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How to calculate taxes

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How to calculate taxes

Postby Naanilii » Wed 21 Mar 2012 12:36 GMT

Hi!

I have questions about tax rates and how to calculate annual taxes.

How is in practice: lets say my annual salary is 36 000e and I'm married and have children. Spouse isn't working.

- Do I have to pay parent rates or can I choose married rates?

- It means 35% taxes, but is it 35% for the whole salary or is it like it says on the government site (married rates): first 11 900e 0%, then 15% for the next 9299e (=1394,85e taxes), then 25% for the next 7299e (=1874,75e taxes) and the rest is 35% and I was wondering, if this is where the deduction comes in: 36 000e minus deduction 6775e is 29 225e, so means that the rest 524e pays taxes 183,40e. Together this is 3453e taxes on year 2012, and from 36 000e it is 9,59% tax rate. So do I pay 9,59% monthly or do I first pay 0% and then finally 35% in the end of the year?

- In which amount of money do I do the deduction 6775e (if not like above)?

- Or is it like 35% every month and for the whole salary, meaning that annually I pay
A) 36 000e * 35% = 12 600e taxes minus deduction 6775e = 5825e (means 16,18% in practice)
B) 36 000e minus deduction 6775e = 29 225e * 35% = 10 228,75e taxes (28% in practice)

:oops:
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Postby gozomark » Wed 21 Mar 2012 16:50 GMT

its a sliding scale - you can choose to be taxed singly or jointly - if only one working, you choose joint.

"first 11 900e 0%, then 15% for the next 9299e (=1394,85e taxes), then 25% for the next 7299e (=1874,75e taxes) and the rest is 35%" correct

you will have your tax deducted equally each month
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Postby Naanilii » Wed 21 Mar 2012 21:51 GMT

Well... So which is it? I still don't get it - what is my monthly net salary then? :brickwall:

Please help me to understand this!


And what about the parent/married rate? Who chooses it for me and how? Since I'm both, a parent and married...
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Postby gozomark » Wed 21 Mar 2012 21:59 GMT

its as you stated - if you earn 36K, and get taxed jointly

first 11 900e 0%,
then 15% for the next 9299e (=1394,85e taxes),
then 25% for the next 7299e (=1874,75e taxes)
and the rest (7,502 is 35% (=2,625.70 taxes)

so total tax on 36K is about 5.9K for married couple who do joint declaration

you will also have social security contributions to pay (on 36K around 2K) - http://www.ird.gov.mt/services/ssc/class1rates2012.aspx
Last edited by gozomark on Wed 21 Mar 2012 22:11 GMT, edited 1 time in total.
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Postby gozomark » Wed 21 Mar 2012 22:03 GMT

you decide which one is best for you (ie which means the lowest tax)
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Postby Naanilii » Thu 22 Mar 2012 07:55 GMT

^^ OK, so you could say my tax rate in practice is around 16.4% monthly? Can I trust that to be somewhat realistic?

What is the "deduct" mentioned here http://www.ird.gov.mt/services/taxrates.aspx ? How it works and what does it actually mean?

So I am paying SSC 33,50e weekly (1742e / year). Did I get it right, it also covers my family members? All of them?




(after some time)
...Well now I think I got it! :D It's quite near my example A) am I right? So how to calculate is that you need to do the deduction from the whole salary amount 35% taxes ? It gives you almost similar numbers, 5.8K and 5.9K...
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Postby gozomark » Thu 22 Mar 2012 09:11 GMT

ignore the deduction - thats just a different way of doing the maths -

ie € 15,000 income

a. 11,900 tax free then 15% of 3,100 = 465 tax
b. 15000* 15% = 2250 less deduction of 1785 = 465

"Can I trust that to be somewhat realistic? " - its a simple calculation

"So I am paying SSC 33,50e weekly (1742e / year). Did I get it right, it also covers my family members? All of them? " - it covers your spouse and your legal dependants (normally children) unless they are also working, then they pay as well
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Postby Naanilii » Thu 22 Mar 2012 09:37 GMT

Ok, now it makes sense. Thank you very much! :)


Edit.
Is there a difference if I make that 36 000e in one month or in six months, and rest of the year I don't work at all..?
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Postby gozomark » Thu 22 Mar 2012 09:55 GMT

makes no difference to tax, does to social security - ps tax year is the same as the calendar year - if you start work part of the way through the year your average tax rate will be lower as you still get the full allowance
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