Income Tax 2024: 8 Q&A about this year's submission

 

The filing period for the 2024 Income Tax return (IRPF) is well underway, and individuals have until May 31st to fulfill this important tax requirement.

Before submitting their data, however, taxpayers should get acquainted with this year's updated regulations and the new guidelines issued by the Federal Revenue Service, which directly affect their reporting obligations.

 

Read more: Income Tax 2024: Federal Revenue Service discloses rules for this year

 

Check out below some questions and answers to help clarify any uncertainties about completing and submitting your tax return and ensure your compliance with the tax authorities.

 

1. Who is required to file the IRPF 2024?

Anyone who, in the calendar year 2023, earned income exceeding the threshold set by the Federal Revenue Service, received cash payments from the sale of taxable assets or rights, carried out stock market transactions, or found themselves in other specific circumstances, must file a return this year. See below:

 

Circumstances requiring mandatory filing	Minimum earnings in 2023 that result in a 2024 Tax Return
Taxable income	BRL 30,639.90
Income that is exempt, non-taxable, or taxed exclusively at source	BRL 200,000
Gross farm income	BRL 153,199.50
Possession or ownership of assets and rights	BRL 800,000
Stock exchange transactions and the like	BRL 40,000 or transactions yielding taxable net gains

 

Additionally, Law 14.754/2023, which advanced the IRPF collection on investments in funds and taxed offshore companies, extended the filing obligation to taxpayers who:

• chose to itemize assets of a controlled entity as if directly held by the individual;
• held trusts overseas;
• elected to adjust their assets and rights held abroad to their market value as of December 31, 2023. 

 

2. Are there any other changes to this year's Income Tax Return?

The tax return forms have been updated to reflect the latest requirements imposed on taxpayers. New information required includes the following:

• Identification of assets mentioned in Law 14.754/2023 (such as financial investments abroad, assets updated to market value, trusts, etc).
  
• Identification of types of crypto;
• Individual taxpayer number (CPF) of the beneficiary of alimony or child support payments, both for those residing in Brazil and abroad;
• Date when non-residents returned to Brazil if they came back to the national territory in 2023.

Another change is the discontinuation of the access code as a method for authentication with the e-CAC service. Since February 1, 2024, taxpayers wishing to use the system to complete their tax returns must use the Gov.br single sign-on method.

 

3. How can I report foreign assets using my Income Tax Return?

The guidelines for the taxation of investments abroad, as established by Law No. 14.754/2023, have been implemented this year, thus introducing new requirements for the Income Tax return. The new rules include the following:

• Income from financial investments made outside Brazil, as well as profits and dividends from offshore companies, are now subject to reporting. This information must be provided separately from other types of income and capital gains.
• Exchange rate variation on foreign currencies are now taxed according to the monthly progressive table for capital gains.
• Income from trusts and any associated assets and rights must be reported if the taxpayer is the owner of these assets.
• Crypto-assets held abroad must now be declared.
• Possibility of declaring offshore assets as if they were owned by the taxpayers themselves, as opposed to the company.
• Option to adjust the value of their foreign assets to their market value as of December 31, 2023, a process that must be carried out using the Declaration of Option for Updating Assets and Rights Abroad (Abex).

 

Read more: Federal Revenue Service issues rules on taxation of investments abroad

 

4. What expenses are deductible from my 2024 Income Tax?

A variety of expenses can be deducted from a taxpayer’s income tax, including costs related to education, medical expenses, social security and private pension contributions, alimony, child support, and charitable donations.

Below are some of the expenses that can be written off from one’s income tax:

 

Type of expense	Details
Dependents	Limited to BRL 2,275.08 per dependent per year.
Alimony or child support	Fully deductible, but the obligation must have been established by court order or registered in a public deed.
Medical expenses (for self and dependents)	Includes costs related to health plans, medical appointments and treatments, including surgeries, psychologists, and physiotherapists. Expenses for medicines are deductible only if included in a hospital bill.
Education	Encompasses expenses on daycare, primary education, higher education (including postgraduate courses), and vocational training, limited to BRL 3,561.50 per person per year. Expenses for language courses and sports activities are not deductible.
Social security contributions	Includes contributions to the National Social Security Institute (INSS) and expenditures on private pensions (PGBL), capped at 12% of taxable income.
Donations to funds and projects aimed at promoting social or cultural projects	Joint limit of 6% of the tax due, which can increase to 7% if the taxpayer has made donations to support sports projects. Donations to programs supporting health care for people with disabilities (Pronas/PCD) or cancer care (Pronon) have an individual limit of 1% each.

 

See also: Income Tax 2024: Federal Revenue Service discloses rules for this year

 

5. When should I use the full or simplified tax return forms?

The full form requires more detailed information and is suitable for those with more deductible expenses. Alternatively, other taxpayers may opt for the simplified form, which applies a standard 20% deduction on taxable income, capped at BRL 16,754.34.

Hence, it is important to evaluate which option will result in lower tax payable or a larger refund. 

Generally speaking, the full tax return form is more beneficial for taxpayers with a significant number of medical expenses, dependents, or contributions to private pension plans, or for those who made charitable donations in the previous year. However, this model is more time consuming, requiring extra attention to be paid when filing. Besides, taxpayers must have kept the receipts for all expenses they intend to claim as deductions.

 

6. Can I file a pre-filled tax return?

The pre-filled tax return is a tool provided by the Federal Revenue Service that automatically populates fields with information retrieved from previous years' tax returns, from monthly tax payment forms, as well as from statements provided by third-parties, including withholding agents, real estate registers, and medical records.

This option is restricted to users with gold or silver level gov.br accounts, individuals accredited by these users (limited to one CPF), or their agents (through digital certification).

However, using this tool does not guarantee exemption from audit discrepancies. Taxpayers are responsible for verifying and ensuring the accuracy of all data entered automatically.

 

7. How does the income tax refund work?

If the amount of tax paid throughout the year exceeds the amount due, the taxpayer is entitled to claim a refund of the difference. Refunds will be issued in five batches:

 

Batch	Date
1st batch	May 31, 2024
2nd batch	June 28, 2024
3rd batch	July 31, 2024
4th batch	August 30, 2024
5th batch	September 30, 2024

 

The refund amount will be deposited into the bank account specified by the taxpayer, according to a preferential order. This order prioritizes the elderly, individuals with disabilities, and educators whose primary source of income is teaching. The date of filing the tax return is also considered in determining priority. 

Keep in mind that using the pre-filled tax return or opting to receive those amount via the Brazilian Instant Payment System (PIX) are also factors that may grant preferential treatment for claiming refunds.

 

8. What happens if I miss the deadline?

If you fail to file your tax return on time, you will incur a minimum penalty of BRL 165.74, which can increase up to 20% of the tax due. Additionally, your CPF status may be declared irregular, leading to various legal and administrative issues.

 

IRPF 2024 compliance

DPC's specialized team stays current with the latest regulatory changes and provides guidance to taxpayers on best practices in tax matters. We ensure that returns are prepared and filed in full compliance. Contact our Individual Taxpayer department: dpc@dpc.com.br.