Simplified advance payments for income tax and maintaining the KPiR
Self-employed persons may, in certain cases, pay simplified advance income tax payments. How to set and bill them? We explain below.
Simplified advance income tax payments - for whom?
Pursuant to the provisions of the Personal Income Tax Act (Article 44 (6b)), taxpayers conducting non-agricultural business activity may pay monthly advances in a given tax year in the amount of 1/12 of the amount of the established income. This applies to taxpayers who settle accounts according to the tax scale or pay flat tax.
This advance payment is calculated on the basis of the company's income shown in the annual tax return filed:
in the tax year preceding the given tax year, or
in the tax year preceding a given tax year by two years - if in the tax return submitted in the previous year, taxpayers did not show income from non-agricultural business activity or showed income in the amount not exceeding the amount that does not result in the obligation to pay tax resulting from the first range of the tax scale; if also in this tax return the taxpayers did not show income from non-agricultural business activity or showed income from this source in the amount not exceeding the amount that does not result in the obligation to pay the tax resulting from the first range of the tax scale, it is not possible to pay advances in a simplified form.
The advance on income tax is reduced by the health insurance premium paid by the taxpayer in a given month. The provisions on the selection of simplified income tax advances do not apply to taxpayers who started business for the first time in a given tax year or in the year preceding the tax year (Article 44 (6e) of the Act on Income Tax).
Obligation to notify the competent authority
Taxpayers who have chosen the simplified form of paying advances are required to notify the tax office of this fact, but only in the annual tax return for the tax year in which they paid simplified advances.
For example, a taxpayer who has chosen taxation on general principles decided in 2020 to pay advances in a simplified form, in the annual tax return PIT-36 for 2020, he must mark item 56 in part C. Additional information.
Taxpayers paying advances in a simplified form must pay advances throughout the tax year. Monthly advances on income are paid by the 20th of each month for the previous month. The advance payment for the last month is made by the taxpayer by January 20 of the following tax year.
Simplified advances and the obligation to keep records
Pursuant to Art. 24a paragraph. 1 of the PIT Act, natural persons, civil partnerships of natural persons, general partnerships of natural persons and partnerships engaged in business activities are required to keep a tax book of revenues and expenses or accounting books in a manner ensuring the determination of income (loss).
Moreover, the regulation of the Minister of Finance on keeping a tax book of revenues and expenses does not specify a separate method of keeping the book by entrepreneurs who pay simplified advances. In this regard, their general regulations apply. After the end of the month, the taxpayer is obliged to add up the individual columns of the book. The book must be kept from January 1 of the tax year or the date of commencement of operations during the tax year.