To avoid employees having to a pay a large amount of income tax at the end of the year, their employers withhold salaries tax from their salaries. Salaries tax is regarded as an advance payment of income tax. Show
Besides salaries tax, national insurance contributions, employee insurance contributions and income-related healthcare insurance contributions are also deducted from employees' salaries. Salaries tax and national insurance contributionsEmployees have to pay salaries tax on their earnings. An employee is someone who undertakes to work for an employer, where the employer pays the employee a salary and there is a relationship of authority between the employer and the employee. Sometimes a worker does not have an employment contract like an employee, but in other ways his or her relationship with the employer is similar. This is called 'deemed employment', and the employer has to withhold tax and contributions from the worker's pay as if he or she were an employee. Everyone who lives or works in the Netherlands is covered by the national insurance schemes for state pension (AOW) and surviving dependants (ANW). The contributions are withheld by the employer from employees' salaries and remitted to the Tax and Customs Administration. A separate scheme applies to artists and professional athletes. Salaries tax and national insurance contributions withheld from all income componentsEmployers must withhold salaries tax and national insurance contributions from all income components paid to employees and remit them to the Tax and Customs Administration. Income components include salary, holiday allowance, overtime pay, end-of-year bonus and benefits in kind (e.g. a company car). Work-related costs schemeThe work-related costs scheme allows employers to provide some benefits tax free, such as travel allowances, study costs, lunches and Christmas hampers. Employers may provide such items tax free only if their total value is less than 1.5% of salary costs. If their total value exceeds 1.5%, the employer must pay 80% tax on the excess. Employee insurance contributionsEmployers also remit employee insurance contributions. These contributions pay for the unemployment benefit scheme (WW), the invalidity insurance scheme (WAO) and the work and income (capacity for work) scheme (WIA). Employers do not withhold these contributions from their employees' salaries but pay them themselves. The government sets the contribution levels twice a year, in January and July. Annuity exemption for redundancy payThe annuity exemption for redundancy pay was abolished on 1 January 2014. An annuity is a form of saving or investment in which the beneficiary receives fixed periodic payments. Transitional arrangements are in place for annuities granted before 1 January 2014 that qualified for the annuity exemption for redundancy pay.
IRS Tax Tip 2022-22, February 9, 2022 A new tax season has arrived. The IRS reminds taxpayers receiving Social Security
benefits that they may have to pay federal income tax on a portion of those benefits. Social Security benefits include monthly retirement, survivor and disability benefits. They don't include supplemental security income payments, which aren't taxable. The portion of benefits that are taxable depends on the taxpayer's income and filing status. To determine if their benefits are taxable, taxpayers should take half of the Social Security money they collected during the year and add it to their other income. Other income includes pensions, wages, interest, dividends and capital gains.
Fifty percent of a taxpayer's benefits may be taxable if they are:
Up to 85% of a taxpayer's benefits may be taxable if they are:
More information:
Subscribe to IRS Tax Tips Page Last Reviewed or Updated: 14-Mar-2022 |
How much tax on social security benefits
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