If you anticipate a drop in your income, you can request a reduction in your withholding tax rate. But the difference with the offtake without this modulation must amount to at least 10%. This is why certain files are refused.
The source deduction was created to stick as closely as possible to the income of the French, almost in real time. It is with this in mind that you can ask the administration for a reduction in your rate if you anticipate a drop in your income or a change in your family situation during the year 2022. Otherwise, your withholding rate will be renewed in September from your 2021 tax return.
But be careful, the reduction in your rate is not not automatic. The tax authorities may refuse your request, warns Olivier Rozenfeld, independent consultant, for The world: The amount of withholding tax that you estimate to owe over the calendar year must be at least 10% lower than that which would be supported without modulation, explains the expert.
If in doubt… ask
If you ever want to start a calculation before making this modulation request, beware of the puzzle! You must first establish the amount of the levy that you estimate to owe in 2022 according to the income that you anticipate for the calendar year, subject of your request.
Then, you must compare this amount with the amount that would have been withdrawn without rate modulation. But it is here that there are many errors. The source deduction carried out over the whole of 2022 includes on the one hand the first 8 months of the year, for which the tax authorities still apply the rate calculated on your income for 2020, and on the other hand , from September, the rate corresponding to your 2021 income. It is the sum of this annual levy for 2022 which must be compared to the levy with modulation, the latter having to be 10% lower for the modulation to be accepted.
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Do you find this calculation too complex? Certainly. In the facts, you don’t have to do this calculation. Like more than a million tax households each year, everyone can request a reduction in the rate of deduction once your income has dropped significantly. Then it’s the taxman who does the calculation! Just be aware that your request may be refused, the fault of this delicate exercise in algebra.
Taxes: who was interested in lowering the withholding tax in the crowd of his declaration?