Tax percentage for second job

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one
Posts: 14
Joined: Sat Feb 22, 2014 4:49 pm

Tax percentage for second job

Post by one » Sun Jul 13, 2014 12:56 pm

If the primary job is a full time work and you also work as a freelancer (for a foreign company abroad over the internet), how does the tax system work in this case? Is it simply sum of both earnings and tax according that? In that case will the sum of both earnings will be of course high, so will the tax percentage increase?

Here's a quote from Upphew's message:
Taxes are calculated from the annual income. If you tax your primary job enough, you can have 0% at the secondary job.
Can someone explain it? How much tax from the primary job is enough?

I have visited the tax office couple of times, either they don't have clear information or I could not understand it.



Tax percentage for second job

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Jukka Aho
Posts: 5237
Joined: Fri Apr 06, 2007 1:46 am
Location: Espoo, Finland

Re: Tax percentage for second job

Post by Jukka Aho » Sun Jul 13, 2014 2:59 pm

one wrote:Here's a quote from Upphew's message:
Taxes are calculated from the annual income. If you tax your primary job enough, you can have 0% at the secondary job.
Can someone explain it? How much tax from the primary job is enough?
I think they simply mean you can order a tax card for your primary job with a sufficiently high income tax percentage (which you can set yourself) that whatever sum is going to be withheld by your employer from your monthly paychecks will also cover the taxes you would otherwise need to pay from your freelance income... so the freelance income can be nominally considered “tax-free”.

So in a way, your employer would withhold more income tax than is necessary from your monthly primary job paycheck — which means you will receive less money from your primary job on your bank account each month. But it will all even out at the end of the tax year when they calculate your actual, combined income from both jobs (primary and freelance) and check whether the “overcharged” taxes from the primary job were enough to cover the actual income tax you would otherwise need to pay for your freelance income. At that point, you will either get a tax refund (if the percentage you set was too high for your combined, total income) or will be ordered to pay the outstanding tax to the tax man (if it was set too low and isn’t enough to cover it all), whichever way the total sum goes.

It is basically just a way to balance and distribute the collection of the income tax over the duration of a tax year by piggybacking it all nominally on the paychecks from the main job, with the intention that things will (hopefully) even out at the end and you won’t get any big surprises, one way or the other... Of course, calculating a suitable “overcharge” tax percentage for your primary job will require having some realistic idea of the total freelance income you think you would likely be able to earn during a tax year.
znark


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