IR 2023: Understand what it means to have your tax withheld

Now, at the beginning of the year, one of the most commented subjects is that related to Income Tax. Informing that the tax is withheld at source refers to the tax that is levied on income and is then calculated and withheld by the payer. In other words, it is a kind of advance payment to the Federal Revenue Service. See below for more details on this subject.

Income Tax for 2023

The Withholding Tax (IRF) is a mechanism adopted by the Federal Revenue Service to collect taxes in advance, that is, at the time the income is paid or credited to the taxpayer. In the case of the Income Tax (IR) declaration, this withholding occurs directly at the paying source, such as employers or financial institutions.

In practice, this means that a portion of your salary, for example, is deducted before you receive it and transferred directly to the IRS. This discounted amount is then considered as an advance on the tax that will be due at the time of declaration.

When filling out the income tax return, you must inform the amounts withheld at source, which will be taken into account when calculating the tax due. If the amount withheld during the year is greater than the tax due, the taxpayer will be entitled to a refund of the difference. If the retained amount is less, it will be necessary to pay the difference to the Tax Authorities.

The Federal Revenue calendar says it is necessary for the paying source (the company you work for) to present the Withholding Income Tax Declaration (Dirf). The deadline is February 28th.

What is necessary to inform in the Dirf?

• Payments related to health care plans, such as corporate collectives;
• Income tax and contributions withheld at source, whether from income paid or credited to its beneficiaries;
• Payments, credits, deliveries, jobs and remittances to residents or domiciled abroad;
• Income paid to individuals domiciled in the country.

More cases where tax is withheld

In the case of investments, the tax is also withheld at source. When there are investments, Income Tax is levied and, in some situations, this may be withheld at source.

What happens when there is no income tax return?

• The CPF will be included in an irregular condition, which may, for example, prevent the application for a loan.
• The person can also be accused of tax evasion, a consequence that can carry up to five years in prison.

In case you are overdue with the statements, but want to regularize, this is possible. However, a fine of 1% per month will be charged, paying a minimum of R$ 165.74 or a maximum of 20% of the tax due.