Taxes sent an important email, it hides a nasty surprise if you do nothing

Better take a serious look at the last tax email.

Taxes sent an important email, it hides a nasty surprise if you do nothing

Better take a serious look at the last tax email. Doing nothing could result in an unpleasant surprise for your finances.

“Action is required on your part.” In recent days, taxes have sent an email to thousands of taxpayers. This is not a fraudulent message but a new official note from the General Directorate of Public Finances (DGFiP). This email is technical but deserves your full attention because it could lower or increase your salary from January onwards. But don't get excited too quickly: it could hide a nasty surprise.

The email in question is aimed at people who have adjusted their withholding tax rate themselves in 2023. This action is recommended when your income increases during the year. However, no matter when you made this adjustment, this rate expires on December 31st. From there, two options exist for 2024:

It is necessary to look carefully at this subject and not to make your choice randomly. However, the General Directorate of Public Finances does not explain it in detail in its email. So, how to make the right choice?

First case. If, in 2023, your income has increased compared to 2022 and you have adjusted your rate accordingly, it is advisable to ask the tax authorities to maintain this rate for 2024. To do this, you must go to the impots.gouv website. .fr, connect to your particular space, click on the “Withholding tax” tab, then on “Update following an increase or decrease in your income”, validate and complete the requested elements.

If you do nothing, the IRS will apply a rate based on your income from 2022.  Since it was lower, your rate will not match your current income. Each month, you will pay less taxes than expected and your take-home pay will increase. But this apparent good news hides a trap: in the fall of 2025, when paying tax on income received in 2024, you will have to face a significant tax catch-up, because you will not have paid enough taxes on income during the year 2024. The amount to be paid could then be significant and cut into your budget that year.

Second case. You already know that in 2024 your income will be at a similar level of the year 2022. In this situation you don't have to do anything. The tax authorities themselves will take care of making the adjustment and sending the appropriate rate to your employer.

In any case, take the time to evaluate the income you should receive in 2024, compare them with those received in 2022, and thus decide what will be the best option for your finances in order to smooth out the year payment of income tax. Unless you prefer to pay the tax authorities all at once... with a large sum to pay.

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