VI What is family deduction? What is the current family deduction level? Who are the dependents in family deduction? How many dependents can a person have when calculating family deduction according to current regulations? Let’s find out more with Pham Consult!
What is family deduction? What is the current family deduction level?
(1). What is family deduction?
According to Article 9 of Circular 111/2013/TT-BTC amended in Clause 6, Article 25 of Circular 92/2015/TT-BTC, family deductions are:
Amounts deducted from taxable income of individuals before determining taxable income from salaries and wages.
In case a resident individual has both income from business and income from salaries and wages, a one-time family deduction is calculated on the total income from business and from salaries and wages
(2). The latest family deduction level currently
Pursuant to Article 1 of Resolution 954/2020/UBTVQH14, the latest family deduction level currently is as follows:
Family deduction level
Adjusting the family deduction level prescribed in Clause 1, Article 19 of the Personal Income Tax Law No. 04/2007/QH12, which has been amended and supplemented by a number of articles under Law No. 26/2012/QH13, as follows:
- The deduction level for taxpayers is VND 11 million/month (VND 132 million/year);
- The deduction level for each dependent is VND 4.4 million/month.
Thus, the deduction level for taxpayers is VND 11 million/month (VND 132 million/year) and the deduction level for each dependent is VND 4.4 million/month.
Who are the dependents subject to family deduction?
Pursuant to Point d, Clause 1, Article 9 of Circular 111/2013/TT-BTC, dependents eligible for family deductions include:
– Children: biological children, legally adopted children, illegitimate children, stepchildren of the wife, stepchildren of the husband, specifically including:
+ Children under 18 years old (calculated by full month).
Example 10: Mr. H’s child born on July 25, 2014 is considered a dependent from July 2014.
+ Children aged 18 and over with disabilities and unable to work.
+ Children studying in Vietnam or abroad at university, college, vocational high school, vocational training, including children aged 18 and over studying at high school (including the time waiting for university entrance exam results from June to September of grade 12) have no income or have an average monthly income in the year from all sources of income not exceeding VND 1,000,000.
– The taxpayer’s wife or husband meets the conditions at Point d, Clause 1, Article 9 of Circular 111/2013/TT-BTC.
– The taxpayer’s biological father, biological mother; father-in-law, mother-in-law (or father-in-law, mother-in-law); stepfather, stepmother; legal adoptive father, adoptive mother of the taxpayer meets the conditions at Point d, Clause 1, Article 9 of Circular 111/2013/TT-BTC.
– Other individuals without support that the taxpayer is directly supporting and meets the conditions in Point d, Clause 1, Article 9 of Circular 111/2013/TT-BTC include:
+ Full brothers, full sisters, full siblings of the taxpayer.
+ Paternal grandfather, paternal grandmother; maternal grandfather, maternal grandmother; full aunt, full uncle, full uncle of the taxpayer.
+ Full nieces, nephews of the taxpayer including: children of full brothers, full sisters, full siblings.
+ Other people who must directly support according to the provisions of law.
How many dependents can a person have when calculating family deductions?
Pursuant to Point c, Clause 1, Article 9 of Circular 111/2013/TT-BTC, the following provisions are made:
Deductions
- Family deductions
- c) Principles for calculating family deductions
c.2) Family deductions for dependents
c.2.1) Taxpayers are entitled to family deductions for dependents if they have registered for tax and have been granted a tax code.
c.2.2) When taxpayers register for family deductions for dependents, the tax authority will grant them a tax code and temporarily calculate family deductions for the year from the date of registration. Dependents who have been registered for family deductions before the effective date of this Circular will continue to be entitled to family deductions until they are granted a tax code.
c.2.3) In case the taxpayer has not calculated the family deduction for dependents in the tax year, the deduction for dependents will be calculated from the month when the taxpayer makes the tax finalization and registers the family deduction for dependents. For other dependents, according to the instructions in Section d.4, Point d, Clause 1 of this Article, the deadline for registering the family deduction is December 31 of the tax year. After the above deadline, the family deduction will not be calculated for that tax year.
c.2.4) Each dependent can only be deducted once for one taxpayer in the tax year. In case many taxpayers have the same dependent to support, the taxpayers can agree to register the family deduction for one taxpayer.
Thus, according to the above regulation, each dependent can only be deducted once for a taxpayer in a tax year. There is no regulation limiting the maximum number of dependents that a person can have when considering family deductions in personal income tax.
