When is it appropriate to choose a joint tax settlement with your spouse? Filing jointly for taxes is generally beneficial when the taxpayer's and spouse's "total" income tax is less than the sum of their individual taxes. However, there are situations when a separate tax calculation is more beneficial. Read more about the terms of a joint tax settlement in this article.

Spouses' income is subject to separate taxation. Subject to conditions such as being married, having joint property during the tax year, and being a tax resident, the spouses' income may be taxed jointly. To do this, one of the spouses makes a statement in the annual tax return. In addition to the previously filed separate income tax return by each spouse, you can subsequently file an adjustment annual return indicating a joint settlement.

A joint tax settlement applies if one of the spouses in the tax year did not receive income from sources according to which he is subject to taxation or received income in an amount that does not require payment of tax (up to PLN 30,000 in 2022) or has suffered losses, for example, from a business activities taxed on a general basis.

For joint filing of the PIT-37(36) return by spouses, the conditions must be met that neither spouse applies the line tax (PIT-36L), flat (lump) tax (PIT-28), tonnage tax, shipbuilding and reconstruction tax. An exception is the taxation of rental income (PIT-28) carried out outside of business activities.

In the case of entrepreneurial spouse(s), joint settlement only applies if they are both settled according to common rules (skala podatkowa).

To use the tax credit during the tax year, spouses can take advantage of the reduced value of income tax advances. A taxpayer (employee) may file a PIT-2 return with an employer stating that they intend to tax income with their spouse for a given year. In this case, if the taxpayer's income for the current year:

• • does not exceed PLN 120,000, and the spouse does not receive any income (except survivor's pension) – in such a situation, advances for all months of the year amount to 12% of the income received in this month, and the employer reduces it additionally (i.e. twice) for each month by an amount equal to 1/12 of the amount reducing the tax (PLN 300),
• • exceeds PLN 120,000 and the spouse does not receive any income or the spouse's income is in the lower range of the tax scale – in such a situation, advances for all months of the tax year amount to 12% of the income received in that month, and the employer applies a reduced tax amount (PLN 300).

Joint settlement for taxpayers occurs in 2 stages. (1) Initially, each spouse's individual income is calculated minus social security contributions, non-taxable expenses, and tax deductions from income. Further, these amounts are summarized as the joint income of the spouses. (2) Then the total income of the spouses is divided by 2, and the tax rate is applied to each part. Personal income tax deductions are applied to the amount of tax received. The resulting tax is multiplied by two.

(2) Then the total income of the spouses is divided by 2, and the tax rate is applied to each part. Personal income tax deductions are applied to the amount of tax received. The resulting tax is multiplied by two.

Benefits of a Joint Tax Return:

1. Spouses, one of whom earns little, and the other spouse earns much more, being at the second threshold of the tax scale (> PLN 120,000). Averaging their incomes can provide a tax benefit by applying a 12% rate to each half of income.

Example. The taxpayer and spouse intend to use a joint tax calculation. The taxpayer's income is PLN 160,000, the taxpayer's spouse's income is PLN 40,000. If the spouses make a separate calculation, they calculate taxes separately.

PLN 160,000 – 21,936 (social insurance contributions) – PLN 3,000 (expenses related to earning income) = PLN 135,064; tax PLN 15,620.48 = PLN 10,800 + 32% * 15,064

PLN 40,000 – 5,484 (social insurance contributions) – PLN 3,000 (expenses related to earning income) = PLN 31,516; tax 781.92 PLN = 31.516 * 12% – 3,600

The total tax will be PLN 16,402.4.

If the taxpayer and spouse choose a joint tax calculation – the tax will be calculated as follows.

31,516 + 135,064 = PLN 166,580

166,580 / 2 = PLN 83,290

Tax from PLN 12,789.6 = PLN 83,290 x 12% – PLN 3,600 = PLN 6,394.8 x 2

The choice of joint taxation saved PLN 3,612.8 (16,402.4 – 12,789.6).

2. When one of the spouses does not earn at all, then he cannot use the amount that reduces the tax. In the case of a joint tax settlement, the reducing amount (PLN 3,600 per year) will further reduce the joint earnings. This amount will be deducted from each half of the earnings of the working spouse, that is, it will not be "lost" and double the amount will be deducted.

In terms of savings, the situation will be neutral when spouses (after deductions from income) receive a net income of up to PLN 120,000: the "joint" tax will be the same as when submitting two separate declarations. That is, when both spouses are taxed at the same tax rate and have an income above PLN 30,000, then they are entitled to the same tax reduction amount, and the joint tax calculation will not bring additional benefits to the spouses.