Today’s question is from a comment on last year’s post about how much it costs to live in Beijing. I thought it was worth putting up a full post for the answer. Danielle asks the following:
Question:
I am taking up a position with a research institute I currently work for, but in their Beijing office. At the moment, it looks like a minimum of two years. So I have two questions that I thought you might be able to help with:
1. They are offering 6000 RMB per month. Is this reasonable? I saw in one of your posts this is okay for one person, but you’ve mentioned that 17,200 for Sam (another commenter) is “probably” enough (I have a partner coming with me but no kids, so obviously that will change the story). Our office is in Haidian District, and I just want to live somewhere where I can get to work easily by public transport but not too far away from everything. I also need to pay back $40,000 in US student loans. Will this be possible?
2. Do you have any ballpark estimate of what kind of income tax I’d be dealing with? I can only find conflicting information online.
Answer:
Part 1: Living on ¥6000. Honestly ¥6000 isn’t enough to live in China AND pay back student loans, especially if you’re earning for two people. You can live in Beijing for a short time (2 years) on a small income (¥6000), if you keep your state-side costs low. That will probably mean putting your student loans into deferment, or maybe just paying the minimums. You’ll have to make sure to work out health insurance as well, as that can be another large “other” cost. Cost of living can will depend on where you live. HaiDian in general is a good place to live if you want to live on the cheap, except if you live in the hotspot for expat culture and social life which is the WuDaoKou area. There are a lot of Western restaurants and tons of foreign (non-Chinese) students and teachers in WuDaoKou but rent prices are really high (likely ¥4000-5000 per month for a 2 bedroom). If you live a bit further away from WuDaoKou rent goes down. Plan on eating in cheap Chinese restaurants and using public transportation most of the time.
Side note on bringing your partner: Unless you’re married your partner is going to need to find a way to get a visa. The easiest would be to get a tourist visa, but it would carry the extra cost of traveling out of China every 3 or 4 months. Your partner should be able to find some sort of job teaching English but don’t expect much more than ¥4000-5000 per month if you don’t have an TESL/TEFL certificate or an English degree.
Part II: Taxes. If you are being paid in China by a Chinese company/school your Chinese taxes are probably calculated and taken out of your salary before you get your take-home pay, so no real worries there. For US taxes you almost certainly will not owe any because of the “foreign earned income exclusion.” You don’t have to pay income tax on anything you earn overseas under $92,000 (and unless the exchange rates go really crazy you won’t come close). You will still need to file an income tax return, but you probably wont need to pay anything. The one catch is if you are self-employed while living overseas (private tutor, free lance writer/designer, etc) in which case you’ll probably get hit for social security taxes (approx. 15%) because you will be filing as “Self-Employed.” You don’t need to pay social security if you are employed by a Chinese company/school. I’m not a tax expert, this is just what we’ve figured out from filing our taxes. I know a lot of people here do not pay Social Security on freelance work, but we’ve talked to tax professionals in the States and in China and both said you are supposed to.
If you have questions for expats living in Beijing write us at info(at)themiddlekingdom.org and we will try our best to help you out.
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{ 5 comments… read them below or add one }
Wow, thanks for the help Matt! This is really great.
I’m still working out some of the details with my employer as far as the health insurance and the salary. I get the impression that 6000 RMB is a bit low given my qualifications (although I have no idea what other people make in China). And thanks for that advice regarding what parts of town to live in.
My partner is actually a Danish citizen, so it’s not likely he’d get one of those teaching english jobs. But he’s great at hunting around for jobs himself so I’m crossing my fingers he’ll just end up getting a work visa for himself (as we’re not married).
Good news to hear I won’t have to worry about US taxes! I was only curious if my Chinese taxes were going to take a significant chunk out of my 6000 RMB per month, but again, more details to come.
Your blog is awesome! Thanks for everything that you do.
If that 6000 doesn’t include Chinese tax, you’re still not going to lose much. The first 4000 is tax free and the next 2000 will be taxed at about 10% (I think it’s actually less than that), so that’s a total of 200 RMB out of your whole pay.
I don’t think that you can get a one bedroom apartment in Haidian District (living room, kitchen, bathroom, bedroom)for under 2000 a month…….. HOWEVER, if you want to live in a Hutong and pay for showers, outside WC and around 20 sq metres you can probably rent for around 600 a month (depending upon which ring road is located near you.
Thanks for the info, Tanya! The 6000 is before tax (but after health insurance, thankfully). I just wanted to get a more clear picture of what I will have to budget for rent and the like.
My partner and I just got here a few days ago and now we’re looking around for a place to live. We’re shooting for the 5000 RMB price range somewhere in Haidian and close to a subway. I hope that isn’t an “ignorance is bliss” statement.
I have one bed room at wudaokou,The room clean and have the furniture,If want to rent can give me a call
my name: Mecheal
mobile phone: 13718826120