The personal allowance is an addition of various types of expenditure. This allowance can be offset against the income in the 3 boxes. You are entitled to all personal tax allowances if you satisfy the relevant conditions. The personal tax allowances reduce your income before calculating the tax due.
- you opt for resident taxpayer status;
- you do not opt for resident taxpayer status;
Personal allowance items
A personal allowance is involved if one or more of the following items apply to you:
- alimony paid and other expenditure on maintenance;
- losses on loans to new businesses (‘Agaath’ loans);
- cost of living of children younger than 30;
- medical expenses and other extraordinary expenditure;
- expenditure on weekend visits by handicapped children of 30 years or older;
- educational expenses;
- expenditure on listed buildings situated in the Netherlands;
How do you offset your personal allowance?
You can offset the personal allowance against the income in the three boxes, provided that your offsetting the personal allowance does not reduce the income in a particular box to less than zero. There is a fixed order of offsetting:
- You deduct the personal allowance from your income from employment and home ownership (Box 1);
- If the allowance exceeds your Box 1 income, you offset the excess against the income in Box 3;
- You then deduct any remaining amount from your income in Box 2;
If it should be impossible to offset the entire amount, the remainder can be carried forward to the next financial year.
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