Coming into force on January 1, 2019, the withholding tax is automatically collected each month on your salary, your retirement or your activity income but calculated by the tax administration based on your income declared the previous year. In other words, it reflects your past tax situation, and not necessarily your current situation if your situation has changed in the meantime: increase or decrease in income, marriage, divorce or separation, birth of a child or a child who leaves the tax home, etc.
The levy rate is updated once a year, in August, with the new rate taking effect from September. All of these events cause the amount of your tax to vary. Without adjustment, you risk paying too much – or not enough – and having an unpleasant surprise when regularizing the following year. “ For example, you just had twinsexplains Ludovic Ploton, national secretary of Solidaires Finances Publiques. At constant income, your tax will automatically decrease the following year thanks to the new tax shares. “.
Unsuitable rate: what to do?
If you do nothing, you will continue to pay based on your previous situation and will be reimbursed for the overpayment the following year. “ Nothing dramatic but it is better to anticipate and keep this cash available now by making the change ».
The tax administration authorizes discrepancies by more than 5% compared to your current rate. On the contrary, if you received a promotion during the year, your current rate risk of being undervalued.
Watch out for catching up
You’ll pay less taxes than you actually owe, and catching up can be painful. “ In these cases, adjusting your rate upwards or downwards is not only possible, but recommended”he recalls. How to do it? Simply by going to the impots.gouv.fr website, “Manage my withholding tax” section.
Practical, the site offers a simulation of your new situation and suggests an adjusted rate. If you validate, the new rate applies within two months, “ no later than the 3rd month following your request » as the site specifies.
The obligation to withhold tax
“ Some taxpayers might be tempted to artificially lower their rate to pay less each month and have a little extra cashwarns Ludovic Ploton. This is a terrible idea — and not just for moral reasons “.
Unlike the old monthly payment system, where the taxpayer freely chose to spread out his payments, the withholding tax is a legal obligation. Especially since the balance will be claimed during the annual regularization, with potentially penalties.
