Income Tax 2023: know how to declare INSS arrears – 05/26/2023 – Market
Retirees and pensioners who received arrears from the INSS (National Social Security Institute) after suing the body in court or waiting for the release of a benefit that took a while to come out need to inform this income in the 2023 Income Tax return, if they are required to declare the IR.
The deadline to render accounts to the Federal Revenue Service is coming to an end and ends at 11:59 pm on Wednesday, May 31st. This year, taxpayers had two and a half months —since March 15— to file the declaration. Those who are obligated and delay delivery pay a minimum fine of R$ 165.74, which can reach 20% of the tax due for the year.
The amounts received cumulatively must be declared in the “Income Received Accumulated” form if they were paid in 2022, but refer to previous years. This occurs when the insured receives a delayed amount after winning a lawsuit in which he waited for the final result for years.
Payment is made by RPV (Small Value Requisition), of up to 60 minimum wages, or by precatório, whose amount is greater than 60 wages.
Accumulated earnings can also be paid to the INSS, administratively, for policyholders who requested retirement and spent years waiting for release or filed a review of the benefit and, after correction, the institute settled the retroactive amounts.
For those who received amounts accumulated in the calendar year of 2022, when waiting a few months for retirement, pension or other benefit, the rule is different. In this case, the money must be declared on the corresponding sheets, which are “Taxable Income Received from PC” or “Exempt and Non-Taxable Income”.
How to declare INSS arrears?
- In “Declaration Sheets”, choose “Accumulatively Received Income” and click “New”
- In the new form, choose the type of taxation, whether “Annual Adjustment” or “Exclusive at Source”
- The “Exclusive at Source” taxation tends to be the best for the insured because it causes the amounts to be taxed separately from the others; in “Annual Adjustment”, the amounts are added to those already declared, which may increase the IR charged
- In the “Exclusive at Source” taxation, inform the name and CNPJ of the paying source; exempt portion for those aged 65 or over; total taxable income; amount of interest paid; alimony, if any; withholding tax; month of receipt; number of months to which arrears refer; and tax due on RRA, if applicable
- Then click OK
The insured person who received the amounts from the INSS must follow what the institute’s income report says (see here how to get the INSS income report). If they were paid by Federal or State Justice, follow what the Judiciary report says or provided by the lawyer in the case.
By following the income statement, the chances of the taxpayer making mistakes and falling into the fine mesh are reduced.
For those who will make the pre-filled declaration, it may be that the values are already in the declaration, if the paying source has informed the Federal Revenue about the payment of the amount.
The rule for declaring accumulated income must also be applied to money received from state, municipal, Federal and Federal District pension agencies.
How is the collection of Income Tax on arrears?
According to the Federal Revenue, arrears received in Federal Justice are charged 3% of the IR at source, at the time of payment. This amount must appear on the Income Tax return for the adjustment to be made and, if the insured person, upon reporting all of his income and expenses, has paid more IR, he will have back, through a refund, what he paid the more.
In the statement, the collection of Income Tax on the accumulated amounts depends on the total amount received, the number of months to which the amounts refer, the type of benefit paid and whether there is an exemption granted to the insured person as it is a sum exempt due to serious illness or for being insured aged 65 or over.
Accumulated amounts received may be exempt from IR if, when declaring the tax, the Income Tax program calculates the right to exemption, according to the number of months to which the payment refers. For this, the insured must choose the “Exclusive at source” option.
Can payment made to the lawyer be deducted?
Anyone who hired a lawyer to sue the INSS and manage to win the case can deduct the amount paid to him. To do so, you must inform the expenses with a lawyer in the “Payments Made” form even before filling out the “Accumulatively Received Income” form.
Click on “New”, enter the expense code referring to the lawyer, whether 60, 61 or 62, the professional’s CPF or the office’s CNPJ, the name of the professional or office, and the amount paid to him. In “Description”, make a brief text saying that these are fees paid for services provided in a lawsuit against the INSS or social security agency of municipalities, states, Union or Federal District.
Should I inform the delayed amounts even if I make a simplified declaration?
The taxpayer who opts for the taxation model with simplified discount must inform the arrears according to the rule for receiving amounts, excluding attorney fees, which go on the “Payments Made” form. If the amount is from the previous calendar year, but paid in 2022, go to “Accumulatively Received Income”. If they are from the same calendar year, go under “Taxable Income Received from Legal Entities” or “Exempt and Non-Taxable Income”.
I have a serious illness. Do accrued amounts go into exempt income or accrued income?
Retirees with a serious illness and who have a report confirming their condition do not pay income tax, if the illness is included in the legislation. In this case, the IR exemption is also applied to income received cumulatively. The retiree must declare this amount on the “Exempt and Non-Taxable Income” form, in line “11 – Pension, retirement income or retirement due to serious illness or retirement or retirement due to an accident at work”.