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Tzedakah: Self-Employed Income Tax Deductions – which year are they deducted?

Question:

L’cvod HaRav,

My “ma’aser year” for Maaser cesafim is Rosh Hashonah and Rosh Hashonah (1st Tishrei to 29 Elul). This corresponds to September/October to September/October in most years.

In my country, the income tax for self-employed income is calculated on 6th April (which usually falls in Nissan and sometimes Adar Sheni) and can be paid anytime until the end of January (which usually falls in Shevat). This is paid through a tax-return. The amount due is based on the previous year’s gross profits.

According to the opinions that hold that income tax can be deducted from the total income from which maaser is due, which year is the income tax deducted in the calculation?
a) The year corresponding to when the profit is received from the client or customer, OR
b) The year in which the income tax first becomes demanded by the government, OR
c) The year in which the income tax is paid to the the government.

For example:
Reuven’s maaser year is between Rosh Hashonah and Rosh Hashonah (Tishrei-Elul 5781, Tishrei-Elul 5782, etc.)
He earned £20,000 between April 2021 (Nissan 5781) and April 2022 (Nissan 5782) .
On April 2022 (Nissan 5782), the government demands that he pay 20% (£2,000) income tax based on those earnings he made between April 2021 and April 2022 and has until January 2023 (Shevat 5783) to pay it.
It is approaching the end of 5782 (September 2022) and Reuven is calculating his maaser due. He does not plan to pay his £2,000 income tax bill until January 2023 (Shevat 5783).

Does he deduct the £2,000 from the total maaser on this year (5782), next year (5783), or should he have deducted last year (5781) and has now missed the opportunity to deduct it as a expense/loss?

(I would grateful if you could provide a source if possible. You are welcome to publish the question online for the benefit of others, if you do not mention my name)

 

Answer:

Hello,

According to the poskim who say that income tax can be deducted from earnings, the reason is because this money is not considered earned, since it is automatically going to the government. The being the case, it is deducted from the money of the year it was (supposed to be) earned, and not the year that it was paid. The money that you are paying the next year is like you merely held the money of the government, until the next year, when you will give it to them.

Best wishes

Sources:

שו”ת אגרות משה יורה דעה חלק א סימן קמג “אבל המסים של האינקאם טעקס שזה הוא מס מהריוח אין צריך לעשר עליהם משום דנחשב כלא הרויח זה כלל”.

 

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