What IRS tax base should I choose?

2021-03-04 18:51 Independent Worker / ENI

What IRS tax base should I choose?

Unless you are exempt from withholding income tax on Category B income (Article 101, paragraph 1 of the CIRS), whenever you issue a green receipt you will have to withhold it. And in order not to be surprised when you hand in the IRS, it is important to understand what percentage of retention you will have to make.

There are 3 retention percentages:

1 - 100% Incidence Base

It applies to most service providers and sales of goods. The base of incidence is 100%, that is, it is levied on 100% of the agreed price.

You must choose "the option" About: 100% - art. 101, paragraphs 1 and 9, of the CIRS"

There are, however, special situations in which the retention rate does not affect the entire price.

2 - 50% incidence base

Applies to:

Emigrants under the new tax regime
Clinical pathology doctors, radiologists and pharmacist clinical analysts;
People with a degree of disability equal to or greater than 60%
Income from intellectual property, under the terms of the 58th Tax Benefits Statute (EBF)

3 - Base of incidence 25%

Physicians of clinical pathology, radiologists and pharmacists clinical analysts with a degree of disability equal to or greater than 60% can use this third option.

Therefore, since you are not exempt, you are more likely to have to withhold over 100% of earnings. The retention is made by the paying entity. The value of your receipt will be net of withholding and then at your IRS you will have to report the total of the withholdings you have made.