Have you been temporarily or permanently laid off during the coronavirus pandemic?

A lot of people have been laid off from work on a temporary or permanent basis in recent time. The tax administration points out that a person receiving unemployment insurance should apply for a new tax card for social-benefit income.

Earnings-related unemployment daily allowance (ansiopäiväraha), basic unemployment daily allowance (peruspäiväraha) and labour market subsidy (työmarkkinatuki) are the benefit incomes for which it is good to apply for a new tax card, reminds Päivi Ylitalo, Chief Inspector of personal taxation at the Tax Administration.

- If you become unemployed, you should first find out what kind of benefit you are entitled to and for how long. Unemployment fund members are generally entitled to earnings-related daily allowance. If you are not a member of the unemployment fund or the necessary employment conditions were not kept, the person can receive labour market subsidy or basic unemployment allowance paid by Kela, Ylitalo says.

Lower income does not automatically mean a lower tax rate

Benefits receiving can affect to the tax rate. Using tax percentage calculator, it is good to check how receiving benefit income affects the tax rate and, if necessary, apply for a new changed tax card intended for the social-benefit receiving. It is important to note that earnings-related daily allowance is also a benefit and must be declared in the new tax card application as a benefit and not as salary income in order for the tax rate calculation to go correctly. If the unemployment is temporary or if you work part-time during it, you should to apply for the changed tax card both for benefit and wage income.

Päivi Ylitalo reminds that although income often drops as a result of receiving the benefit, the tax rate does not necessarily decrease.This situation may be due to the fact that it is impossible to do the same tax deductions from the benefits and other subsidies as from wage income.

Estimate your income as accurately as possible and make changes in tax card using MyTax (OmaVero)

When applying for a tax card for benefit income, use the same instructions as for usual tax card change. The applicant must have the most accurate estimate of his or her total income for the full year. It is quick and easy to make the tax card change using MyTax (OmaVero), if you collect the necessary information in advance.

- The information required is the amount of wages received before temporarily lay-off or complete dismissal and the amount of tax paid thereon. This information can be found, for example, on the latest pay slip or, alternatively, the salary information provided by the employer, which is already visible in OmaVero. In addition, the most accurate estimate of possible income for the rest of the year is needed, as well as information on the duration of the lay-off and the amount of benefit to be paid during it, Päivi Ylitalo advises.

Instructions: How to order Finnish tax card for benefits in MyTax - for example in case of layoff

The full information and the source text can be found at vero.fi.