Mom and Dad, look here! In 2014, the special deduction for preschool children will be increased.

The Taipei National Taxation Bureau of the Ministry of Finance stated that in order to reduce the burden on families raising young children, the 114th fiscal year comprehensive income tax "Special Deduction for Preschool Children" will not only expand the applicable age, but also increase the deduction amount, and cancel the rich exclusion provisions.

The bureau explained that on January 3, 2014, Article 17 of the Income Tax Act was amended and promulgated. Effective from January 1, 2014, the applicable age for the special deduction for pre-school children was expanded from under 5 years old to under 6 years old. That is, parents can apply for the special deduction for pre-school children every year from 0 to 6 years old, for a total of 7 deductions. Depending on the number of children under 6 years old supported by each declaring household, the deduction amount for the first child will be increased from NT$120,000 (the same below) to NT$150,000, and the deduction amount for each second and subsequent children will be NT$225,000. In addition, the wealth exclusion regulations that prevent high-income earners (those with applicable tax rates of 20% or above, whose dividends and profits are taxed separately at a 28% rate, or whose basic income exceeds the amount of deductions stipulated) from applying for deductions have been abolished.

The bureau gave an example. Mr. A has three children, aged 1, 3 and 6 respectively. When Mr. A files his 2014 comprehensive income tax return, he can apply for a special deduction for his three children's pre-school expenses. The first child can deduct NT$150,000, plus the second and third children can each deduct NT$225,000, for a total of NT$600,000 [NT$150,000 (first) + NT$225,000 (second) + NT$225,000 (third)]. However, if the ages of the three children are 1, 3, and 8 respectively, since the taxpayer declares that the number of children under the age of 6 is 2, the special deduction for preschool children that can be deducted is NT$375,000 [NT$150,000 (first child) + NT$225,000 (second child)].

The bureau reminds that when taxpayers use mobile phones or computers to file the 2014 comprehensive income tax settlement declaration through the online declaration system (the declaration period is from May 1 to June 30, 2015), as long as they declare that they support children under the age of 6, the system will automatically calculate and deduct the special deduction for preschool children. If you have any questions, please use the smart customer service "National Tax Assistant" to inquire online, or call the toll-free service number 0800-000-321 for inquiries. The bureau will serve you wholeheartedly.

(Contact person: Section Chief Su of the Inheritance Tax Group of the Institute; Tel: 2311-3711 ext. 1560)