Hi Everyone,

I was hoping all of you could give me some advice and share your experiences about annual tax declarations.

I'm a permit B holder so I do pay source income tax every month and I do make over the 120K threshold so I am required to do an income tax declaration every year. I thought this was a good thing.

However, i just had a tax preparer do my taxes for 2014 (i know a bit late) and my taxes are very simple to do, no kids, no special deductions except for my pillar 2 contributions.

I've found out that i actually need to pay more taxes back! Is this right? I know the quellensteuer is based monthly on a percentage of your monthly income that moves with the money you make that month. There is one month out of the year where i get a bonus and it shoots my quellensteuer out the roof! So if anything, i thought i would get a return due to paying so much more that one month.

Thanks for your sharing your experiences,

Quellensteuer seems to assume some reasonably generous allowances, so if, when you use your real figures, these aren't applicable or you have more tax liabilities, then you may end up paying more.

Anecdotally it seems about 50/50 whether you'll pay more or get a refund, which makes sense if Quellensteuer is calculated on some sort of average.

Have you really been contributing to pillar 2 or pillar 3? And if it was pillar 2, how many?

Cheers
Andy

Tax at source uses a % for communal taxes that is the average over the canton. If you do your returns, you use the actual commune tax rate which in your case seems to be higher than the average.

Only pillar 2, i don't have a pillar 3 account.

That reminds me, if i have a pillar 3 account what is the maximum deduction i can get with this per year? Also any difference in deductions between 3a and 3b?

Thanks miniMia, this seems exactly what it is. I just wanted to know if this was a common thing and if other people usually pay more at the end of the year?

So have a look into your tax declaration, Point 16.1. There is the full amount you paid into your second pillar.


Third pillar deduction and taxation you can find here.

Cheers
Andy

Assuming you are in Zurich, the Quellensteuer rate is set for the whole Canton. If you live in Stadt Zurich or one of the close by town areas, you very likely will need to 'top up' and it could be a few thousand. The 'good news' is that once you actually submit, it will take quite a while to come back to you, and even then when you do get a big bill, you can write a letter quickly to them and ask for a 'payment plan'... We had no problem getting ours split over 4 or 6 monthly payments...

We are a double income with one full and one part-time salary and do quellensteuer plus tax returns but our salaries have been slowly coming down each year due to me working less, so we did not get a top up bill last year...we also have three kids so there are some deductions here and there.

If you have the extra money, you have the option of putting the money into a top up pension (pillar 3) and that reduces your taxable amount. Your accountant may be able to tell you what amount would be needed to be set aside to avoid the extra tax liability. We pay about 200chf per year to have our taxes done professionally...

Thanks for this info, very useful!

One question about what you mentioned above. Is there any risk about just waiting for the bill for the difference or "top up" as you call it? Or is there something we should do proactive to pay it advance? I'm just concerned about being charged for interest if there is still money due.

I will definitely open a pillar 3 account as well as raise my percentage for my pillar 2 account to make sure i get enough credits to not pay more.

Thanks again!

You will be charged interest if you have not paid in full. When you do the tax return you can see the tax payable assuming you use the computer program from the canton to fill in the form.

So that is the thing, i just completed my taxes for last year and sent them in the mail, but there is a difference and I do owe more. So my question is, do I wait for a bill from them or do I proactively pay the difference somehow? I assume if I don't pay now, i'll be charged for interest, but i'm just not sure how I proceed to pay the difference.

Thanks!

I always paid far too much in advance, they pay interest on credit balances & its tax free. They will refund at any time so use them as a high interest bank account.

When this happened to us in Canton Zurich, there was no 'liability' until they issue the first bill (invoice) which has a deadline. Then if you can't pay immediately you have to write a letter (we emailed and they said they would accept an email the first time but in future to always write a proper letter) - stating the payment plan that you would like. They then re-issue the new invoices with the amounts separated into monthly payments, and it's only once these come that you need to start paying.

Because it's a Quellensteuer - tax return - adjustment - extra invoice situation, they don't expect any interim payments 'in advance' and any interest payable is a very small amount as it's not interest on the whole year's tax, just a tiny bit of interest from paying late on the adjustment amount..