How is my income tax calculated?

Got a tax question? We’ll answer for free by email.

Bitte gib eine gültige E-Mail-Adresse ein

Ask your question

It is usually a challenge for users to read and comprehend their extracted profit and loss statement and logic behind the values in the income tax submission tab found in the taxes' universe of the application. The usual reason behind it is the lack of preemptive accounting knowledge. Well, not anymore! As it is part of Accountable's vision to simplify your accounting in order to provide you with real time clarity on your finances. This article will cover both the accounting side and the product side of income tax calculations.

What's the rule?

The way your income tax gets calculated is simple:

• Total Turnover - Operating Costs (for example: good for resale & Raw and professional materials - Subcontracting) - Social Contributions +/- Capital gains/losses -Financial expenses - Amortization = Income before taxes

• Your relevant income tax % is then applied to your Income before taxes, which provides you with your estimated income tax.

• Total turnover = Sales revenue, Operating Costs = All your direct costs variable to your business activity + Fixed Costs, Financial Expenses = Interests, Amortization = Depreciation of your fixed assets over a period of time

To have an idea about the scope of operating costs, look at the picture below:

How does the app computes your estimate?

On this end, you can compare/look-at these two docs/locations in your app or web:

Figure 1:

Figure 1 is the example of your app/web income tax submission tab. You can find it in your taxes' universe under your current, future or past obligation tab. You have left-middle side various options that you can track and input in, for instance: income, professional capital gains and review etc. The sum/accumulated value of all the accounting requirements and figures mentioned above in the accounting side + figures related to your deductibility are available here. All you need to do is to explore.

Figure 2:

Figure 2 is the example of extract of your profit and loss statement. This can be downloaded from your Data Export Universe subject to the period you would like to download it for (For instance: for 2021 only). This is the in-product execution of your accounting, where the methodology is implemented. You can look at your Estimated Income tax from here, found after Net Income before taxes. To understand more about the Profit and loss, read this article.

So, the two amounts that you can compare rectify from these two documents are:

• Estimated Income tax from your profit and loss extract (Figure 2)

• Total tax amount from your income tax submission window, found under the 'Review' section (Figure 1).

How are these accounting figures accumulated or computed?

When you encode your expenses, invoices and add your asset classes into the app/web, these gets added under a particular code specified by a numeric (Made by the tax authorities). The reason why it is related to the code because it corresponds to the section, when you file your income declaration in the government's official tax reporting website. These accumulated values are then linked to your income tax submission and profit and loss extract.

Author - Valesca Wilms

As content marketing lead at Accountable Belgium, Valesca writes about freelancing, self-employment, and taxes based on her own experience as a freelancer.

Who is Valesca ?