2022 Taxpayer and Dependent Household Deduction

Abbreviation Glossary

- PIT: Personal Income Tax
- Enterprise: Company
- Employee: Worker
- ID card: Identification card
- Citizen ID: Citizen Identity Card

The household deduction is the amount deducted from taxable income before it is distributed to the beneficiary. To find out how much the household deduction for 2022 is, you can refer to the article below.

What's New in the 2022 Household Deduction?

1. Who is eligible for the household deduction?

Based on the provisions of the Personal Income Tax Law and related guidance documents: Household deduction is understood as the amount deducted from taxable income before calculating PIT for income from salaries and wages of resident individuals.

- Accordingly, only income from salaries and wages is eligible for the household deduction.

- The household deduction includes:
+ Household deduction for the taxpayer: This is the amount that the PIT taxpayer from salaries and wages is naturally entitled to deduct, without the need for any specific procedures or conditions.
+ Household deduction for dependents: The taxpayer must submit a registration dossier for dependents, and the dependents must meet the conditions specified by law.

2. Household Deduction Amount for 2022

According to Resolution 954/2020/UBTVQH14, the household deduction amount for 2022 is specified as follows:

- The household deduction amount for the taxpayer in 2022 is 11 million VND/month (132 million VND/year).
- The household deduction amount for each dependent in 2022 is 4.4 million VND/month.

=> Therefore, the household deduction amount for 2022 remains unchanged compared to 2021. This amount has been applicable since July 1, 2020.

3. Issue of Dependents for PIT Payers

3.1 Who are considered dependents eligible for household deduction?

According to Circular 111/2013/TT-BTC, individuals identified as dependents (with accompanying conditions) include:

- Child: biological child, legally adopted child, stepchild, child born out of wedlock, child of spouse, child of husband.
+ Children under 18 years old (counted by month).
+ Children aged 18 and above with disabilities, unable to work.
+ Children currently enrolled in universities, colleges, vocational schools in Vietnam or abroad, including those aged 18 and above attending high school: with no income or with average monthly income from all sources not exceeding 1 million VND (hereinafter referred to as 'average monthly income during the year').

- Spouse of the taxpayer meeting the following conditions:

+ Disabled, unable to work.
+ No income or average monthly income during the year not exceeding 1 million VND.
+ If already of working age, must have no income or average monthly income during the year not exceeding 1 million VND.

- Biological father, biological mother; father-in-law, mother-in-law (or stepfather, stepmother); stepfather, stepmother; legal foster father, legal foster mother of the taxpayer meeting the following conditions:

+ Disabled, unable to work.
+ No income or average monthly income during the year not exceeding 1 million VND.
+ If already of working age, must have no income or average monthly income during the year not exceeding 1 million VND.

- Other individuals without a support system that the taxpayer directly supports and meeting the following conditions:

+ Disabled, unable to work.
+ No income or average monthly income during the year not exceeding 1 million VND.
+ If already of working age, must have no income or average monthly income during the year not exceeding 1 million VND.

These individuals include:

+ Biological siblings of the taxpayer.
+ Grandparents; aunts, uncles; paternal and maternal great-grandparents; paternal and maternal great-aunts, great-uncles, paternal and maternal great-aunts, great-uncles of the taxpayer.
+ Biological nephews and nieces of the taxpayer include: children of biological siblings.
+ Other individuals directly supported as required by law.

3.2 Documentation for dependent identification

To register dependents, it's essential to prepare the complete documentation for dependent identification.

* For children

- Children under 18 years old: Copy of Birth Certificate and copy of ID Card/Citizen ID (if available).

- Children aged 18 and above with disabilities or unable to work should prepare:

+ Copy of Birth Certificate and copy of ID Card/Citizen ID (if available).
+ Copy of Disability Confirmation Certificate.

- Children currently attending university, college, or vocational schools:

+ Copy of Birth Certificate.
+ Copy of Student ID Card, confirmation letter as a student from the institution, or other documents proving enrollment at educational institutions.

- Foster children, adopted children, stepchildren

+ Required documents according to each case as mentioned above.
+ Copy of the decision to recognize foster parenting, decision to recognize the parentage of father, mother, or child issued by competent state authorities.

* For spouse

- Copy of ID Card or Citizen ID Card.
- Copy of marriage certificate or household registration book.

If the spouse is of working age, additional documents proving the spouse's incapacity to work need to be prepared, such as:

- Copy of Disability Certificate;
- Copy of medical records (for diseases such as AIDS, cancer, kidney failure, etc.) for individuals with disabilities.

* For biological father, biological mother, father-in-law, mother-in-law (or stepfather, stepmother), adoptive father, adoptive mother

- Copy of ID Card/Citizen ID Card.
- Copy of household registration book, birth certificate, decision to recognize the parentage of father, mother, or child.

In case they are of working age, prepare additional documents:

- Copy of Disability Certificate;
- Copy of medical records (e.g., AIDS, cancer, kidney failure, etc.) for individuals with disabilities.

* Other individuals without proper support whom the taxpayer is directly responsible for nurturing

- Copy of Birth Certificate or ID Card/Citizen ID Card.
- Copy of documents defining the obligation to support as prescribed by law (if available).
- Copy of household registration book (if available under the same household registration) or copy of temporary residence registration of the dependent (if not under the same household registration).
- Self-declaration of the taxpayer with confirmation from the Commune People's Committee where the taxpayer resides regarding the dependent living together.
- Self-declaration of the taxpayer with confirmation from the Commune People's Committee where the dependent resides regarding the dependent's current residency at the locality and no one is nurturing them (if not living together).
- If the dependent is of working age, additional documents need to be prepared to prove their inability to work:
- Copy of Disability Certificate;
- Or copy of medical records (e.g., AIDS, cancer, kidney failure, etc.) for individuals with disabilities.

3.3 Registering Dependents

According to Article 7 of Circular 105/2020/TT-BTC, the registration of dependents for household reduction in PIT calculation is conducted as follows:

* If individuals authorize the employer (the income payer) to register taxes

- Individuals prepare the following documents:

Power of attorney document.

Dependent verification documentation.

- Submission location: Employer, company - where the individual's salary is paid.
- The employer will proceed to submit the documentation to the tax authorities directly.

* In case individuals register taxes for dependents themselves

- Prepare the documentation including:

Tax registration declaration form (Form No. 20-ĐK-TH-TCT Circular 105/2020/TT-BTC).

Dependent verification documentation.

- Submission:

Individuals earning income from salaries, wages from International Organizations, Embassies, Consulates: Submit to the tax office at the workplace;

Individuals earning income from salaries, wages paid by foreign organizations, individuals: Submit to the Tax Department where the work is performed in Vietnam;

Other cases: Tax Sub-department in the area where the individual is resident or temporarily resides for other cases.

4. Example

Mr. A works at X Corporation, with a monthly salary (after deducting mandatory insurance premiums) of 30 million VND. He has a 3-year-old child, a 70-year-old mother without a pension, and a working wife. He wants to claim dependent deductions for his child and mother. Determine Mr. A's dependent deduction?

Answer:

- In the case where Mr. A wants to claim dependent deductions for his child and mother, he needs to prepare supporting documents for dependents and may authorize the company to register with the tax authorities.

For the child: Certified copy of the child's birth certificate.

For the mother: Certified copy of mother's ID card.

- Note that if Mr. A has already registered dependents as his child and mother, his wife cannot register these two individuals as dependents.

- Mr. A's TNCN tax calculation is as follows:

The dependent deduction for individuals: 11 million VND/month.

The dependent deduction for 02 dependents is: 4.4 million x 2 = 8.8 million.

=> The total dependent deduction to calculate Mr. A's TNCN tax from salary is 19.8 million/month.

5. Frequently Asked Questions

5.1 How many dependents can an individual register?

Decree 111/2013/TT-BTC stipulates that each dependent can only be deducted once for one taxpayer in the tax year.

Furthermore, there is no limit on the number of dependents that an individual can register.

=> Thus, an individual can register multiple dependents as long as these individuals meet the legal requirements.

5.2 How much salary is subject to TNCN tax

Based on the current regulations on PIT, individuals with the following salary levels are subject to PIT:

- Individuals with no dependents: monthly salary above 11 million VND.

- Individuals with dependents:

With 01 dependent: Monthly salary above 15.4 million VND;
With 02 dependents: Monthly salary above 19.8 million VND;
With 03 dependents: Monthly salary above 24.2 million VND.

Here's the latest information on the 2022 family deduction reductions that we provide.