Tax at source: pay attention before squandering your tax credit

Tax at source: pay attention before squandering your tax credit

In Bercy, the countdown is triggered: more than 55 days before the implementation of the withholding tax (or PAS). At the end of January, your income tax will be deducted directly from your salary or retirement pension.

Some 8.85 million households will also be entitled to a nice check. For, as announced by Prime Minister Philippe in September, taxpayers who receive credits or tax cuts will receive a deposit of 60% from 15 January. This cash advance represents a total cost of EUR 5.6 billion for the State. The balance will be paid to taxpayers in the summer. To benefit, no administrative action is necessary, confirmed the Minister of Public Accounts, Gerald Darmanin, Tuesday.

If you are among the beneficiaries, be careful not to squander too quickly the money, because some might perhaps have to repay a few months later.

"Tax credit at source"

The taxpayers concerned by this deposit are those who benefit from the following tax reductions or credits: childcare expenses, home work, accommodation expenses in EHPAD, rental investment (Pinel, Duflot, Scelliet, investment in housing in DOM, Censi-Bouvard), donations and union dues. In administrative jargon, these are "tax credits at source".

These expenses must be recurrent, in other words, they must occur every year. Until now, the taxpayers concerned, when they benefited from a tax credit for several years, had become accustomed to modulating down their monthly payments to take into account the tax credit. With the withholding tax, because the rate of levy can not be changed by the taxpayer. The government has decided to pay taxpayers a large down payment for major credits and tax cuts early in the year to prevent them from making too much cash advance to the state.

Refund in the summer of 2019

Problem, some homes may have ceased in 2018 to achieve these expenses that qualify for a credit or a tax reduction. And the administration will not notice until spring 2019, when taxpayers have completed their income tax return of 2018.

However, the administration will have already paid the deposit of 60% in January, calculated in relation to the amount indicated in the previous tax return (that relating to the revenues of 2017 and therefore the expenses of the same year which give right a credit or a tax reduction).

Taxpayers who will be in this situation will have to return in the summer of 2019 the full amount collected in January.

For example, if you donate to an association of a relatively similar amount for several years, you have the right to a tax reduction. If you do not donate in 2018, the tax authorities will still give you a deposit of 60% in January 2019 (when in theory you are not entitled). When you file your income tax return in the spring, he will discover that you have not made this expense in 2018 and will ask you to repay it in the summer of 2019.

Could not refund the taxman earlier

Gérald Darmanin will write a letter to all taxpayers in late December. A specific version will be sent to those who benefit from these reductions and recurring tax credits to prevent them, in case they find themselves in this situation to have to repay the amount to the administration.

In good faith, the taxpayers concerned may want to repay the administration immediately, so that they will not have to keep the amount paid in January until the summer. Impossible answers Bercy. They will have no choice but to keep the money warm for six months.

Finally, with the withholding tax, "the tax adapts to your life" and the tax credit also but not 100%. Immediately calculating the tax credit when the expenditure is made is not possible so far, "firstly for technical problems", justifies Gérald Darmanin. The General Inspectorate of Finance is working on proposals to put in place such a device, but "we will not do it next year," warned the minister, or even by the end of the five-year period.

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