Tax-free amount and simultaneous full-time work and running a business


Many entrepreneurs, apart from running their own business, also work full-time. Therefore, there is a doubt as to how to settle the tax-free amount in such a case. Is the tax-free amount due to full-time employment or business activity?

When is the tax-free amount deductible?

The tax-free amount is due for running a business if the activity is taxed with the tax scale (according to general rules) and until the first tax threshold, which is PLN 85,528 of income in a given tax year, is exceeded. After it is exceeded, i.e. the income tax rate of 32% is applied to the excess of over PLN 85,528, and the tax-free amount is not deductible.

The amount of income tax (PIT) rates settled on general principles is:
- 17% - the first tax threshold,
- 32% - the second tax bracket.

Tax-free amount and full-time work and activity

When taxing business activity on general terms and, at the same time, working full-time, the tax-free amount is in the first place due to the conducted business activity. Therefore, when calculating advances for income tax on general principles, one should take into account the tax-free amount until the tax threshold is exceeded.

On the other hand, the employer with whom the taxpayer is employed full-time, should provide information about running his own business, which is tantamount to the fact that the employer does not deduct the tax-free amount.

However, if the fact of running a business is not notified to the employer, who will deduct the tax-reducing amount due to employment, it should be compensated in the PIT-11 information received at the end of the year from the employer and then settled by the entrepreneur in the annual PIT-36 tax return.