The Income Campaign ended a few months ago but there is a ‘myth’ that always prevails: If you have two payers, the declaration always comes out to pay. This, really, doesn’t have to be like this. And it all depends on the withholdings that each company has applied to us throughout the year, under the Personal Income Tax (IRPF).
“They offer you to have two jobs, two salaries and two payers. Horror. You think, ‘I’ll pass, I’ll stay as I am with my part-time job, because if I have two payers the Treasury is going to crush me’. Well, you should know that this is an urban legend,” began explaining the lawyer Virginia López Bello, who has assured that the Tax Agency is not looking for people who work or have worked in several companies so that they “pay double.” “It doesn’t work like that,” he clarifies.
“Having two payers does not mean that you are going to pay more personal income tax. So, why do some people with two jobs have to pay the tax return? Here is the real reason: withholdings,” he explains, informing that each company retains a certain percentage of personal income tax. When submitting the declaration, the Treasury does the accounts. And this is where “the trouble comes.”
The problem of withholdings
Virginia López explains it with a simple example: let’s imagine that an employee works in one company in the morning and in another in the afternoon. In the first, they withhold 12% month by month, while in the second, they only withhold 2%. When the time comes to file the return, the Treasury adds up everything you have earned (all your income) and sees that a total of 14% has been withheld.
“Simplifying a lot and taking into account your circumstances and deductions, your effective rate finally turns out to be higher. Then the declaration arrives and the Treasury tells you, ‘You are missing 1,000 euros’ and you: ‘My God, they have punished me for having two payers!’ And the Treasury, if it deigned to be accessible and transparent with the taxpayer, would tell you: ‘No, creature, it’s just that during the year your two payers withheld little from you,’” the lawyer explains.
Why does this happen? Personal income tax is a progressive tax, the more you earn, the higher the percentage that must be applied to the payroll. The problem when you have two payers is that companies usually do not take into account that this worker is in a situation of multiple employment, and must adjust the personal income tax according to the total income they have been receiving.
“You don’t pay more for having two salaries and two jobs, what can happen is that they have withheld less than what you ultimately have to pay,” adds López Bello, who reiterates that “The Treasury does not punish labor plurality, it simply does the math.”
To avoid “scares”, the lawyer explains that you should ask the company to apply a higher withholding tax, paying month by month what corresponds to the Tax Agency and thus avoiding the fact that, when the time comes, the declaration comes out ‘to be paid’.
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What does change when you have two or more payers
There is an aspect to take into account if you have two or more payers. In this case, if with the second we receive income of more than 1,500 euros per year, the threshold that requires us to submit the Income Tax return drops to 15,876 euros gross per year. On the other hand, when you have a single payer, the limit that requires submitting it is 22,000 euros.