IIT Comprehensive Income Annual Reconciliation and Settlement Q&A (2024 Tax Year)

2024年度个人所得税综合所得汇算清缴问答

Source (Chinese): STA Policy Database — 政策解读 (Income Tax Division, February 26, 2025)

English translation: Independent translation. Not an official government translation.

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Q1: What is the annual reconciliation and settlement?

Answer: The annual reconciliation and settlement refers to the process whereby, after the end of a tax year, a taxpayer aggregates the comprehensive income received during that tax year, deducts the standard deduction of RMB 60,000, as well as specific deductions, special additional deductions, other deductions determined in accordance with law, and eligible charitable donations, applies the comprehensive income IIT tax rates and subtracts the quick deduction, then subtracts any tax reductions or exemptions to calculate the actual annual tax liability, and finally subtracts the taxes already prepaid to determine the tax refund or supplementary payment due for that tax year, and files a tax return with the tax authorities and settles the tax within the statutory time limit. In short, it is the process of "checking for omissions, aggregating income and expenses, calculating on an annual basis, and refunding or supplementing the difference" based on taxes already prepaid during the year. This is an inherent requirement of the comprehensive-plus-schedular individual income tax system that China established beginning in 2019, and is also an international common practice.

The following points should be noted:

First, the entities subject to the annual reconciliation are limited to resident individuals as defined under the IIT Law. Non-resident individuals are not required to file the annual reconciliation.

Second, the scope and content of the annual reconciliation cover only the four categories of income included in comprehensive income: wages and salaries, remuneration for personal services, author's remuneration, and royalties. Schedular income such as interest/dividend income and property rental income is not included in the annual reconciliation. At the same time, income that, pursuant to relevant regulations, may be excluded from the combined calculation of comprehensive income is also not within the scope of the annual reconciliation.

Q2: Why is it necessary to file the annual reconciliation?

Answer: First, the annual reconciliation better protects taxpayers' legitimate rights and interests. For example, certain deduction items — such as the major medical expense deduction among the special additional deductions — can only be determined after the year ends when the full-year expenditure amount is known, and must be supplemented through the annual reconciliation.

Second, the annual reconciliation enables more accurate calculation of a taxpayer's total annual IIT liability on comprehensive income. Generally speaking, for taxpayers who receive multiple types of comprehensive income, regardless of the withholding method used, it is nearly impossible for the prepaid tax amounts to exactly match the annual tax liability. The resulting "difference" must therefore be adjusted through the annual reconciliation.

Q3: Who needs to file the annual reconciliation?

Answer: Generally speaking, any taxpayer whose prepaid tax amount differs from the annual tax liability needs to file the annual reconciliation. In accordance with the IIT Law and its Implementation Regulations and other relevant provisions, the circumstances requiring annual reconciliation can be divided into the following categories:

Category 1: Taxpayers whose prepaid tax exceeds their annual tax liability and who wish to apply for a tax refund. Applying for a tax refund in accordance with law is a taxpayer's right. If a taxpayer's prepaid tax amount exceeds the actual annual tax liability determined through the annual reconciliation, the taxpayer may apply for a refund within the statutory time limit.

Category 2: Taxpayers whose prepaid tax is less than their annual tax liability, and the supplementary tax payment due exceeds RMB 400.

Category 3: Taxpayers who, due to special circumstances such as incorrect application of income categories, failure by the withholding agent to lawfully fulfill its withholding obligations, or receipt of comprehensive income without a withholding agent, have under-reported or failed to report comprehensive income for the year. These taxpayers must file the annual reconciliation based on actual circumstances in accordance with law.

Q4: Who does not need to file the annual reconciliation?

Answer: In accordance with the IIT Law and its Implementation Regulations and other relevant provisions, the circumstances not requiring annual reconciliation can be mainly divided into the following categories:

Category 1: Taxpayers whose prepaid tax amount matches their annual tax liability. These taxpayers have no refund or supplementary payment due and therefore need not file the annual reconciliation.

Category 2: Taxpayers whose annual comprehensive income does not exceed RMB 120,000 or whose supplementary tax payment amount does not exceed RMB 400 are exempt from the annual reconciliation obligation. It should be noted that if a withholding agent failed to lawfully withhold and prepay taxes on the taxpayer's comprehensive income, the exemption from annual reconciliation does not apply.

Category 3: Taxpayers whose prepaid tax amount exceeds their annual tax liability who choose not to apply for a refund are also not required to file the annual reconciliation.

Q5: When should taxpayers file the annual reconciliation?

Answer: The filing period for the 2024 tax year annual reconciliation is March 1 to June 30, 2025. Taxpayers who are non-domiciled in China and depart early may file the annual reconciliation before their departure. Taxpayers who wish to file during the initial period (March 1 to March 20) may, based on their individual circumstances, make an appointment through the IIT App after February 21 for any day within that period. From March 21 to June 30, taxpayers do not need an appointment and may file at any time. It should be noted that, to help taxpayers complete the annual reconciliation efficiently, conveniently, and in an orderly manner, tax authorities and employers will notify and remind taxpayers in batches to file during designated time periods to stagger peak periods. Taxpayers are advised to file within their designated time period to the extent possible to avoid congestion and ensure a smooth filing experience.

Q6: What preparations should taxpayers make before the annual reconciliation?

Answer: Before the annual reconciliation, taxpayers should verify the validity of their contact phone numbers, bank accounts, and other basic information to avoid situations where the tax authorities cannot reach them or tax refund/payment transfers fail. Taxpayers may review and verify their comprehensive income, related deductions, and taxes already paid through the "Income and Tax Payment Detail Query" function in the IIT App or the Natural Person Electronic Tax Bureau website, or through their withholding agents.

Upon review, if taxpayers have objections to the comprehensive income or other information reported by the withholding agent, they should first verify the accuracy of the information with the withholding agent. If errors are confirmed and the withholding agent refuses to make corrections, or in cases such as identity misuse where the taxpayer cannot contact the withholding agent, the taxpayer may file a complaint with the tax authorities through the IIT App, the Natural Person Electronic Tax Bureau website, or other channels.

Q7: How should taxpayers file the annual reconciliation?

Answer: There are mainly three methods for filing the annual reconciliation:

Method 1: Self-filing. The taxpayer files independently. The tax authorities provide efficient and convenient online filing channels, and taxpayers are recommended to file the annual reconciliation preferably through the IIT App or the Natural Person Electronic Tax Bureau website. For special groups such as elderly persons or persons with limited mobility who have difficulty completing the annual reconciliation independently, the tax authorities can provide personalized annual reconciliation services upon the taxpayer's application.

Method 2: Employer-assisted filing. The taxpayer requests their employer to handle the filing. If the taxpayer makes such a request, the employer should process it, or train and guide the taxpayer to complete the annual reconciliation return and tax refund/supplementary payment independently through the IIT App or website.

Method 3: Delegated filing. The taxpayer engages a professional tax service firm or other entity or individual to handle the filing.

Q8: What materials must taxpayers submit when filing the annual reconciliation?

Answer: Taxpayers are recommended to file preferably through the IIT App or website. The tax authorities will provide pre-populated return form services, so under normal circumstances no additional materials need to be submitted. If the taxpayer needs to modify their basic personal information, claim deductions, or apply for tax reductions or exemptions, they must retain or report the relevant information and provide supporting materials as required. Taxpayers must carefully review and ensure all information reported is true, accurate, and complete.

Q9: Can taxpayers who have difficulty completing the annual reconciliation within the filing period apply for an extension?

Answer: If a taxpayer genuinely has difficulty completing the annual reconciliation before June 30 and needs an extension, the taxpayer should submit an application for extension to the tax authority before June 30. Upon approval by the tax authority, the filing period may be extended. However, the taxpayer must prepay taxes during the filing period based on the actual tax amount paid in the previous annual reconciliation period or the amount determined by the tax authority, and must complete the reconciliation within the approved extension period.

Q10: After a taxpayer submits a refund application for the annual reconciliation, how will the tax authority conduct the refund review?

Answer: After the taxpayer submits a refund application, the tax authority will conduct a refund review in accordance with law. If the refund application is found to comply with regulations upon review, the refund will be promptly transmitted to the state treasury for processing. If the review reveals that the refund application does not comply with regulations, the tax authority will issue reminders to the taxpayer through the IIT App and website messages, mobile text messages, telephone, and other means. Upon receiving such notification, the taxpayer should promptly supplement materials or amend the annual reconciliation return. If the taxpayer refuses to provide materials or refuses to amend the return, the tax authority will deny the refund.

Q11: What measures are in place to strengthen annual reconciliation oversight after the filing period ends?

Answer: First, for taxpayers who have failed to file supplementary tax returns, have not paid supplementary taxes in full, or have falsely or erroneously reported annual reconciliation income, special additional deductions, or other items, the tax authority will pursue collection of the underpaid or unpaid taxes and late payment surcharges in accordance with law, and make notations in the taxpayer's IIT tax payment records.

Second, for conduct including failure to file tax returns as required, underpayment or non-payment of taxes, fraudulent tax returns, non-cooperation with tax inspections, and false commitments, such conduct will be included in the credit information system. Where it constitutes a serious breach of trust, disciplinary measures for breach of trust will be implemented in accordance with relevant regulations.

Third, after the annual reconciliation period ends, for taxpayers who have not filed supplementary tax returns or have not paid supplementary taxes in full, the tax authority will order rectification within a time limit and serve the relevant documents in accordance with the Tax Collection and Administration Law. If rectification is not completed after the deadline, the tax authority may impose penalties in accordance with the Tax Collection and Administration Law. In serious cases, public exposure may be imposed.

Taxpayers are urged to file their IIT annual reconciliation in accordance with law to avoid adverse effects on their taxpayer credit.

Q12: What new optimized service initiatives have been introduced for the 2024 tax year annual reconciliation?

Answer: For the 2024 tax year annual reconciliation, the tax authorities have further improved taxpayer services and introduced the following convenience measures:

First, continuing the appointment-based filing service. To guide taxpayers in an orderly manner and improve the filing experience, the appointment-based filing service remains available during the initial period. Taxpayers may make appointments through the IIT App. Taxpayers who wish to file during the initial period of the 2024 annual reconciliation (March 1 to March 20) may, based on their circumstances, make an appointment through the IIT App after February 21 for any day within that period. From March 21 to June 30, no appointment is needed and taxpayers may file at any time.

Second, continuing the priority refund service. For taxpayers who meet annual reconciliation refund conditions and bear heavy living burdens — including those who are "supporting the elderly while raising children," bear heavy medical expenses, have experienced significant income declines, or whose annual income is RMB 60,000 or less and have already prepaid IIT — the tax authorities will provide more convenient priority refund services.

Third, improving the pre-populated return form service. Leveraging commercial health insurance data shared by the National Financial Regulatory Administration with the tax authorities, the service now provides pre-populated information including the tax-preferential identification codes for commercial health insurance, delivering a better filing experience for taxpayers.

Fourth, launching a nationwide one-stop personal pension deduction filing service. In December 2024, the personal pension system was rolled out nationwide. Under the relevant provisions, deferred tax preferential policies apply to personal pension contributions. To further facilitate timely enjoyment of the policy, the tax authorities have cooperated with the Ministry of Human Resources and Social Security to implement a "one-stop" personal pension filing function in the IIT App. The system can directly retrieve the taxpayer's personal pension contribution information from the Personal Pension Management Service Platform, eliminating the need to download and manually enter contribution certificates, enabling taxpayers to conveniently file and enjoy the IIT deduction for personal pension contributions.