The Legal Terms for the Tax Filing Now

 

Are you completing your income tax return and you do not know where to enter the amount of deductible payments you made in 2020 on your Retirement Savings Plan (PER), your PERP?

Brought up to date by the Pacte Law and the launch of PER, products dedicated to preparing for retirement are on the rise. But to take full advantage of it, you must declare the deductible payments made on your contract. 

The 2020 payments on a PER are fully deductible

However, due to the implementation of the withholding tax canceling the tax on 2019 income, contributions made in 2020 are not always fully deductible. An average of the contributions paid in 2019 and 2020 is thus retained when the amount paid in 2019 is lower than the amount paid in 2017 and the amount paid in 2020.

Remember that the contributions paid on the new individual PER are not used for the calculation of the average of the contributions paid in 2019 and 2020. They are therefore fully deductible (up to the ceiling). These contributions are then subject to the global income deduction limit. If you made contributions in 2019, this limit is indicated on your return. For tax filing this is important.

Box 6QR to pool the deduction limits of a couple

Certain situations, such as a change in family situation, may have an impact on the amount of the limit indicated on your 2019 income tax notice (and on the income tax return).

If the amount is incorrect, it can be modified in boxes 6PS, 6PT and 6PU by clicking on the button: “To consult or modify the overall limit”.

For couples subject to joint taxation, it is possible to pool the ceilings by checking box 6QR. By choosing this option, the deduction ceilings for each married or civil partnership are then added.

Certain 2020 contributions reduce the 2020 limit

Declare the amount of these contributions which exceeds 15% of the fraction of taxable profit between 1 and 8 PASS N-1 (i.e. between 40,524 euros and 324,192 euros).

In boxes 6QS, 6QT and 6QU indicate the optional contributions paid in 2020 deducted from the income of non-employees (other than the contributions declared in lines 6OS, 6OT, 6OU), the compulsory contributions deducted from salaries as well as the payments exempt from tax on income earmarked for company retirement savings.

Are concerned:

  • Declare the amount of deducted contributions which exceeds 15% of the fraction of taxable profit comprised between 1 and 8 PASS N-1 (ie between 40,524 euros and 324,192 euros);
  • Payments from the employer and employee exempt from income tax (employer contribution; rights registered in the time savings account.

Up to 14,000 euros in tax cuts

For each member of the tax household, the payment made on an individual PER (or a PERP, PREFON, etc.) may be deductible from net taxable income (excluding the ceiling on tax loopholes in the amount of 10,000 euros). Thus, the higher your marginal tax bracket (TMI), the greater the tax savings. The deductibility limit is set at 10% of the net amount of all activity income declared for year N-1 comprising a minimum of 3,973 euros and a maximum of 31,786 euros.

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