do this as they have a Hukou and ID card so con't complain too much on this one.

Regarding the age requirement, your parents do not have to be 60+ in order to claim as a dependant, if they are not/unable to work they are dependants and you can claim with proof. Similarly other family members be they in university or what not can be processed as dependants.
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Re: Salary deductions

Postby headhonchoII » 15 Jul 2016, 18:35

I will also echo the fact that Taipei city tax office asked for more documentation whereas some of the other tax offices requirements were far more lax.
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Re: Salary deductions

Postby afterspivak » 15 Jul 2016, 19:12

As others have mentioned, I've also provided the tax office with proof that my parents are alive. Their bank back home is easily able to provide a corroborative letter for this purpose.

I presume that most of you who are claiming deductions for lineal ascendants while *not* providing proof that you've wired money to parents are living and filing taxes outside of Taipei City. AmIright?

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Re: Salary deductions

Postby lostinasia » 15 Jul 2016, 19:36

afterspivak wrote:I presume that most of you who are claiming deductions for lineal ascendants while *not* providing proof that you've wired money to parents are living and filing taxes outside of Taipei City. AmIright?

Yes, he says, quietly hoping that the less said about this the better, because any changes in policy will cost me a lot of money.
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Re: Salary deductions

Postby meldrew » 17 Jul 2016, 11:17

There's so much great information here, thanks to all the above posters.

I feel slightly overwhelmed by what needs to be done to maximise my return on taxes but it's great that they have so many alloances. I've not read through that PDF tax guide. I won't bother until closer to the time I arrive.

I, most likely, wont be in Taipei City.

Is there a set date when I would need to file my taxes to get the rebate in the Ausgust?

Is it just one document/package that I can pick up from a local tax office to fill out everything?

I don't mind providing financial information if needed because I have documented proof anyway and I will be sending money to them on a monthly basis (presuming it's quite easy to send money home in TW.
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Re: Salary deductions

Postby best_intentions » 22 Jul 2016, 10:04

Just to add regarding deducting for money sent to parents- I only need to show a photocopy of a 'old fashioned' bank check (along with passport copy). They just take your word that the money is deposited.

Also they allow for deducting for my living grandmother.
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