Income Tax: INSS contribution increases refund – 05/24/2023 – Market
The taxpayer who is obliged to declare the 2023 Income Tax can deduct the contributions paid to the INSS (National Institute of Social Security) in 2022.
For this, it is necessary that he has at least one source of taxable income, regardless of whether the person responsible for the payment was a company or an individual.
Examples of taxable income are salary, remuneration received from individuals for services rendered and receipt of rent.
“The deduction depends on taxable income, as without it there is no way to deduct the amount”, explains Richard Domingos, executive director of Confirp Contabilidade.
Legal entity withholds tax
Those who receive from legal entities must follow the income report sent by the company. The payment for Social Security is already withheld by the paying source. It is placed under “Taxable Income Received from Legal Entities” in the “Official Social Security Contribution” field.
If the taxpayer has opted for the pre-filled statement, it is necessary to request the income statement from the company to check the data. According to the Revenue, the divergence in the withholding tax amount is the third item that most led the declarations to the fine mesh last year, with 18.6% of cases.
For those who receive INSS retirement, there are different conditions (click here to learn more). Those aged up to 65 must declare it under “Taxable Income Received from Legal Entities” and part of the amount is withheld at source, and must be completed in the declaration as per the report sent by the INSS.
Retirees aged 65 and over have an exemption limited to BRL 24,751.74 in 2022 (12 installments of BRL 1,903.98 plus the 13th in the same amount) and must declare this portion under “Exempt and Non-Taxable Income”. If there is taxable income, it must be declared under “Taxable Income Received from Legal Entities”.
“For a correct statement, it will be extremely important to have proof of income obtained from the INSS in your hands”, says Valdir Amorim.
Who is self-employed can deduct?
If the payment was made by the natural person, the filling is done in “Income Received from Natural Person/Abroad”. Enter the NIT/PIS/Pasep number, click Other information and include the amount paid month by month in the Official Pension field.
However, the taxpayer must have some source of taxable income to be able to deduct this contribution. “If there is no such income, he cannot declare it, as he has nowhere to deduct it”, explains Richard Domingos.
The person who is included as a dependent in the declaration can only deduct the amount paid on their own to the INSS if they have a taxable source of income.
An example is the couple who share ownership of a rented property and one of the spouses is dependent on the other in the income tax return. The amount received in rent belongs to both. Therefore, the dependent has a taxable income, which allows the deduction of the contribution paid by that dependent to the INSS, even if he has no other source of income.
In this situation, the dependent can be classified as optional in the INSS (since he does not have a source of income for the INSS rules), but has an income considered taxable by the IR (in the case of the example, it would be the rent).
The payment of the contribution to the INSS by the individual is made monthly through a guide generated by Social Security called GPS (Guia da Previdência Social), which can be accessed through the INSS website or through the Meu INSS application.
The taxpayer needs to fill in the requested data, issue the receipt and make the payment on this website (The GPS is due every 15th and corresponds to the previous month. For example, the May contribution is paid until June 15th.
Finally, the PGBL private pension plan (Free Benefit Generator Plan) and contributions to the Fapi (Individual Programmed Retirement Fund) allow the deduction of up to 12% of the total taxable income. “But the payment is only deductible if the PGBL holder also contributes to the official Social Security or in the case of a dependent under 16 years old”, says Domingos.
See the step by step to declare the PGBL
Go to “Payments Made” and select code 36 (Complementary Pension, including Fapi).
Inform if the plan belongs to the holder or the dependent and the name and CNPJ of the pension entity; in description, describe the account data and if there was a redemption during the year, in addition to informing the amount paid
If there was redemption of value and the table is progressive, the money received must be declared in the form Taxable Income Received from Legal Entity. Click on new, enter the name and CNPJ of the paying source and the income received
If there was redemption of value and the table is regressive, the money withdrawn must be declared in Income Subject to Exclusive/Definitive Taxation, in line 12 (Others); indicate whether it belongs to the holder or a dependent, fill in the name and CNPJ of the paying source and the amount received. In the discrimination field, inform that it is “PGBL Social Security redemption”
For each different account, it is necessary to open a new file in Assets and Rights