IRS Guide: My First Filing – CASA SAPO News

Is this the first time you will have to submit the IRS declaration? The good news is that you don’t have to be a financial expert, and if you can’t find the answer to your questions, you can contact the Tax and Customs Administration (TA) services by phone or electronically and ask questions.

On the finance portal itself, it is possible to find leaflets, instructions and FAQs to clarify several common questions that can help newcomers.

Essential information for those who will submit the IRS declaration for the first time

The first thing to understand is that Personal Income Tax (IRS) is on income (salaries, pensions, property income, etc.) earned in the previous tax year. In other words, in 2022, you submit the statement corresponding to what you earned in 2021.

deliver the statement

Another thing to consider is that currently the declaration can only be submitted electronically, i.e. through the finance portal. Therefore, and if you have not yet requested the access password, this will be the first step to move forward.

delivery dates

The submission of Model 3 regarding the income tax return must be made from April 1 to June 30. The deadlines are the same for employees and for the self-employed.

Expenses that serve to reduce the tax payable or increase the refund are already included automatically, such as income from work or pensions.

IRS: who must submit the declaration?

This tax is levied on the income, in cash or in kind, of residents in Portugal, even if it was obtained abroad or in another currency.

Generally, the IRS is associated with labor income because it is the largest share of income reported to the Treasury, but it is not the only one.

In total, there are six types of income that must be declared and which must be taken into account when completing the Model 3 declaration and its annexes.

Labor income belongs to categories A and B.

Category A

This is income obtained through the work of others, that is to say the wages or allowances that have been paid to you by the employer during the past year.

If you completed an internship and received it, the earnings are included in this category and must be reported on Schedule A.

Category B

This is where the so-called green or self-employed recipes come in. It also covers business and professional income from agricultural, commercial, industrial, livestock or forestry activities.

This income is reported on Schedule B or Schedule C, for those with organized accounts.

Returns of the two categories

The declaration relates to income received in one or more categories, so you must declare what you have earned in both.

Self-employed persons must also submit Annex SS (relating to social security).

Other income to declare

Also subject to tax are, for example, capital income (category E), i.e. money earned through financial investments.

Generally, interest on term deposits, savings certificates and bonds is excluded, since the tax on this income is already withheld by the financial institution.

The IRS declaration also applies to property income (Category F) or the sale of real estate and the purchase of shares (Category G).

Pensions such as alimony, old age, retirement or invalidity or survivors’ pensions, such as temporary or life annuities (Category H) must also be declared.

Bank accounts in the statement

If the accounts belong to a bank that is not headquartered in Portugal, they must be declared in Annex J.

With regard to accounts in digital banks, such as Revolut or N26, it depends on whether or not the entity is recognized as a bank by Banco de Portugal.

If the account is Revolut, no, but if it’s N26, it already requires you to fill in the attachment.

IRS: who is not obliged to submit the declaration?

There are exceptions. Some people, either by the value or by the nature of the income, are exempt from filing the declaration.

This waiver refers to amounts that have been received individually or cumulatively.

Salaries and pensions

To be exempt from filing a declaration, the amount must be equal to or less than €8,500 (€4,104 in the case of alimony) and they cannot benefit from withholding tax, i.e. reductions IRS throughout the year.

isolated acts

The annual amount must be less than €1,755.24 (4 X the social support index which in 2021 was €438.81) and there cannot have been other income.

other cases

The other cases of declaration exemption relate to aid or subsidies under the common agricultural policy (CAP) with an annual value of less than €1,755.24. Capital income that has already been taxed at source is also excluded.

However, these exemptions are not valid if you opt for joint taxation, receive temporary and life annuities not intended for the payment of pensions or have income in kind.

How many declarations must the family submit?

It all depends on the income and age of the children, as well as the more favorable choice, ie the one that allows you to pay less tax or receive a larger refund.

Still with the parents: do I issue the declaration alone?

Children, adopted and stepchildren, adults and under the age of 25, can be weighted dependents and included in the household income tax return, even if they are no longer in school.

It is enough that they continue to live with their parents and that they do not receive more than 14 SMIC per year (which in 2021 was 665 euros).

Thus, if you are up to 25 years old and last year you did not earn more than 9310 euros (665€ x 14), nor made any source deductions, you can submit the IRS declaration with your parents .

However, as the sum of the income will be divided by all the elements of the household, the parents may be penalized in terms of taxes.

In this sense, it can compensate the dependent, even if he is not obliged by law to present an individual declaration. In other words, it will always be better to simulate first to choose the most favorable hypothesis.

Living as a couple: How many statements should I submit?

It all depends on the so-called tax system, i.e. whether you want income and expenses to be considered together or separately.

In the so-called separate taxation, each individual submits his declaration with his own income and expenses which entitle him to a discount on the IRS (the deductions).

In joint taxation, a single declaration is made with the income of the entire household.

It should be noted that, for the declarations to be presented together, the holders must have the same tax address.

Spouse or separated? What is the best ?

To see which is the most advantageous choice, you must do three simulations: one for you, another for your spouse or partner and a third together. Then compare how much you would have to pay or receive in the two cases and decide which is more advantageous.

The fact that you choose one of the options this year does not mean that you must keep this option next year.

automatic IRS

A big advantage for those who are going to file the IRS for the first time and don’t understand much about taxes or don’t particularly like printouts is the ability to use the automatic IRS.

This is a very simple possibility, since the declaration is already completed. In this case, simply validate the data, confirm that the values ​​(such as expenses and income) are correct, and Confirm.

However, this option is not available to everyone. Self-employed workers under the simplified regime registered as “other service providers” cannot benefit from the automatic declaration. The same is true if they accumulate independent activity with work for others. Those who organized the accounting, for now, are also left behind.

Taxpayers who receive capital income (category E), property income (category F) and capital increases (category G) are also excluded from the automatic IRS.

deliver the statement

To submit the declaration, one must access the finance portal and from the menu select IRS, then the two options IRS Automatic or Deliver Declaration will appear.

If you must opt ​​for the second option, you must follow the instructions to complete it.

At the end, do not forget to validate that everything is ok. You can also, by clicking on “simulate”, find out how much you will pay or collect in tax.

Once the process is complete, all you have to do is wait for the AT email which validates the declaration or requests corrections. If all goes well, it’s only next year that you’ll have to worry about a new statement.

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