As the festive season approaches, how can Chinese individuals engaged in frequent cash transactions avoid becoming targets of crime? Financial experts provide recommendations that not only effectively minimize tax liabilities but also safeguard the security of cash.
Fengyun Niu, a financial planner at MassMutual with over 20 years of experience, suggests that the simplest method is to avoid keeping cash at home or in the workplace, using credit cards or checks as much as possible instead.
One reason is that withdrawing cash from a bank can make individuals vulnerable targets for criminals. In May of this year, a resident of Flushing withdrew thousands of dollars from a bank to pay two months’ rent, only to be followed and robbed by thieves. Fengyun Niu mentioned that her client, a person in their 60s, not only had their cash, phone, and various bank cards stolen, but also suffered psychological trauma from falling and getting injured during the incident, leaving behind lasting fear.
Many Chinese landlords, in an effort to save on tax expenses, tend to prefer collecting rent in cash, a practice that Fengyun Niu believes is not only unsafe in the long term but may also lead to tax issues.
“You cannot completely avoid taxation by collecting cash because having tenants means you have income. If the IRS discovers undeclared income, the fines can be very high, resulting in even greater losses.”
She recommends that landlords familiarize themselves with beneficial tax deduction policies such as property depreciation, maintenance costs, and property taxes, which often significantly reduce the actual amount of tax owed. “After consulting with a professional accountant, many people realize that receiving rent through checks does not significantly increase their tax burden.”
Mr. Yan, a Chinese landlord, spoke about his rental payment methods, mentioning that during his tax filing for 2024 after renting out his property, his accountant assisted in deducting property taxes, renovation costs, and depreciation expenses. Ultimately, he found that nearly 20,000 yuan of his rental income from the previous year reached the non-taxable threshold. He remarked that it was only through communication with a professional accountant that he learned this information, allowing him to confidently accept tenants’ checks, reduce the risks associated with tenants carrying cash, and ensure secure transactions.
Regarding daily expenditures, Fengyun Niu emphasizes the advantages of using credit cards. Despite the possibility of transaction fees for some credit card transactions, often borne by merchants, when compared to the risks associated with cash transactions such as robbery, these fees may seem trivial.
Moreover, credit cards allow for cashback accumulation, offsetting some transaction fees. In cases where credit cards are subject to unauthorized charges, banks typically assist in recovering losses, significantly reducing risks involved.