Don't make mistakes when declaring your Income Tax

Auto insurance compensation is exempt from taxation, but that does not mean it should be left out of your income tax. Find out what and how to do by following this text!

Every beginning of the year, millions of Brazilians need to file their Income Tax declaration, so that they don't have any problems with the Federal Revenue Service.

Every year, doubts also arise about how to make this declaration and what should or should not be reported. For example: should car insurance appear in the information list?

It is common for consumers to need to report assets and income on their Income Tax declaration. As well as some expenses, such as health.

This listing of data allows the citizen to later receive their refund.

The need to declare insurance payments, or even compensation, however, is something that is rarely discussed. After all, should this data be reported to the IRS or not?

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How to declare insurance compensation in Income Tax?

A car insurance claim is paid to the consumer if the vehicle is stolen, stolen or is a total loss.

A total loss occurs when an accident damages the car and makes repairs impossible. In other words, when the car repair would cost more than 75% of the vehicle's value.

In these situations, the individual receives the amounts as compensation for their loss. With the values, he will then be able to acquire a new good.

As the compensation constitutes a financial transaction, it must be reported in the Income Tax declaration. However, this movement will not be subject to taxation.

Step by step of car insurance in Income Tax

To avoid errors, you must inform your ownership of the car in the part designated for assets in the declaration. In this field, you must enter the value of the vehicle when it had not yet suffered an accident.

Soon after, in the “Situation in December of the previous year” option, the vehicle must be identified with the value R$0.00. This discrimination is necessary for the Revenue to understand the occurrence of the accident.

It is important to say that, for the IR declaration, only data up to December of the previous year is considered.

If your vehicle suffered an accident in January this year, this loss and the compensation obtained will only have to be declared next year.

In the next step, the user must inform the amount received for compensation, in the Exempt and Non-Taxable Income area.

By following these precautions, there will be no problems with your Income Tax. Remember that, if you do not declare the amounts, any citizen is subject to paying a fine.

For Income Tax, it is not necessary to consider compensation corresponding to partial loss claims.

A partial loss is one in which the damage to the car can be repaired, as it represents less than 75% of the vehicle's cost.

In this scenario, the amounts are passed directly to the workshop responsible for the repair, and not to the insured.

Should the monthly insurance premium be declared?

Despite being a consumer expense, monthly payments for taking out car insurance should not appear on income tax.

They are not deductible, just as other insurances are not — such as travel or life insurance. Car taxes, such as IPVA (Motor Vehicle Property Tax), should also not be declared.

Who should do Income Tax?

Not all Brazilian citizens need to declare Income Tax. In fact, only those who had an income higher than that stipulated by the Government must provide the information.

The yield value is updated annually and, therefore, the user must be aware of the new rules. In 2018, for example, individuals who had an income exceeding R$28,559.70 in 2017 declared income tax.

Generally, the deadline for submitting the declaration is April. All individuals required to report data to the IRS must respect it.

Submitting your declaration late, or even failing to submit it, may result in a fine.

Care for IR declaration

The entire accounting process is carried out online. The consumer can do it on their own by downloading the program onto their computer. You can also look for an accounting professional and hire the service.

Regardless of this method of declaration, it is essential not to leave it until the last minute.

After all, with a large number of users, the IR system tends to experience delays and outages, and may not record information. Especially on the last day of the deadline.

When declaring the expenses to be deducted, be careful not to make a mistake. They may include, for example, expenses with health insurance, private pensions and education.

In addition to these, the IR declaration must include:

• Individual assets (such as car and property);
• Rental income;
• Construction and renovation expenses;
• The rescue of the FGTS;
• Inheritance received;
• Income from lawsuits;
• Alternative sources of income, such as freelance services;
• Debts with a value greater than that indicated by the Revenue for that declaration year.

The amounts to be declared are limited, both for the declarant and for dependents. Some may provide refunds.

In other words, a refund to the consumer for part of the taxes paid in the previous year. But that does not always happen.

It is important to pay attention to the stipulated refund period to check whether you will receive a refund.

Anyone who wants to file an Income Tax declaration and not have any problems later can access the Federal Revenue website.

There, all guidance for filling out the fields in the document is always available. Don't forget to file your auto insurance claim correctly. This way, you will avoid problems with the Federal Government.