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Old 29.08.2015, 13:47
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Taxation - Double earner - minumum salary?

Hello,

My wife and I live in Basel Stadt with two kids. We got B-permit so I pay withholding tax or 'Quellensteur' 10% straight from my salary every month (married - single earner). My wife is now looking for a part time job and plans to work a few hours (5-8 hours) per week (e.g. 500-1000 CHF/month) on average.

However from other threads in this forum and online tax calculators I fear that my wife earnings will be less that the increase in my withholding tax: We will be registered as double earners which will results in 50% increase in my withholding tax (from 10% to 15%, thus 500-1000CHF approximately less paid per month)

Example:
Taxable income (per year) CHF 125,000
Civil status married
Number of children 2
Double earner NO : Taxes per year 11,437
Double earner YES : Taxes per year 18,761

That is an increase of 7324 CHF a year just for being double earners (with no or minor income from spouse) !

So I would like your advise on the following:

1) Is there a minimum income for my wife before we are registered as double earners? Or will any income of result in double earner status meaning that she needs to earn at least 7324chf/year (from example above) in order not to actually pay for going to work?

2) Can we deduct more as double earners and then somehow get the 'lost' 500-1000CHF/month back by completing tax declaration form by the end of the year? Other advantages ?

3) Would it be worth contacting an accountant/tax advisor? If yes - Any recommendations for Basel Stadt?

3) Should my wife simply just accept 'working for kind of free/fun' or simply not start working and be at home since this is 'normal' in Switzerland?

Thanks in advance.
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Old 29.08.2015, 14:02
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Re: Taxation - Double earner - minumum salary?

Whoah... so they not only tax your spouse, they increase your tax simply for being married? Interesting, and seems like they penalize you for getting married!
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Old 29.08.2015, 14:57
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Re: Taxation - Double earner - minumum salary?

@Jeppe
I know you're asking about tax, so my reply is slightly off-topic, but.... are you sure that your wife is allowed to work/earn? As I understand it, some spouse-permits are issued only for being allowed to reside (she) with the spouse who has the working permit (you), and holders of this category of permit are not entitled to work/earn themselves.
Of course it depends at least in part on wife's own nationality. I put this thought in here because some stay-at-home spouses discover this shocking retriction only after a while of being here, so I hope you and your wife have checked this first.
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Old 29.08.2015, 15:10
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Re: Taxation - Double earner - minumum salary?

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Whoah... so they not only tax your spouse, they increase your tax simply for being married? Interesting, and seems like they penalize you for getting married!
The Swiss tax system is optimised for 1 breadwinner in the family. Salaries are high which is why it's so common for the wife to stay at home. 2 working people in a marriage are going to be better off than most so will pay more which is considered fair in taxation terms in almost every county
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Old 29.08.2015, 15:39
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Re: Taxation - Double earner - minumum salary?

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Example:
Taxable income (per year) CHF 125,000
Which means you have to fill a tax return anyway and your withholding tax is just a prepayment.
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Old 29.08.2015, 16:09
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Re: Taxation - Double earner - minumum salary?

..and when you do a return, you will be taxed as one family unit, anyway. So don't worry, you'll get a refund from your prepayment.
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Old 29.08.2015, 18:04
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Re: Taxation - Double earner - minumum salary?

Jeppe,

quite the opposite is true. Go to http://www.steuerverwaltung.bs.ch/st...errechner.html

Husband income: CHF 125'000
2 kinds and a wife (not earning)
Total taxes: CHF 16'240 (12.99%)

Husband income: CHF 125'000
Wife income: CHF 12'000
2 kids
Total tax: CHF 17'863 (13.04%)

An increase of a minimal 0.05 points only!

In other words: the withholding tax is totally undervalued.

So relax. Except for you will have to pay 5000 more at the end after the final tax evaluation, anyhow.

But also consider, your two kids are about CHF -5000 tax worth!!!

Husband income: CHF 125'000
No kinds, just a wife (not earning)
Total taxes: CHF 21'043 (16.83%)

Well, the same is true for a wife :-O , well, even more: CHF -5900!!!

Husband income: CHF 125'000
No kinds, no wife
Total taxes: CHF 26'922 (21.54%)
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Last edited by Sublime; 29.08.2015 at 18:35. Reason: increase
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Old 29.08.2015, 18:15
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Re: Taxation - Double earner - minumum salary?

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Whoah... so they not only tax your spouse, they increase your tax simply for being married? Interesting, and seems like they penalize you for getting married!
... proven as total bullshit of a frequently unconsidered (in order not to say: ignorantly stupid) "Zürcher".
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Old 29.08.2015, 19:12
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Re: Taxation - Double earner - minumum salary?

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Jeppe,

quite the opposite is true. Go to http://www.steuerverwaltung.bs.ch/st...errechner.html

Husband income: CHF 125'000
2 kinds and a wife (not earning)
Total taxes: CHF 16'240 (12.99%)

Husband income: CHF 125'000
Wife income: CHF 12'000
2 kids
Total tax: CHF 17'863 (13.04%)

An increase of a minimal 0.05 points only!

In other words: the withholding tax is totally undervalued.

So relax. Except for you will have to pay 5000 more at the end after the final tax evaluation, anyhow.

But also consider, your two kids are about CHF -5000 tax worth!!!

Husband income: CHF 125'000
No kinds, just a wife (not earning)
Total taxes: CHF 21'043 (16.83%)

Well, the same is true for a wife :-O , well, even more: CHF -5900!!!

Husband income: CHF 125'000
No kinds, no wife
Total taxes: CHF 26'922 (21.54%)
Far more deductions possible if wife earning, Lunch / Travel / Training costs probably 10k extra to deduct from gross salary so her taxable income could be 0
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Old 29.08.2015, 19:36
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Re: Taxation - Double earner - minumum salary?

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Jeppe,

quite the opposite is true. Go to http://www.steuerverwaltung.bs.ch/st...errechner.html

Husband income: CHF 125'000
2 kinds and a wife (not earning)
Total taxes: CHF 16'240 (12.99%)

Husband income: CHF 125'000
Wife income: CHF 12'000
2 kids
Total tax: CHF 17'863 (13.04%)

An increase of a minimal 0.05 points only!

In other words: the withholding tax is totally undervalued.

So relax. Except for you will have to pay 5000 more at the end after the final tax evaluation, anyhow.

But also consider, your two kids are about CHF -5000 tax worth!!!

Husband income: CHF 125'000
No kinds, just a wife (not earning)
Total taxes: CHF 21'043 (16.83%)

Well, the same is true for a wife :-O , well, even more: CHF -5900!!!

Husband income: CHF 125'000
No kinds, no wife
Total taxes: CHF 26'922 (21.54%)
Thank you Sublime,

I really hope that the calculator is correct, but unfortunately I doubt. The tax rates you got is not consistent with compares.ch calculator, Quellensteuertarif B (single earner) and C (see link below) nor my actual tax rate.

The tax rate for yearly income of 125'000 CHF (single earner) is 9.15% according to Quellensteuertarif B and not 12.99%

The tax rate for yearly income of 125'000 CHF (double earner) is 15.01% according to Quellensteuertarif C and not 13.04%
http://www.steuerverwaltung.bs.ch/dm...d%20Tarife.pdf
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Old 29.08.2015, 19:42
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Re: Taxation - Double earner - minumum salary?

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Thank you Sublime,

I really hope that the calculator is correct, but unfortunately I doubt. The tax rates you got is not consistent with compares.ch calculator, Quellensteuertarif B (single earner) and C (see link below) nor my actual tax rate.

The tax rate for yearly income of 125'000 CHF (single earner) is 9.15% according to Quellensteuertarif B and not 12.99%

The tax rate for yearly income of 125'000 CHF (double earner) is 15.01% according to Quellensteuertarif C and not 13.04%
http://www.steuerverwaltung.bs.ch/dm...d%20Tarife.pdf
That's because you don't yet understand the difference between tax at the source and final taxes. Your monthly deductions may well go up as you've noted, but your final tax bill at the end of the year will not appreciably go up, so you'll get a refund when you file.
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Old 29.08.2015, 21:38
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Re: Taxation - Double earner - minumum salary?

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Thank you Sublime,

I really hope that the calculator is correct, but unfortunately I doubt. The tax rates you got is not consistent with compares.ch calculator, Quellensteuertarif B (single earner) and C (see link below) nor my actual tax rate.

The tax rate for yearly income of 125'000 CHF (single earner) is 9.15% according to Quellensteuertarif B and not 12.99%

The tax rate for yearly income of 125'000 CHF (double earner) is 15.01% according to Quellensteuertarif C and not 13.04%
http://www.steuerverwaltung.bs.ch/dm...d%20Tarife.pdf

First of all, comparis is a commercial site. Secondly, my given links is an official site. Guess which one is more reliable? Further, comparis calculates with gross income (the amount in your contract, given it is fixed) figures!

Nevertheless, these claculation are statistically based on "averages", since for example deductions are assumed, as the site says: "Die Berufskostenpauschale, der Versicherungsabzug, der Zweitverdienerabzug sowie die Sozialabzüge und die Freibeträge werden automatisch berücksichtigt.", but are already impiied. Of course, they cannot know your individual situation before you file them the coming year.

And the 125K on BS' calculator are considered to be the net income (excluding social contributions, but including withholding tax!) and not the figure on your contract. And decductions are applied commonly for you and your wife, of course. If you do not mind the work, you can file a test tax declaraton right now, then you get a perfect forecast, given your figures are correct.

And as already said several times, the Quellensteuer is not your final tax calculation, but based on a average figure of expats with a comparable income and family setting.

So stop worrying, it will work out correctly in the end after you have been filed a final tax declaration, around the figures I gave you. Either you will have to pay a missing amount, or get refunded (including interests) in the following year or before leaving the country.

And anyhow, the tax you will have paid to the Swiss authorities will be dramatically below what you would have to expect in Danemark, or even in US!
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Old 29.08.2015, 22:06
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Re: Taxation - Double earner - minumum salary?

And here you find a federal calculator working with your gross income and listing the most important deductions. The following contributions are usually deducted from your salary by your employer (the so-called social contributions) even without withholding tax and constituting the net income:

- Old age, invalidity and income compensation contributions (
AHV-, IV-, EO-Beiträge)- Unemployment insurance ALV
- Non-work related accident insurance contributions NBU
- Pension fund contributions

So single earner tax with gross income 125K: CHF 13'864
So double earner tax with gross income 135K: CHF 14'780

With the Second earner deduction this will lead to the fact that the income of your wife (here: 10'000) will hardly be taxed(Federal: only 1900; cantonal: 9000).
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Old 29.08.2015, 22:20
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Re: Taxation - Double earner - minumum salary?

... and pardon-me, the previous figures are calculated also without the any (mandatory and voluntary) pension fund contributions. So taxes will be even lower.

And it should read "tthe income of your wife (here: 10'000) will hardly be taxed higher", given the increase from 125K to 135K would otherwise been taxed (more) progressively.
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Old 29.08.2015, 22:28
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Re: Taxation - Double earner - minumum salary?

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Jeppe,

quite the opposite is true. Go to http://www.steuerverwaltung.bs.ch/st...errechner.html

Husband income: CHF 125'000
2 kinds and a wife (not earning)
Total taxes: CHF 16'240 (12.99%)

Husband income: CHF 125'000
Wife income: CHF 12'000
2 kids
Total tax: CHF 17'863 (13.04%)

An increase of a minimal 0.05 points only!

In other words: the withholding tax is totally undervalued.

So relax. Except for you will have to pay 5000 more at the end after the final tax evaluation, anyhow.

But also consider, your two kids are about CHF -5000 tax worth!!!

Husband income: CHF 125'000
No kinds, just a wife (not earning)
Total taxes: CHF 21'043 (16.83%)

Well, the same is true for a wife :-O , well, even more: CHF -5900!!!

Husband income: CHF 125'000
No kinds, no wife
Total taxes: CHF 26'922 (21.54%)
the calculator asks for the net pay. yours is based on gross.
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Old 29.08.2015, 22:55
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Re: Taxation - Double earner - minumum salary?

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the calculator asks for the net pay. yours is based on gross.
Yes, Taxable income (see OP) is even less than the net income (gross income minus AHV, IV, EO, ALV, NBU, and pension contribution).

But for the Quellensteuer, the gross income is the key figure!

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Old 30.08.2015, 14:21
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Re: Taxation - Double earner - minumum salary?

Ok - thanks.

From the replies above I've learned:
  • that many different calculators and methods to calculate tax based on either gross, net salary etc. exists. With the example above I was just trying to compare consequences of double earner versus single earner with same yearly income. Seems only possible to figure out after result of actual tax declaration.
  • that the withholding tax apparently is much lower than the actual tax (after complete tax declaration), unless you got a lot of deductions. So save some money for January (as C permits and native Swiss do)
  • I still think it's complicated I'll definitely contact a tax advisor to get clarified when and how it's actually worth the money for my wife to work instead of realizing that it wasn't worth it after completing the tax declaration. (Actually she will start working not only for the salary but to keep updated within her profession, to get other relations than those related to the kids and to learn speaking perfect German - it is just more fun when you get some money out of it)
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Old 30.08.2015, 14:51
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Re: Taxation - Double earner - minumum salary?

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Ok - thanks.

From the replies above I've learned:
  • that many different calculators and methods to calculate tax based on either gross, net salary etc. exists. With the example above I was just trying to compare consequences of double earner versus single earner with same yearly income. Seems only possible to figure out after result of actual tax declaration.
  • that the withholding tax apparently is much lower than the actual tax (after complete tax declaration), unless you got a lot of deductions. So save some money for January (as C permits and native Swiss do)
  • I still think it's complicated I'll definitely contact a tax advisor to get clarified when and how it's actually worth the money for my wife to work instead of realizing that it wasn't worth it after completing the tax declaration. (Actually she will start working not only for the salary but to keep updated within her profession, to get other relations than those related to the kids and to learn speaking perfect German - it is just more fun when you get some money out of it)
Taxation is not that different with a C permit, your taxed on net pay so 12-15% less than gross, then you will have 8-20k of deductions before looking at the tax rate,
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Old 31.08.2015, 16:54
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Re: Taxation - Double earner - minumum salary?

Sorry for hijacking your thread, but I have a similar question. What if the spouse starts working full time and makes more than the minimum?

I just checked and if I start working and make roughly 50% of what my husband is making at the moment, our total tax burden triples!
(I didn't specify any deductibles though.)

Considering the cost of day care, I'd pretty much be working for peanuts. (I know I shouldn't view it that way, but still...) And from what I understand, child care isn't considered a deductible, is this correct?

Just trying to figure out what kind of jobs I should be looking for, so we won't actually end up paying extra for me having a job. I live in Geneva by the way...
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Old 31.08.2015, 17:16
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Re: Taxation - Double earner - minumum salary?

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if I start working and make roughly 50% of what my husband is making at the moment, our total tax burden triples!
Something sounds wrong, it should only double.

Tom
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