Taxpayers in Finland recently received their new tax cards for the year, but many recipients are likely to log into MyTax to change the automatically generated tax cards.
These days people are updating their tax cards throughout the year like never before, according to Finland's Tax Administration.
Heikki Koskela of the agency said the shift relates to the changing nature of worklife, with people nowadays often having multiple employers.
The tax cards sent out at the turn of the year generally come into effect from February, which means that the earnings threshold applies to eleven months of income.
The Martha Foundation warns of nasty surprises at year's end if the initial withholding rate is too low.
Finland's taxation system is highly progressive, meaning that small increases in income will also increase the percentage of tax due on the whole year's income.
"If you have too low of an amount on your [pre-filled] tax card, you won't pay enough tax throughout the year… when you exceed the income threshold, you start paying radically more tax," said Marina Nygård, an economic advisor at the organisation.
Keeping track
The tax office bases your tax percentage on past income. But it's up to taxpayers to track their own deductions.
"The customer knows which deductions they can make. That's information we never have," said Koskela.
Any potential tax deductions should be made no later than when you file your tax return, but you can also declare them when ordering a new tax card to get the most accurate tax percentage as possible.
For those with many sources of income it can be unclear just how much they'll earn before the year is over.
"We're all usually wiser by autumn, so it's good to re-evaluate your income for the year between October and November," Koskela explained.
Nygård advises people to log into the MyTax portal to raise their withholding rate to avoid sudden increases.
When figuring out your annual income, calculate your monthly salary 12.5 times to take into account holiday pay, but also any potential benefits.
"People might not consider the fact that benefits like those related to parental leave or unemployment also impact the tax percentage, and need to be taken into account when ordering a new tax card," Nygård explained.
Forced savings?
Tax refunds now arrive in bank accounts during the summer, but the tax office used to pay them out at the end of the year, around Christmas. The cash injection was sometimes viewed as holiday spending money.
Nygård pointed out that some people have a habit of overestimating their earnings — and pay more taxes — as a way to "save" money.
"Personally, I think it's always a better option to set a realistic tax percentage and instead set up a regular savings plan," Nygård said, noting that while the tax office pays a small interest on refunds, that money isn't accessible until it lands in your account.
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