Moving to China From the US: Tax Guide for Americans
Last reviewed: July 21, 2026. This article reflects current IRS rules and EA exam requirements as of this date.
You're moving to China. The visa is sorted. The WeChat account is set up. Someone in HR mentioned something about "individual income tax" and "five insurances and one fund" and you nodded without really following.
Here's what you actually need to know, in order.
Step one: Your US filing obligation follows you
Moving to China does not suspend your obligation to file Form 1040. You still file every year. You still report worldwide income. You still file FBAR if your foreign account balances exceed $10,000 in aggregate. You still get the automatic two-month extension to June 15 if you're abroad on April 15, and you can request a further extension to October 15.
The forms change. You'll likely attach Form 2555 for the Foreign Earned Income Exclusion or Form 1116 for the Foreign Tax Credit. You'll almost certainly file FinCEN Form 114 (FBAR) if you have a Chinese bank account. You may file Form 8938 (FATCA) if your Chinese financial assets exceed the applicable thresholds.
Your US filing requirement is constant. The attached forms change. That's the framing.
Step two: Understand Chinese Individual Income Tax
China's IIT is a progressive tax on comprehensive income. The brackets in 2026:
| Annual taxable income (CNY) | Rate |
|---|---|
| 0 – 36,000 | 3% |
| 36,001 – 144,000 | 10% |
| 144,001 – 300,000 | 20% |
| 300,001 – 420,000 | 25% |
| 420,001 – 660,000 | 30% |
| 660,001 – 960,000 | 35% |
| Over 960,000 | 45% |
These brackets apply to residents. Non-residents pay tax only on China-source income, generally at the same progressive rates but without the standard deduction and specific deductions available to residents.
Residency triggers at 183 days in China during a calendar year. If you move mid-year, you may not trigger residency until the following year. Your employer withholds IIT monthly from your salary. China also has an annual IIT reconciliation process. "annual settlement". typically completed between March and June of the following year through the IIT app or with assistance from your employer.
The standard monthly deduction for IIT purposes is CNY 5,000 (CNY 60,000 annually). Additional itemized deductions apply for children's education, continuing education, mortgage interest or rent, elderly parent support, and serious medical expenses. These deductions reduce taxable income and can produce a refund at annual settlement.
Step three: The six-year rule
This is the most important rule most foreigners in China don't understand.
Before 2019, China had a different tax residency framework for foreigners. The 2019 IIT reform reset the clock. Starting January 1, 2019, non-domiciled foreigners. meaning you don't have a permanent home or household registration in China. are taxed only on China-source income for their first six years of Chinese tax residency. After six consecutive years, worldwide income enters the Chinese tax base.
The six-year clock resets if you spend more than 30 consecutive days outside China during any calendar year. A single trip of 31 days resets the clock to zero. The next year becomes year one again.
This is a planning tool. If you've been in China for four or five years and your non-China income is growing. investment income, rental income from a US property, side business income. a 31-day trip outside China can keep that income out of Chinese IIT. You don't need to guess. The math is mechanical. 30 days consecutive or fewer, clock keeps running. 31 days or more, clock resets.
There's also the 90-day rule for short-term residents: if you're in China fewer than 90 days in a calendar year and your income is paid by an overseas employer and not borne by a Chinese entity, you may owe zero Chinese IIT. This applies to short-term assignees and consultants.
Step four: Social insurance
China's social insurance system covers five areas: pension, medical, unemployment, work injury, and maternity. There's also a housing fund ("one fund"). Foreign employees generally must participate, though specific rules vary by city. Shanghai, Beijing, and Shenzhen have different contribution rates and sometimes different rules about which categories of social insurance apply to foreigners.
Employer and employee contributions both apply. The combined rate can be 35% to 40% of salary, split between employer and employee. This is not a small number on a six-figure RMB salary.
There is no totalization agreement between the US and China. Your Chinese social insurance contributions don't offset your US Social Security and Medicare obligations. If you're employed by a Chinese entity, your wages are generally exempt from US Social Security tax because they're foreign-source wages paid by a foreign employer. If you're self-employed in China, you may owe self-employment tax on your net self-employment income on top of your mandatory Chinese social insurance contributions.
When you leave China permanently, you can generally withdraw your personal social insurance account balance. but the process requires documentation, including proof of tax clearance and termination of employment. The employer portion stays in the system.
Step five: Bank accounts and currency controls
China has capital controls. The State Administration of Foreign Exchange (SAFE) monitors cross-border transfers. Large transfers require documentation. proof of tax payment, proof of income source, employment contract, or other supporting documents. The annual foreign exchange purchase limit for individuals is USD 50,000 equivalent.
For US tax purposes, your Chinese bank accounts are foreign financial accounts. If the aggregate balance across all your foreign accounts exceeds $10,000 at any point during the year, you file FBAR. This includes your Chinese RMB account, your Chinese USD account if you have one, and any other foreign accounts.
Moving money from China to the US for tax payments, mortgage payments, or family support requires navigating the SAFE documentation requirements. Plan ahead. Transfers can take weeks. The documentation requirements are not flexible.
Step six: Chinese investment products are probably PFICs
If you invest through a Chinese platform. a Chinese mutual fund, a Chinese ETF, a wealth management product offered by your Chinese bank. those investments are almost certainly Passive Foreign Investment Companies under US tax rules.
PFIC reporting on Form 8621 is punitive by default. The Section 1291 regime applies unless you make a timely QEF or mark-to-market election. Excess distribution rules, interest charges on deferred tax, and per-fund per-year filing requirements make PFIC compliance one of the most burdensome areas of US international tax. Many Americans in China hold Chinese investment products without knowing the US reporting obligation exists.
Before you buy a Chinese investment product, talk to a preparer who understands PFIC rules. The product that looks like a simple Chinese mutual fund may create a US tax compliance problem that costs more to fix than the investment returned.
Step seven: Get a preparer who knows both sides
China is not a jurisdiction where you want to learn the tax rules by trial and error. The US-China treaty exists but the Savings Clause limits its value for US citizens. The Chinese IIT system has rules. the six-year rule, the 90-day rule, the social insurance structure, the SAFE documentation requirements. that have no US equivalent. A preparer who knows US tax but not Chinese tax will miss things. A preparer who knows Chinese tax but not US tax will miss things in the other direction.
Our China EA finder guide has specific questions to ask before hiring. Use them.
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