Adjustment of the mode of paying individual tax for wage earners next month: advance payment according to the cumulative withholding method

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 Adjustment of the mode of paying individual tax for wage earners next month: advance payment according to the cumulative withholding method


In the Announcement issued by the State Administration of Taxation, it is clear that when paying personal income tax, the residentspersonal wages and salary income shall be withheld and withheld by the cumulative withholding method on a daily basis. If the amount of withholding tax in advance is inconsistent with the amount of tax payable in the current year, the individual resident shall, from March 1 to June 30 of the following year, handle the annual settlement and settlement of the comprehensive income to the competent tax authorities, with more tax refunds and less subsidies.

From January 1, next year, income from personal wages, salaries, remuneration for services, contributions and royalties of residents will be combined to calculate personal income tax according to the tax year.

How will this new change affect taxpayers? How to pay tax every month?

On December 20, the State Administration of Taxation issued the Announcement on the Connection of Collection and Administration of the New Personal Income Tax Law (hereinafter referred to as the Announcement), which determined the calculation methods of the above four income tax withholding.

Accumulative withholding method is adopted to prepay salary income.

In order to make the tax withheld and prepaid by residents as close as possible to their annual tax payable, and to facilitate the withholding agents and taxpayers to adapt to the tax system transformation smoothly, the Announcement clearly stipulates that when paying personal income tax, the residentspersonal wages and salary income should be withheld and prepaid by accumulative withholding method on a daily basis; the income from service remuneration, manuscript remuneration and royalties shall be collected. Prepayment shall be withheld in accordance with the basic translation of the current provisions.

According to the Announcement, if the annual withholding and pre-paid tax amount is inconsistent with the annual taxable amount, the individual resident shall, from March 1 to June 30 of the following year, handle the annual settlement and settlement of the comprehensive income to the competent tax authorities, with more tax refunds and less subsidies.

What is the accumulative withholding method? Its calculation formula is: accumulative withholding of pre-paid taxable income = cumulative income - cumulative tax exemption income - cumulative deduction expenses - cumulative special deduction - cumulative special additional deduction - cumulative other deductions determined by law. Among them, the cumulative deduction fee shall be calculated by multiplying the amount of 5,000 yuan per month by the number of months in which the taxpayer has been employed in the unit from that year to this month.

For example, when a staff member enters the post in 2015, the monthly payable salary in 2019 is 10,000 yuan, the monthly deduction fee is 5,000 yuan, and the special deduction such as three insurance and one fund is 1,500 yuan. If the staff member enjoys the special additional deduction of 1,000 yuan from January, and there is no deduction or exemption of income or tax amount, the amount of withholding tax in advance should be calculated according to the following methods:

January: (10000-5000-1500-1000) *3% = 75 yuan;

February: (10000 *2-5000 *2-1500 *2-1000 *2) *3% - 75 = 75 yuan;

March: (10000 *3-5000 *3-1500 *3-1000 *3) *3% -75-75 = 75 yuan.

In addition to wages and salaries, income from remuneration for services, contributions and royalties shall be withheld in advance by time or monthly. Income from remuneration for services, contributions and royalties shall be the balance of income minus expenses. Among them, the income from contributions is reduced by 70%.

When calculating the deduction fees, if the income from remuneration for services, contributions and royalties does not exceed 4000 yuan per time, the deduction fees shall be calculated at 800 yuan; if the income exceeds 4000 yuan per time, the deduction fees shall be calculated at 20 percent.

In this regard, the relevant person in charge of the State Administration of Taxation said that the withholding and pre-payment method of personal income tax from personal remuneration for services, contributions and royalties basically shifted the current tax laws withholding method, especially the stipulation that each income should not exceed 4,000 yuan and expenses should be calculated at 800 yuan. This method of withholding and prepayment is not only easy for withholding agents and taxpayers to understand, but also easy to operate, and convenient for withholding agents and taxpayers to operate.

Facilitate personal tax savings with high income fluctuations

Why should we adopt the method of accumulative withholding?

The relevant person in charge of the State Administration of Taxation said that the cumulative withholding method is mainly a method to determine the current tax payable by subtracting the corresponding deduction from the cumulative income of each month, calculating the cumulative tax payable according to the comprehensive income tax rate table, and subtracting the tax paid.

This method, on the one hand, for most taxpayers with only one salary and salary income, the withholding and prepaid tax at the end of the tax year is basically equal to the annual tax payable, so there is no need to go through the self-tax declaration, remittance and settlement; on the other hand, for taxpayers who need to make up and refund, the difference between the withholding and prepaid tax and the annual tax payable is relatively small and will not be. It takes up too much money from taxpayers.

Li Xuhong, director of the Institute of Finance and Taxation Policy and Applied Research of Beijing National Accounting Institute, explained that the cumulative withholding of salary and salary tax next year would not have much impact on people who had a relatively balanced monthly salary income before. But for those individuals whose incomes fluctuate greatly and fluctuate from high to low, they can indeed save taxes. Because the new tax system is to pay taxes on comprehensive income on an annual basis, the cumulative withholding method will not present the situation of high income in a previous month but low overall income with multi-tax withholding, well balancing the income fluctuation, and reducing the difference between the withholding advance and the year-end settlement and settlement.

PricewaterhouseCoopers Global Dispatch Service Partner Zhang Zhigang told Daily Economic News that special additional deduction items that employees failed to deduct in time could be reimbursed in the following months of the same tax year; if employees only get salary and salary income from one place in the tax year and complete all special additional deductions through withholding in advance, the cumulative withholding tax amount will be the same. The taxable amount of annual comprehensive income does not require annual settlement and settlement, thus reducing the burden of levying and paying.

However, Zhang Zhigang said that the applicable tax rate and amount of monthly withholding would be affected by factors such as the monthly cumulative amount of wages and salaries, the acquisition of a single large amount of income, and special additional deductions and deductions for several months. For employees who have been accustomed to the basic stability of monthly after-tax salary income, they may face floating monthly after-tax salary income in the future, so it is necessary to properly predict and manage the cash flow of individuals and families.

Source: Responsible Editor of Daily Economic News: Xu Meng-NN7485