Reduction of income tax advances by contributions

Service-Tax

The amount of advances for income tax is, as a rule, variable, since it is determined on the basis of current income. However, taxpayers who earn income from non-agricultural business activity may withhold income tax advances in a fixed amount (independent of the income generated on an ongoing basis in the tax year), using a simplified form of its payment. The condition for using simplified advances is a written notification of the competent head of the tax office about the choice of such a solution by February 20 of a given tax year (if the taxpayer has not submitted an appropriate declaration of resignation, this notification also applies to the following years). The taxpayer is obliged to use a simplified form of advance payments throughout the tax year, make advance payments by the 20th day of each month for the previous month (advance payment for December - in the amount due for November - until December 20) and settle the tax for the tax year.

The basis for calculating the simplified advance payment is the business income shown in the annual tax return submitted in the tax year preceding the given tax year or in the tax year preceding the given tax year by two years. In practice, this means that, for example, in order to calculate advance payments for 2011, the amount of income for 2009 or 2008 should be taken into account, with the income from the tax return filed in the preceding year first. If the income did not occur or was shown in the amount that does not give rise to the obligation to pay the tax, then the basis for calculating the advance payment should be the income from the tax return submitted in the year preceding the given tax year by two years. For this reason, taxpayers who undertake economic activity for the first time in the tax year or in the previous year cannot be paid by taxpayers in simplified form (there must simply be a declaration on the basis of which it is possible to determine the tax on income from economic activity).

The advance is calculated in the amount of 1/12 of the amount calculated on this income using the tax scale applicable in a given tax year (taxable on general principles) or the 19% rate. (for taxpayers with flat tax).The taxpayer may reduce the amount of the advance payment by the amount of the health insurance premium (the regulations do not provide for the possibility of taking into account other deductions when determining the amount of the advance payment). For example - if in the PIT-36 statement for 2010 submitted in 2011, the income from business activity amounted to PLN 50 thousand. PLN, the advance payment in a simplified form determined using the tax scale will amount to PLN 703.66 [PLN 50,000 x 18 percent. - 556.02 PLN / 12].