Federal Revenue discloses rules to file the 2020 Individual’s Income Tax Return

The Special Secretariat of the Federal Revenue of Brazil (RFB) published the RFB Normative Instruction 1924/2020, on Feb-20-2020, with the filling instructions and releasing the generating program of the Individual’s Income Tax Return for the 2020 fiscal year (2020 DIRPF) - 2019 calendar year. The RFB expects 32 million reports are filed this year.

Shipping deadline

The period to file will be from March 02 until Apr-30-2020 by 11:59:59 p.m. (Brasília‘s time).

Requirement

According to the Normative Instruction, those required to file the 2020 DIRPF are the individuals residing Brazil who, in the 2019 calendar year:

a) earned taxable income, subject to adjustment in the report, whose sum was greater than BRL 28,559.70;

b) earned income that was exempt, non-taxable or taxed exclusively at source, whose sum was greater than BRL 40,000.00;

c) obtained, in any month of the calendar year, a capital gain on the sale of assets or rights subject to the income tax or carried out transactions on stock exchanges, commodities, futures and the like;

d) in relation to rural activity, earned gross revenue amount greater than BRL 142,798.50 or intends to offset, in 2019 calendar year or later, losses from previous calendar years or the 2019 calendar year itself;

e) had, on Dec-31-2019, the possession or ownership of goods or rights, including bare land, amounting to a value greater than BRL 300,000.00;

f) became a resident in Brazil, in any month, and was in this condition on Dec-31-2019; or

g) opted exemption from Income Tax on capital gains on the sale of residential real estate, the revenue from the sale of which is intended for application in the acquisition of residential real estate located in Brazil, within 180 days from the signature of the sales contract (Article 39 of Law No. 11,196/2005).

Presentation exemption

The individual who is within the following situations is not required to file the DIRPF:

a) only in the event provided for in letter “e” of the aforementioned topic and that, in the constancy of the conjugal partnership or the stable union, the common assets were reported by the other spouse or partner, provided that the total value of their private assets is less than BRL 300,000.00;

b) in at least one of the cases provided for in letters “a” to “g”, if another individual appears as a dependent in the Annual Adjustment Report, in which the income, assets and rights, if you have them, have been informed.

It is worth mentioning that the individual, even if released, may report the DIRPF, however, the same taxpayer is forbidden from appearing simultaneously in more than one report, either as holder or dependent, except in cases of change in the dependency relationship in the 2019 calendar year.

Simplified discount

It is worth emphasize that the individual can opt for the simplified discount, corresponding to the deduction of 20% from the amount of taxable income in the DIRPF, limited to BRL 16,754.34.

However, the option for the simplified discount implies the replacement of all deductions allowed in the tax legislation.

Ways to prepare and file

The DIRPF is developed and transmitted using:

a) the Programa Gerador da Declaração (Report Generator Program - “PGD”), for 2019, available at the RFB website (http://receita.economia.gov.br/); or

b) the “Meu Imposto de Renda” service: (i) at computer, made with a digital certificate, through access to the service “Meu Imposto de Renda”, available at the Virtual Service Center (e-CAC - Centro Virtual de Atendimento), at the RFB website; or (ii) by mobile devices, such as tablets and smartphones, through access to the service “Meu Imposto de Renda” (My Income Tax), available at Google Play or App Store store.

Important: Before opting for the "My Income Tax" service, the individual must check if he/she does not fall under some of the prohibited conditions listed in Article 5, of Normative Instruction 1924.

Pre-filled Annual Adjustment Report

It is also possible to use the Pre-filled Annual Adjustment Report, using:

a) PGD, by selecting, from the Program entry screen, in the tab "New", the "Iniciar Declaração a partir da Pré-Preenchida" (Start Declaration from Pre-Filled) option; or

b) "Meu Imposto de Renda (Extrato da DIRPF)” (My Income Tax (DIRPF Receipt)) service, by selecting, from the e-CAC home screen, within the "Declarações e Demonstrativos” (Reports and Statements) menu, under the item "Meu Imposto de Renda (Extrato da DIRPF)” (My Income Tax (DIRPF Receipt)) and then, within the "Declaração” (Report) menu, the" Preencher Declaração Online” (Fill in Online Report) item and, finally, the" Importar Declaração Pré-Preenchida” (Import Pre-Filled Report) item;

The file of the Pre-filled Annual Adjustment Declaration will be made available to the taxpayer (access through e-CAC using a digital certificate), to then be imported into the report, thus containing some information related to income, deductions, assets and rights and debts and real liens. This reporting form does not apply to those who use the service "Meu Imposto de Renda", through mobile devices.

Important: The person must check such information, since the DIRPF content is under the individual’s responsibility, who must provide the amendments, inclusions and exclusions of the required information, if applicable.

Penalties

The penalty for filing the report after the deadline is 1%, per calendar month or fraction of delay, recorded ex-officio and calculated on the income tax due, with a minimum amount of BRL 165.74 and a maximum of 20% of the tax due.

Highlights for 2020

a) The Revenue will require the receipt number of the previous declaration for the taxpayers and their dependents who, in calendar year 2019, earned income subject to an annual adjustment equal to or greater than BRL 200,000.00.

b) The Individual’s Income Tax (IRPF) refunding, for 2020, calendar year 2019, will be through five (5) lots, from May to September/2020.

c) The refunds are prioritized according to the filing order of the 2020 DIRPF. However, the priority order will be: (i) elderly taxpayers, with special priority for those over 80 years-old; (ii) the taxpayer with a physical or mental disability; (iii) taxpayers whose main income source is from teaching profession; and (iv) the other taxpayers.

d) End of the deduction of the social security contribution levied on the remuneration of the domestic employee.