Income tax: a complete guide for 2021

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Income tax: a complete guide for 2020

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, Every year, between March and April, UK citizens must fulfill a very important obligation before the government: the declaration of the Income tax.

Although many people see the task as a beast with seven heads, anyone can make their own statement. Just get informed, gather the necessary documentation and fill out the form carefully.

In 2021, the deadline for declaring income tax is from March 2 The April 30th. With that in mind, we have prepared a guide with everything you need to know to complete your data with peace of mind. Want to know more? Check it out below!

What is Income Tax?

Income Tax is an annual tax levied by the federal government on the financial gains of individuals and companies. Under taxation rules, citizens with a higher income pay more taxes, while those with a lower income pay less.

Because it is applied to citizens and companies, the Income Tax is divided into two categories:

Individual Income Tax (IRPF)

Rate varies according to income, according to a pre-fixed table. Taxpayers who earn below the limit established for the mandatory declaration are exempt;

Corporate Income Tax (IRPJ)

Applied to companies, its rate is based on profit (actual, assumed or arbitrated, depending on the branch and size of the business). The rate is 15% on the profit calculated, with an additional 10% on the portion of the profit that exceeds R $ 20 thousand per month.

How does the income tax return work?

Income Tax is monthly withheld from salary or paid based on other taxpayer earnings. Therefore, the mandatory annual declaration is a way for the Federal Revenue to verify if the citizen is paying more or less taxes than he should.

Making the statement is simple: just install the computer Income Tax application, available on IRS website, and then fill the form with the correct and updated data. Then, just check and send through the system.

When entering data, it is important to know the concepts of calendar year and fiscal year.

Calendar year is the period in which expenses were recorded, and fiscal year is the current year, in which the declaration is being made. I.e, in the fiscal year 2021, taxpayers send the declaration for the calendar year 2021.

The amount to be paid or refunded is informed as soon as the declaration is completed. When the system identifies that the person has paid less tax than he should, he must make up the difference. If she has paid more over the course of the year, she receives a refund.

Payment can be made by boleto or automatic debit, and payment is made via bank deposit. Therefore, pay great care when filling bank details on the form.

Income Tax Deductions

In addition to assets and income, the taxpayer must also inform the main expenses he had during the year, since they can be deducted from the declaration and reduce the amount to be paid in the tax. Among the expenses that can be deducted from income tax are:

  • medical expenses (without limit);
  • expenses of children or parents (maximum amount of R $ 2,275.08 per dependent);
  • education expenses (maximum amount of R $ 3,561.50 per dependent);
  • contributions to social security;
  • contributions to private pension (up to 12% of taxable income).

To validate the deduction, the amounts entered in the form must be exactly the same as those shown in the income and payment receipts.

Complete and simplified declaration

When making your declaration, you can choose between the full or simplified versions:

  • complete statement: recommended for those who have a lot of expenses to deduct. All health and education expenses must be broken down by the taxpayer according to the invoices;
  • simplified declaration: ideal for those who have no dependents or expenses to deduct. Only the deduction of 20% is levied on all taxed income, which replaces any other legal deduction that would be considered in the full declaration.

Income Tax Refund

As stated earlier, when the IRS identifies that the taxpayer has paid more taxes than he should, he gains the right to get back part of the amount.

The amount is returned until December of the fiscal year. There are five lots, starting in the month of May. Generally, those who send the declaration before receive the refund in the first batches. Check the 2021 dates:

  • 1st batch: May 29;
  • 2nd batch: June 30;
  • 3rd batch: July 31;
  • 4th batch: August 28;
  • 5th batch: September 30th.

>> To learn more about the Income Tax Refund, check out this other blog post:
Income Tax Refund: what it is and how it works <

What income goes into the income tax return?

The taxpayer must declare in the Income Tax all your assets and earnings in the period, including:

  • salary;
  • retirement;
  • rental income;
  • investments;
  • sales of goods;
  • real estate reforms;
  • construction expenses;
  • assets and rights that were part of the patrimony until 12/31;
  • vehicles, real estate and movable property (such as paintings or jewelry above R $ 5,000).

Even gains exempt from taxation, such as FGTS, must be reported. The same goes for IR-exempt investments, such as savings, LCI and LCA. Furthermore, that declares dependents must claim any income obtained from them.

All this information must be extracted from the Income Reports made available by companies, banks and investment brokers, in addition to the receipts of expenses and receipts gathered during the calendar year.

Who should declare income tax?

Taxpayers who have received taxable income above R $ 28,559.70 in 2021. Anyone who had non-taxable, exempt or taxed income at the source, in the amount of R $ 40 thousand, also needs to declare. Among companies, there is no exemption.

What happens to those who do not declare income tax?

Failure to submit the Income Tax declaration is tax evasion, that is, it is a crime. Delays can lead to a fine ranging from R $ 165 up to 20% of the tax due.

In severe cases, when bad faith or concealment of assets is identified, the person can 2 to 5 years in prison.

So, stay tuned to the deadlines and be sure to send your form. If you make a mistake in filling out or forget some information, submit a rectification as soon as possible, Without cost. So you reduce the risk of falling on the call “thin mesh” and be asked to provide clarifications.

Now that you know everything about Income Tax 2021, it’s time to put what you’ve learned into practice. Gather your vouchers, fill out the form and send your statement as soon as possible. So you don’t run the risk of having problems with the IRS and are free to take care of finances with peace of mind.

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