In the PIT-11 form for 2022, employees will not find any information about the amount of the middle class tax break applied to them. Therefore, they will be asking employers about the amount of the break and how to include it in their tax returns. 

When filing their tax return for the previous year, the taxpayers will not report whether they were entitled to the middle class tax break, whether they actually used this entitlement or in what amount.

The amount of tax should be calculated according to the tax scale in effect for 2022, completely ignoring this tax break.

Once the taxpayer has filed his or her tax return, the head of the relevant tax office will recalculate the tax liability. This will be the case for any taxpayer who has earned an annual employment income in the range of PLN 68,412 to 133,692 gross.

The calculation will be made in accordance with the regulations in effect on 1 January 2022, that is, taking into account the middle class tax break, the 17% tax rate in the first tax bracket and the annual tax-reduction amount of PLN 5,100. The authority will also take into account the deductions and tax credits that the taxpayer has included in his or her return.

The tax calculated in this way will be the hypothetical tax due for 2022. If it is lower than the amount of tax resulting from the tax return filed by the taxpayer, the difference will constitute an overpayment of tax, which will be refunded to the taxpayer.

The head of the tax office has 21 days from the date the return was filed to inform the taxpayer of the amount of any overpayment. 

The taxpayer does not need to take any action to initiate the calculation of the hypothetical tax due for 2022. It is the authority itself that will verify whether the taxpayer meets the conditions for determining the hypothetical tax, and then calculate the amount itself.

Only those taxpayers with an overpayment of tax will learn about the result of the comparison of the two amounts. The mechanism will apply only to the 2022 tax settlement.

The difference between the tax liability resulting from the return and the hypothetical tax due for 2022 will be calculated on the assumption that the taxpayer has paid the entire liability resulting from the return prepared by him or her. Accordingly, if the return shows an amount to be paid, the taxpayer should pay it by 2 May 2023. Otherwise, if the taxpayer is refunded an overpayment resulting from the above difference, there will be tax arrears, which will have to be paid with default interest.

We suggest that, along with sending the PIT-11 form, employers inform employees about the above rules for preparing the 2022 tax return.

Find more in the PRO HR January 2023.