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Old 15.09.2016, 11:59
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Withholding tax vs tax return

Hello,

I hope I could get someone`s experience here on a topic I tried researching but could net get concrete answers on.

I am aware on the CHF 120K tax threshold for annual tax returns but I am looking to find out

1. Does the tax bracket increase/decrease for annual tax returns versus tax at source, or is it irrelevant (for salaries just over the 120K mark)?

2. Can you use your 3a pillar to bring your taxable income under 120K and would that make you eligible to be taxed at source again?

Thanks very much in advance

Nikolay
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Old 15.09.2016, 12:26
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Re: Withholding tax vs tax return

My understanding is that in zurich (https://www.stadt-zuerich.ch/fd/de/i...rklaerung.html) the decision for tax-at-source (quellensteuer) depends on your brutto salary. Thus, my guess is that the pillar3a wont change that. I have no direct experience however.

Regarding difference in amount (tax return vs tax-at-source), my understanding is it depends a lot on what you can deduct (pillar 3a, medical bills, transportation cost, etc). We consulted a tax lawyer once just to get an understanding of all possible deductions and then did it ourselves in subsequent years. In general though, tax-at-source is a very good deal.
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Old 15.09.2016, 12:36
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Re: Withholding tax vs tax return

Whether or not you are taxed at source has to do with your permit/nationality and not your salary. As far as I know, B and L permit holders are taxed at source unless they are married and file joint returns with a C permit holder/Swiss national (then it is possible they may be exempt).

The 120,000 threshold does not determine you are taxed at source or not, but whether or not you have to make a declaration to the tax authorities.

If you are under 120,000 (gross income, so getting 3a does not affect this) you are taxed at source and can leave it at that. OR... if you feel you should have paid less tax than what was deducted, you can voluntarily complete a tarif correction form. (example for kanton Zug https://www.zg.ch/behoerden/finanzdi...5.pdf/download)

If you are over the 120,000, you need to complete a tax return. You state on this tax return how much you have already paid in Quellensteuer for the year and it is deducted from your final amount.
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Old 15.09.2016, 12:42
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Re: Withholding tax vs tax return

following lablatt's link.... here is all the info you probably need, in English.

https://www.stadt-zuerich.ch/content...t_qst14_en.pdf
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Old 15.09.2016, 12:48
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Re: Withholding tax vs tax return

Thank you both, it`s quite clear now.
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Old 15.09.2016, 13:29
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Re: Withholding tax vs tax return

Tax at source uses the same rates in the whole canton. But for ordinary assessment the rate varies for different municipalities. If you live in a municipality with a lower rate than cantonal average, you'd pay less tax with ordinary assessment than with tax at source even without extra deductions like pillar 3. And conversely. In Zürich you'd pay more tax normally.
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Old 15.09.2016, 16:12
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Re: Withholding tax vs tax return

Actually I just spoke to the Zurich tax office yesterday.
Once you did a tax return once, due to yearly income being
over 120 000 chf ,you always have to do one in the future.
Even if you have no income for a year.
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