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IRPF 2021: Get your income tax return ready for filing

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The Individual Income Tax Declaration (IRPF) season in Brazil takes place every year, from March to April. Delays in submitting this obligation, which must be fulfilled by all Brazilian tax residents, can result in a fine of R$ 165.74, which is the minimum amount of the penalty.

To help those who want to meet the deadline and avoid headaches with tax authorities, we have selected important information for those who need to file their income tax in Brazil in 2021.

Check it out:

From when can I submit my declaration?

The deadline for submissions opens on the 1st of March and ends on the 30th of April, as it has taken place in the years prior to 2020.

It is inadvisable to leave the submission until the last couple of days, as it can result in the taxpayer being at risk of finding the system overloaded due to the numerous submissions, which can make it difficult to submit the declaration.

For whom is the declaration obligatory?

Those who must submit the 2021 IRPF are those who:

  • Received taxable income (salaries, fees, vacations, commissions, work benefits, income from property rental, pensions, among others) of over R$ 28,559.70 during the 2020 year.
  • Received exempt, non-taxable or exclusively taxed at the source income, the sum of which was more than R $ 40,000.00.
  • Received money, in any month, from the sale of assets and rights – in which income tax is levied – or made any activity related to stock exchanges, commodities, future, among others.
  • Has owned, by the 31st of december 2020, assets or rights valued at over $R300 thousand total.
  • Became a resident in Brazil and remained so by the date of December 31, 2020;
  • Sold real estate and made a profit on the activity.
  • Takes part in rural activity and had a gross revenue above R $ 142,798.50 or that intends to offset losses from previous years or even 2020.

Exemptions on income tax are granted to those who:

  • Had a monthly income lower that the value of R$ 1,999.18 in 2020
  • Own, in a shared property system with a spouse, possessions such as automobiles, real estate or land, for example, which correspond to a value greater than R $ 300,000.00.
  • Were dependent on another individual person.  However, in this case, the other person must declare the income of that dependent;
  • Were retired, at over 65 years of age, and only have their retirement benefit as their sole source of income.

What should be included in the declaration?

All the income that the individual had during the year 2020, even the exempt ones that are not taxed by the income tax, such as the withdrawal of FGTS and indemnities for work accidents, in addition to expenses with education, rent, payment of alimony , operations on the stock exchange, among others.

What are the necessary documents to complete the declaration?

  • RG, CPF, proof of address, banking information;
  • An annual income report that must be provided by the company in which the individual is working or who worked during the year referred to in the declaration;
  • Personal documents of dependents;
  • Report of income from financial investments or financial statements
  • Proof of medical expenses
  • Proof of private education expenses
  • Private Pension Statement
  • Documentation of Health Plan
  • Documentation for real estate and vehicles;
  • Report of financial income (provided by the bank)
  • Receipts of rent payment;
  • Receipts of donations;

Is it possible to reduce the amount paid to the IRPF?

To ensure that the amount of tax to be paid will not be high and to ensure the highest possible refund, it is essential to declare all expenses and be aware which are deductible for the calculation of this tax.

You can deduct the following from your tax base:

  • Dependents: Parents, children, stepchildren and partners can be added as dependents in the declaration, with a maximum deduction of R $ 2,275.08 per dependent.
  • Alimony: The amount of the alimony becomes deductible when it was established in a judicial decision or an extrajudicial agreement.
  • Education: Spending on private education, whether for children, elementary, middle or higher, of the taxpayer himself and his dependents, can also be deducted from the tax base, with a limit of R $ 3,561.50 per person. School supplies, language and preparatory courses should not be included in this sum.
  • Health: Spending on consultations, health plans, hospitalizations, among others can be fully deducted from income tax, whether they are the declarant or their dependents.
  • Social or Private Welfare: The amount paid to the INSS, including in the case of dependents, can be fully deducted. PGBL private pension plan (Free Benefit Plan Generator) can be deducted with a limit of 12% of the declared annual taxable gross income.

What are the consequences in cases of lateness or absence of submission?

The lack of submission of the declaration will result in fines and official sanctions.      

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Do you have any questions?  Get in touch by email info@drummondadvisors.com.

Update 12/04/2021: According to publication in “Diário Oficial da União” on April 12, 2021, the deadline for submitting the Income Tax Declaration will be extended until 05/31/2021.