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The New Deal: Middle-class relief is questionable. What about marriages?

The New Deal: Middle-class relief is questionable.  What about marriages?

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EY presents in its study published on Thursday The main changes resulting from the Polish dealRelated to the joint settlement of the spouses. As he notes, the key point is that the amount of annual income to which the 17 percent rate applies. It was increased to 120,000 zlotys.

“It is also permissible to jointly settle with the spouse for the year in which the marriage contract took place provided that they remain in it until the end of the year, meaning that even if the taxpayers got married on December 31, 2021, they will be. You have the right to a joint settlement” – EY notes.

According to his tax experts, in the event of a divorce, the taxpayer is not entitled to a joint settlement for months of marriage. This change will apply to settlements for 2022.

However, joint settlement with the spouse is possible in the year of the death of one of the spouses – EY notes.

Experts also note that spouses who settle jointly will be able to settle the so-called 4+ exemption, however, this change will only apply to the annual settlement introduced in 2023. “Couples who file joint accounts can benefit from the middle class exemption. tax,” according to their report.

EY estimates that in the judgments made under Polish rule The biggest doubt is the comfort of the middle class.

“Taxpayers do not know, for example, whether they are eligible for it in a situation where the income of one spouse is PLN 50,000 per year, and the other is PLN 150,000” – he points out.

The consultants explain that in the case analyzed, one taxpayer is not entitled to a middle-class tax break because his income is too low, while the income of the other is too high. “However, in the case of spouses, there is an alternative solution (as a right and not an obligation) – they can add their income, which may be beneficial to them,” EY suggests.

In their view, the solution is for each individual taxpayer to “reduce their income according to the costs (tax-deductible costs, Social Security contributions, middle-class relief—if applicable) and other deductions they are entitled to. The spouses combine their income, which should be divided into two parts and the resulting value is multiplied by the tax rate according to the scale and reduced by the amount of the tax reduced (PIT-2) ”- they wrote. As they assessed, the end result is input tax, which, after deducting the sum of advances transferred to the tax office during the year, will show an overpayment or underpayment of income tax.

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