Earnings-related allowance is taxable income. For withholding tax, we can apply either
- a revised tax card applied for a benefit
The tax rate is applied as such. You must send the revised tax card to IAET-kassa yourself.
- or a tax card determined for employment income
The tax withheld will be at least 25%. You do not need to send the salary tax card to IAET-kassa.
You are personally responsible for making sure that the tax on your earnings-related allowance is appropriate. IAET-kassa cannot retroactively adjust the withholding tax on allowances that have already been paid. You can see your withholding tax information in the Status information section in eService and in your payment notification.
We recommend that you provide us with a revised tax card for the purpose of the benefit
As an allowance recipient, we recommend that you apply for a revised tax card for a benefit for the taxation of your earnings-related allowance. In this case, we will apply the tax rate indicated on the tax card. This will also allow you to determine the appropriate tax rate specifically for your earnings-related allowance.
You can apply for the tax card via the Tax Administration’s online service. You can send the tax card to IAET-kassa as an attachment via eService.
You can send a new tax card to the fund at any time. If you send us a new tax card, we will apply the new tax rate for allowance payments made after we have received the card.
Tax card for salary or wages
You do not need to send us the salary tax card automatically mailed to your home address by the Tax Administration, as unemployment funds receive this information directly from the Tax Administration. If we use a salary tax card for withholding tax on your earnings-related allowance, the tax rate is at least 25%, even if the tax rate stated on your tax card is lower.
The income limit for the salary period is stated on your tax card. Tax is withheld according to the basic rate up to the income ceiling and according to the additional rate for the excess amount. For the payment of an earnings-related allowance, the monthly income ceiling on a salary tax card is divided by 21.5 to determine the daily income ceiling.
New tax cards are applied from 1 February.
For allowance payments in January, we apply your tax rate from the previous year, unless you send us a separate tax card for January. The accumulated income on the tax card is reset at the turn of the year.
Good to know when you are checking your tax return: If you have received an earnings-related allowance, the benefits paid will be reported as your taxable income for the year. The fund will report the benefits to the Tax Administration based on the payment date regardless of the period covered.
More information can be found on the Tax Administration website.