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Earn tax-free earnings 2018, 2019 and 2020


More tax-free earning will become possible in  2019 and 2020 because a number of tax credits will go up and the tax-free income will increase. What are the consequences for the tax and allowances?

For example, the labor credit and general tax credit increase. A second job is possible tax-free in  2019 and 2020, depending on your total income and the income tax to be paid. Do not confuse tax-free money with black money, as long as you abide by the rules of the Tax Authorities it is not black money. Naturally, earning tax-free money was also possible in 2018 and is also possible again in 2019 and 2020.

Earning tax-free in 2018, 2019 and 2020, how does that work?

When talking about a tax-free income and earning tax-free money, this means that you have such an income that on balance you do not have to pay tax. No wage tax and no income tax. That is easily achievable if your income is not too high. In 2019, the limit for a tax-free income is around 7,000 euros per year. That does not seem that much but if this is your only income, it is nice. An additional advantage is that this income is not an obstacle to the payment of a healthcare allowance, rent allowance or other tax allowance. This income is therefore not at the expense of your tax allowance. And this income is not too high for a student who receives a student grant. He may not lose his student finance until he earns more than euros 14,215.

Tax-free income, second job and the Tax Authorities 2018, 2019 and 2020

Since 2001,  income tax system has mainly consisted of four elements that together make a tax-free income possible:
  • The rates;
  • The tax brackets;
  • The tax credits;
  • The deductions.

If you earn a wage in a job or a side job, you pay wage tax. The employer is obliged to withhold wage tax and premiums. At the same time there are tax credits to which you are entitled. Anyone who works is in any case entitled to the employed person's tax credit and the general tax credit. With an income of up to 6,700 euros  you are entitled to:

  • a maximum of 2,265 euros in general tax credit (2018) to 2,477 euros in 2019;
  • 115 euro employed person's tax credit in 2019.

Together this is a maximum of 2,500 euros. You pay 36.65% tax on 6,700 euros and that is 2,375 euros. Subtract that from each other and it is tax free. Here, therefore, lies roughly the limit for 2019, the exact amount in 2019 is 7,070 euros.

Earning tax-free in 2020

2020 is also an interesting year because the tax credits go up. Despite the tax increase in the first bracket of the income tax, this means that the tax-free rate goes to an income of more than 7,600 euros.

The total income counts for earning tax-free money

Remember that the total income in a year counts for taxation. If you exceed an annual income of 7,000 euros (2019) with your job, side job or extra job, you will nevertheless pay income tax on balance. The income tax return is the final moment to calculate whether you have paid enough tax, are receiving too much or perhaps money back from the tax authorities. If two employers both calculate with your tax credits, it may happen that too little tax has been withheld and you will have to pay tax next year.

The income tax deductions also help

And then there are the tax deductions that can lower your taxable income, so that you pay less tax. For example, the deductible items through donations and of course the deduction of mortgage interest for your own house. More deductions also means paying less tax. It is true that the Tax Authorities never refund you more tax than you paid in tax in a year. In 2018, part of the tax deduction for specific healthcare costs will disappear . As a result, less tax refunds can be achieved with this deductible item in 2018 and 2019.

Earning tax-free and the general tax credit for the least-earning partner

What also happens is that the least-earned partner receives the so-called work-in subsidy via the partner's income and then starts working for himself for a few hours. Then, because the general tax credit is already in the wallet, so to speak, approximately 37% tax will have to be paid on the income.

That seems a lot, but that is purely because the tax refund in the form of the tax credit has already been received without an own income. Yet many partners who would like to work something see this as an obstacle. To remove this obstacle, it has been decided to gradually reduce the work subsidy. In most cases, you will then only receive a general tax credit if you also have your own labor income. For example, entering the labor market should become more attractive.

Extra income, taxes and surcharges

The extra income can also have consequences for the benefits because your second job or extra earnings are seen as extra income. As long as you stay below the exemptions for income and assets, you will not be bothered by this and you can continue to earn additional income without any disadvantage.

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