Nobody likes paying tax. For some people, this period is viscerally difficult.
Why is it difficult?
First of all, you need to find your registration codes on the www.impots.gouv.fr. Then there are a number of steps to be completed concerning identity, place of residence and family situation. If nothing has changed since the previous year, there is nothing to do. However, if there has been a change in your family structure (marriage, civil partnership, birth, separation, death), you should indicate this. This will have an impact on the family coefficient and consequently on the calculation of your income tax. For example, if you have raised a dependent child on your own for more than 5 years, and you are single, you may qualify for an extra half share. This will reduce your tax liability. To qualify, tick box L. You can see straight away how important it is not to make a mistake at this first stage.
What income?
You follow this with the income category. The best known is the remuneration if you are an employee. If you are majority manager, In this case, you will fill in the box for Article 62 remuneration. Filling in this box is not insignificant, as it will lead you to a 2042 DSI return to indicate the compulsory and optional social security contributions. From 2020 onwards, your income tax return will be merged with the declaration of the bases for your social security contributions for self-employed workers. If you make a mistake, the annual adjustment of your social security contributions will be wrong.
The most common income categories
Other categories should be mentioned as the most common:
- Property income
- Marketable securities
- BIC (industrial and commercial profits)
- Non-commercial profits
- etc...
Please note that for BIC and BNC, if you are a member of a management association, If you don't, your income will be increased (by 15% in 2021)!
Another example of the risk of error is if you declare income from non-professional furnished lettings. Do you think they should be declared as property income? Wrong, they should be declared as BIC (or micro-BIC) income. The impact is not neutral, because the rules for determining the taxable amount will not be the same. In simple terms, you'll pay more.
Charges to be declared
After completing the taxable data according to their income category, you will enter the expenses that generate tax reductions or credits.
What we often find is that people forget to declare sums that reduce the tax they have to pay. A typical example is donations made. If you are taxable and have made a donation to Restos du cœur, If you make a contribution of up to €1,000, you can reduce your tax by 75%. The surplus still generates a tax reduction of 66.2/3).
Tax reductions
The treatment of tax reductions for the various tax niches also has its own particularities. For the Pinel and Denormandie reductions, etc., you will need to provide several pieces of information to obtain the benefits of income tax reductions. Otherwise, the authorities will not validate your deductions.
Withholding tax
Once these steps have been completed, the withholding tax from your tax (NOT since 2018) must be made to find out the final amount to be paid. The new calculation will have an impact on your direct debits for the coming months. This is not neutral.
The amount payable
The final step will be the amount of the bill. Before validating, check each of the amounts. This is your only guarantee that you won't overpay your tax for the year.
Remembering this process helps you understand that declaring your income has an impact on your personal finances. If you have planned your cash flow, you will not be caught unprepared. If your cash flow is tight, any discrepancy will have a significant impact.
Finally, you are not immune from tax inspection because there are inconsistencies in your declaration. In addition to the’financial impact, It's never pleasant to be straightened out. A sense of injustice is bound to strike...
Delegate the preparation of your declaration
IF you are afraid of declaring too much or too little of your income and expenses correctly, you can delegate this task to Novalliance Chartered Accountants. We will ensure that your tax return is secure and on time. Legally, you will pay the right amount of tax. For those who are more interested, we can also help you to reduce your contribution (in compliance with the general tax code) throughout the year.
To find out more about our income tax preparation services, leave us your contact details here.
