Tax season is here again. Time to ask for money back, grab tax credits, and hope for a windfall. We are now talking about aggregate income. So be sure to read on!
Key Points
What will change concretely in 2022 is what you undoubtedly want to know. The reduction percentage in 2022 is 15%, which means for everything above a collective income of €38,464. In this blog we will tell you everything you want to know about aggregate income. The most important questions are: What is the aggregate income? How is it tested? And how can you calculate it yourself? This blog is a complete article on everything you need to know about aggregate income. Of course, this is only a small part of all the tax credits and tax troubles that you need to know about. We also show you what has changed in the field of aggregate income in recent years and what you need to know about it. So let’s dive a little deeper into the subject right now.
What is the aggregate income?
How is your aggregate income calculated? Sometimes it all seems a bit complicated, but if you take a good look at it, you will have done the tax return in no time. The aggregate income is the sum of your and your partner’s income in boxes 1, 2, and 3. You deduct the deductible items from this and you have the aggregate income. For income tax purposes,
There are Three Types of Income:
- Income from work and home
- Income from a substantial interest
- Taxable income from savings and investments.
The aggregate income is the gross income on which you have to pay tax. In that sense, the tax has not been deducted. Tax credits or tax refunds have not been deducted either. The calculated income is therefore not in your hands but is the basis for the payroll tax and income tax. However, something can still be deducted, such as the exemption when saving, the personal allowance such as medical expenses, and the deductible items such as owning a home. Always check whether there are still deductible items in your situation that you can deduct from your income.
The aggregate income and taxable income are The taxable income is the same as the aggregate income. The taxable income or aggregate income is the amount on which tax is levied: the total income minus any deductible items.
Test income
Even more confusing terms. The aggregate income is equal to the qualifying income. However, the term “test income” is used for the allowances (healthcare allowance and rent allowance), while the term “aggregate income” is used for tax purposes. The allowances are therefore included in the aggregate income. Schemes such as child benefit are not covered by this.
Deductions
Making deductible costs pay off. You then pay less tax and are more likely to be eligible for benefits. This means that you will primarily benefit from the healthcare allowance and the childcare allowance.After all, someone who owns a house does not qualify for the rent allowance but can qualify for the other allowances. A power test can change that.
Deductions for Owning a Home
For many people, the deductible items for the owner-occupied home and medical expenses are the largest deductions when it comes to the tax return. The deductible item for the owner-occupied home can involve much more than just the deduction of the mortgage interest. If you buy your own home for the first time, you suddenly have to deal with all kinds of extra costs. Think, for example, of the costs of the notary, the transfer tax, the costs of valuation and the land registry. With the exception of the transfer tax, these costs are tax deductible.
With the deductible item, you significantly reduce your taxable income and therefore pay less tax than if you rented a house under the same circumstances. Even if you already have a house but want to change or increase the mortgage, all kinds of mortgage costs are deductible: less costs when purchasing your house, non-deductible items for tax returns, small home acquisition debt, and deductible costs of the mortgage.
Medical Expenses that are Deductible
Medical expenses must meet a number of conditions if you want to be able to use them as a deductible item. Chronically ill people, in particular, can still deduct a considerable amount. A joint threshold income of the sick person and their partner applies. This means that the healthcare costs minus the threshold are deductible.
The Deductible Medical Expenses Are:
- Costs for yourself or your household, insofar as they are not reimbursed by their health insurance and are higher than the compulsory deductible, (medicines, medicines, dietary costs, physiotherapy, aids)
- Costs for family help
- The cost of additional clothing and bedding for a chronically ill individual
- Travel expenses for your own hospital visit and under certain conditions for another person’s hospital visit
- Costs for home adaptation, insofar as not reimbursed by the municipality
Deductible study costs.
The year 2021 is the last year that the deduction for study costs will still exist. This tax arrangement will expire after 2021. So if you think you qualify for this, it’s good to look at this this year. Only necessary costs may be deducted, such as tuition fees, course fees, and teaching materials. The deduction does not apply to a course or hobby, but if you are currently studying for work or to improve your position in the labour market, those study costs are deductible .
The deductible item does not apply to students who have a loan, grant, or public transport subscription from DUO. However, it is good for them to check at the end of the year whether they have not paid too much tax on the earnings of a part-time job. If too much wage tax has been withheld, students can request a refund from the tax authorities via the income tax return.
In 2022, we can therefore no longer use study costs as a deductible item.
Estimating Collective Income
If you want to know where you stand next year, you can try to estimate your aggregate income. This way, you can prepare yourself whether you have to repay an amount or for a financial windfall. You can estimate the aggregate income by adding up your gross monthly wage and that of your partner and multiplying it by twelve (twelve months in a year). Then you must add 8% of the gross income (the holiday allowance). Now you have roughly calculated what you will also enter in box 1 with your income from work in box 1.
Request a postponement
Is it all becoming too much for you, and the concepts are making you dizzy, but you still need to file your tax return? No problem. You can always request a deferral of the tax return from the tax authorities. For example, if you still need to find out something or you are still in the middle of a move and you just don’t have the time for it. Request a postponement before May 1, and then you will automatically receive a letter from the tax authorities that they have received the application. It also tells you what to do next. You then complete your tax return before September 1. Then it is important that you are there on time.
