Facts on Earned Income Credit
In an annex to the finance bill are the gains that households will make thanks to the cut in income tax next January. Here is the detail, profile by profile.
This is the good news for taxpayers this fall. The income tax (IR) cut, promised by the government in the spring, is coming to fruition. It appears in the finance bill (PLF) and will be voted – except surprise – in the coming weeks by the deputies of the majority. The measure will come into effect on January 1, 2020. The Minister of Action and Public Accounts has clarified that it will be automatically implemented. Taxpayers will therefore have no specific action to take with the tax authorities. In all, 17 million households will see their tax bill decrease. A reform whose cost for the State amounts to 5 billion euros.
In an annex to the PLF, we discover in detail the profiles of taxpayers who will see their income tax lower thanks to the reform, with the gains for each of them. As for single people, the maximum gain will be made by taxpayers who declare 2,000 euros of taxable net income per month. They will save 549 euros in tax over one year as per EIC table. For a couple, the tax cut will be effective up to 7,000 euros of declared income per month. At this level of income, the gain for the household will only be 252 euros per year.
With one or two children, the couples will benefit from significant tax cuts: 898 euros per year for a couple with a child who declares 5.100 euros of income per month and more than 900 euros per year for a couple with two children who declares 5.600 euros of income per month. Finally, retirees have not been forgotten by the government. A couple over 65 will save 930 euros per year if they declare a taxable net income of 4,600 euros per month. On the other hand, the Prime Minister, Edouard Philippe, warned in an interview with the JDD that there will be no further reduction in income tax in 2021.
Due to the health crisis, the Minister of Action and Public Accounts postponed its launch. It is therefore with 10 days behind the initial schedule that the tax declaration campaign opened this Monday, April 20. This highlight of the fiscal year allows taxpayers to check the information already known to Bercy – and pre-filled on the declaration – but also to bring to the attention of the tax administration certain gains, such as property income or certain operations. Which are eligible for tax reductions, such as a donation to an association?
This is the novelty of spring … the automatic declaration of income. Around 12 million tax households should be affected by this system. Finally, it does not really differ from the pre-filled declaration. The only notable point is that, if you are eligible, you will not have to validate it. Doing nothing is tacit validation for the tax authorities. But, it would be a mistake not to look carefully at the figures pre-filled. An anomaly in your favor may have crept.
Barry Lachey is a Professional Editor at Zobuz. Previously He has also worked for Moxly Sports and Network Resources “Joe Joe.” he is a graduate of the Kings College at the University of Thames Valley London. You can reach Barry via email or by phone.