2023-05-20 05:00:00
The reporting period is already coming to an end next Monday, May 22 at midnight, for some taxpayers. This first deadline concerns tax households that still use the paper form, the postmark being authentic. As a reminder, the online tax return is now mandatory for everyone. Only those whose home is not equipped with an internet connection, or who do not have the capacity to complete the online form, can still use the famous copy n°2042 and the additional documents (2042-C, 2042 -C PRO, 2044, 2042-RICI…).
Before even carrying out the inventory of income received in 2022, it is advisable to check the information pre-filled by the tax authorities, starting with the family situation. Each change must be declared within 60 days of the event (birth, marriage or Pacs, divorce, death, etc.) on the site impots.gouv.fr, in order to adjust the home’s withholding tax rate. On the other hand, there is no guarantee that the change notified to the administration will indeed be taken into account in the pre-filled form. This is why it is essential to be attentive.
“Favoring a family policy”
Especially since the family situation can generate serious advantages. In addition to the tax advantages, such as the tax reduction for tuition fees or the tax credit for care expenses outside the home, the simple mechanism of family quotient is beneficial. Created in the post-war period, in the 1950s, it was set up to encourage the birth rate in a France bruised by the Second World War. France is one of the few countries, along with Portugal and Luxembourg, to have implemented such a system, INSEE reminds us in a study published in 2021.
“The genesis of the family quotient consists in favoring, from a fiscal point of view, a family policy, and thus large families”confirms Guy Parlanti, tax lawyer associated in Paris with the firm Gozlan & Parlanti.
“The family quotient designates the number of shares allocated to each tax household for the calculation of income tax”recalls the Ministry of the Economy on a dedicated pageas defined at Article 194 of the General Tax Code. It thus makes it possible to divide the taxable income according to a number of shares: a couple with two dependent children thus has three shares (two for adults, and two half-shares for children).
A significant gain…
“It is a logic which consists in breaking the progressiveness of the tax”, underlines the lawyer. In fact, it aims to modulate the final amount of income tax according to the number of children in a household, in order to take into account the costs inherent in families. The progressive scale of income tax sets the rate of the first bracket at 0%, when income is less than 10,777 euros.
« When you have an additional half share, it is no longer 10,777 euros, but 16,165 eurosillustrates Guy Parlanti, who recalls that the gain is not identical according to the family situation of the tax household. If we have a taxpayer, whose household taxable income amounts to 50,000 euros, and whose marginal tax rate reaches 30%: the amount of tax amounts to 8,594 euros for one part, before tax benefits. Now, a household with two shares would have 5,238 euros in tax to pay. »
… To be assessed when filing your income tax return
From this perspective, when completing their 2023 tax return, taxpayers should consider two points:
- The tax connection of minor childrenin the context of a separation: “ When the spouses are subject to separate taxation (…), each of them is considered to be a single person having in his charge the children for whom he is mainly responsible for the maintenance.recalls the legislator. In this situation, as well as in the event of divorce, breach of the civil solidarity pact or any de facto separation of unmarried parents, the child is considered, until proven otherwise, as being dependent on the parent. where he resides principally. »
- The tax attachment of adult children, up to 21 years old, or even up to 25 years old if they are studying : it allows you to benefit from the advantages resulting from the family quotient. On the other hand, the taxpayer must add the income received by these same children, which can inflate the taxable income. This is the reason why the gain of this option should be compared with the tax detachment of adult children, which allows the deduction of alimony, under the maintenance obligation, when the child is unable to meet financially to his own needs.
« The family quotient goes further than family policynuance the lawyer specializing in personal taxation. You have cases in which you can benefit from an additional half share of the family quotient regardless of the number of dependent children. For once, we are in a logic of aid or reward from the State with regard to particular situations. »
A capped mechanism
Note: the increases in the family quotient mentioned above – in respect of the family or not – are subject to a cap. Clearly, it is not possible to accumulate half-shares in order to reduce one’s tax to nothing. “In the general case, the tax reduction linked to the family quotient is limited to: 1,678 euros for each additional half-share; 839 euros for each additional quarter share”recalls Bercy on its site, citing Article 197 of the General Tax Code. “In practice, the limitation only comes into play from a certain level of income”specifies the Official Bulletin of Public Finances.
The doubling of the half share for the first rejected child
As part of the tax cut of two billion euros for the most modest, a reform of the family quotient would have, for a time, been considered by the government. It would have allocated a full share of the family quotient – and not an additional half share as is currently the case – from the first child. “I don’t know where it comes from (…)”had swept Gabriel Attal, Minister of Public Accounts at the microphone of BFM TV, on May 5th. Asked by Capital.fr last week, the minister’s office confirmed to rule out this track.
And for good reason, if the measure is beneficial for families (861 euros in savings for a couple with a dependent child and a taxable income of 45,000 euros, according to simulations carried out by France Info), it is above all very expensive for public finances.
The family quotient, already reformed under Hollande…
In the past, the family quotient has been the target of several reforms, the most significant having been carried out under François Hollande, in 2013. The socialist government, then led by Jean-Marc Ayrault, then decided to lower the amount of the ceiling the benefit of the family quotient. As an indication, the last lowering dated back to 1998, the cap itself having been put in place in 1983.
The executive then mentioned a measure “evidence of justice”, “implemented from 2014”which should improve “by nearly a billion euros the situation of the family branch” Social Security, indebted to the tune of 2.5 billion euros in 2011. The majority had already touched on this ceiling, in October 2012, lowering it from 2,336 euros to 2,000 euros, in accordance with a campaign promise from François Holland.
… To reduce the advantage with the wealthiest
Unsurprisingly, these two combined reforms provoked a real outcry. By further capping the family quotient, the socialist government has, de facto, reduced the resulting tax advantage for the wealthiest. The ancestor of the Les Républicains party, the UMP then invoked the defense of the middle classes, affected, according to the party, by this reform. This measure was, on paper, to increase by 64 euros per month on average the taxes of 1.3 million households, or 12% of households with dependent children. According to Matignon in 2013, the families affected by the reform were almost all among the 20% of the richest French tax households.
« The capping of the family quotient is a device mainly concentrated at the top of the distribution of living standardsconfirms INSEE in its 2021 study. It concerns less than 3.5% of households among the poorest 75%, while 86% of households affected by the ceiling on the family quotient belong to the 20% wealthiest including 28% among the wealthiest 5%. »
Under Macron, the half-share of certain widows reinstated
Although applied with a capping mechanism, the family quotient is likely to concern all tax households a priori, without distinction of income. To reserve the benefit for the most fragile families, a parliamentary report recommended in 2018 to replace the tax advantage with family allowances for all from the first child, subject to means testing.
“It is a red line which, for us, is not acceptable. It is the pure and simple questioning of the whole family policy which aims to question the family quotient “, had then reacted Christian Jacob, president of the group Les Républicains in the National Assembly. In the past, other actors have advocated the establishment of a tax credit for low-income families with dependent children. However, no major project seems to be under consideration.
The only notable measure relating to the family quotient, under Emmanuel Macron’s five-year term: the additional half-share for widows of veterans over the age of 74. Included in the 2023 finance law, this measure is intended to allow all surviving spouses – regardless of the age of death of the other spouse – to benefit from an increase in their family quotient, with an additional half share. Thus, a widow or widower over 74, alone and without dependents, receives 1.5 shares, not one share. The only condition for claiming this tax benefit: the deceased spouse had to hold the combat card at the time of his death.
The family quotient, totem of taxation in France
The widows’ half-share scheme, also called “old parents half share” – excluding the spouse of a veteran and/or invalid – has been phased out under the presidency of Nicolas Sarkozy. To relieve surviving spouses facing mourning and an increase in their taxation – due to the loss of the second part of the family quotient – several senators had tabled a proposal as part of the 2021 finance bill. The elected officials then proposed the establishment of widowhood insurance, but this track was rejected.
More recently, the Borne government recently announced the implementation of an individualization of the withholding tax rate for married couples and PACS couples, without however calling into question the principle of conjugality of income tax. Difficult, for the time being, to imagine the launch of such a debate on the familialization of taxation in France, as the family quotient still appears today as a totem.
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