INSPER NEWS

Learn about tips and suggestions from Insper professor Camila Boscov on how to properly prepare your federal income tax return filing this year   

The period for filing Brazil’s Declaração de Imposto de Renda Pessoa Física 2021 — the country’s Income Tax Return 2021 for individuals — had already begun. Until May 31, around 32 million Brazilian taxpayers must undergo the process with the Receita Federal, Brazil’s Internal Revenue Service. Those who have an obligation to file the document and do not send it correctly are subject to fines of a minimum of R$ 165.74.     

To help settle the score with the “Lion” (that is how Brazilians call their internal revenue service, alluding to a government’s “lion’s share”), Insper professor Camila Boscov gives tips and suggestions about the filing. Check out the points of attention below:   

Who needs to file the income tax return?   

All persons who received taxable income above R$ 28,559.70 during the year 2020.    

How does the filing work for those who received the Auxílio Emergencial (Emergency Aid) as a result of COVID-19?  

Those who received the Emergency Aid need to access this consultation website and search for their informe de rendimentos (income statement). If they or their dependents had received the emergency aid and, together with other taxable income, the total amounted to over R$ 22,847.76 in 2020: They shall file their income tax return.   

The emergency aid amounts received must be filed by filling out the “Rendimentos tributáveis recebidos de pessoa jurídica” (“Taxable income received from legal entities”) form.   

What other income do I need to report?   

You must report all your income during the year 2020. It includes those that are tax-exempt and not taxed by the income tax, such as the FGTS (the Brazilian Guarantee Fund for Length of Service) withdrawals and workers’ compensation, assets, medical and dental expenses, educational expenses, rents, child support payments, dependents, stock exchange transactions, among others.    

When will the 2021 Income Tax refund be made?  

Five tax refund batches are scheduled for this year. They take place according to the date the income tax return is filed. It is worth remembering that the refund follows a filing queue, so the taxpayer who files first receives the refund first. There are some categories that fall under legal priority, such as people over 60 or older, people with physical disabilities or serious illnesses and conditions. 

The dates set by the Receita Federal for receiving the refund are as follows:  

1st batch:  May 31, 2021     

2nd batch: June 30, 2021  

3rd batch:  July 30, 2021  

4th batch:  August 31, 2021  

5th batch: September 30, 2021  

How do we file the income tax return having two jobs?  

All taxpayer’s and dependent’s taxable income from the different paying sources must be added together. All deductible expenses are then applied to this amount, and then the income tax due for the year is calculated. How to file them requires attention. Each paying source’s CNPJ (Brazil’s National Register of Corporate Taxpayers) number must be entered, and a row containing the amounts received from it in the year must be created.  

It is also important to point out that the same happens with those who changed jobs last year or who, in addition to formal employment, also worked as an Individual Microentrepreneur (MEI, for its acronym in Portuguese), for example.   

Who can be considered as a dependent in the filing?  

“Dependent” is a term used by the Receita Federal to describe people who can be included in other persons’ income tax return filings. Therefore, they do not need to file their own income tax return.  

Several persons can be considered dependents, such as:   

• The spouse or the partner in a stable union.   
• Any person to whom you are a legal guardian, up to 21 years old, or up to 24 years old if they are in higher education.   
• Parents, grandparents, and great-grandparents, as long as they had an income of up to R$ 22,847.76 in 2020.   

• You can also include parents-in-law in your filing, but only if you file your spouse as a dependent.   
• “Incapacitated person,” that is, a person under 16 years old or with disabilities.   
• The spouse’s dependents (only if the spouse is filed as a dependent).  
• Children married or in a stable union; in this case, you can also include the children’s spouses as dependents.  
• Relatives deceased in 2020: If you had a relative who met the criteria for a dependent, but they died in 2020, you can include them in your 2021 income tax return filing.  

• Dependents who do not live in Brazil but meet any of the above criteria.  
• Ex-spouse and the children who are receiving child support.  

What documents are required?   

• Personal documents: The RG (Brazilian ID card), CPF (Brazil’s Individual Taxpayer Identification Number), proof of residence, and bank account information.   
• Income statement (employers must provide it).   

• Dependents’ personal documents (the CPF is mandatory).   
• Statement of financial and investment income or statement of investments (provided by the bank).   
• Proof of medical expenses – containing the provider’s name, address, CPF or CNPJ, the incurred date, and the physician’s signature if it is not a nota fiscal (a Brazilian financial document similar to an invoice).   
• Proof of education expenses.   
• Private Pension Statement.   

• Health Insurance Documentation.   
• Documentation of properties and vehicles (including financed ones).   
• Payment receipts or rent receipts.   
• Donation receipts.   
• Include: Articles of organization or incorporation of the companies in which you are a partner.   

• Documentation of consórcios (type of buyers clubs in Brazil), whether you won the draw for the intended good or not.   
• If you are self-employed: Statement of the carnê-leão, a form used for monthly tax payments on personal income.   

How to best fill out the filing?   

Start by organizing all your data and income statements in advance and downloading the Receita Federal software to fill out the filing (beware of fake websites). It is important to reference your previous filing and fill in all possible information and blanks.   

Another important tip is to analyze the most advantageous form of filing in your case – completa (complete) or simplificada (simplified). This changes the form of taxation and can bring returns through a better refund in the future. The filing software itself provides this information.     

In addition, save all documents and receipts securely to avoid problems and organize your information in a simple way.  

If we have any questions, what is the best channel to check information out?   

I recommend you access Receita Federal’s official website – Meu Imposto de Renda (My Income Tax Return) for further information.