Advance payment for income tax and deduction of social security contributions
As it results from the act on personal income tax, the basis for taxation with income tax is income less deductions listed in art. 26 above legal act. What is deductible? First of all, personally paid contributions for sickness, accident, disability and retirement insurance, as well as dues for cooperating persons and receivables from the taxpayer's funds that were hit by the payer. Thus, the deduction of ZUS contributions is a privilege both for the taxpayer for whom ZUS contributions were paid by the payer, and for the entrepreneur.
Deduction of contributions in the case of an employed person
Depending on the form of employment, the taxpayer may pay ZUS contributions independently, and they may also be paid by the payer.
The workplace calculates contributions, deducts them from the salary, and then transfers them to ZUS in the case of employment under an employment contract or contract of mandate. The taxpayer finds out about the amount of ZUS contributions through the information provided in PIT-11. The workplace is obliged to provide these data to employees by the last day of February of a given tax year.
It should be emphasized that PIT-11 shows only contributions financed from the taxpayer's remuneration, while the company's costs show contributions paid by the employer (payer) for the employed person.
The contract of mandate or a contract for specific work are, in principle, subject to income tax on general principles. It is worth remembering that if the value of the contract is not more than PLN 200, the flat tax rate of 18% may apply, while the tax is charged directly on the income. This means that although ZUS contributions are deducted from the salary, they do not reduce the tax amount. In such a situation, they can be included in the declaration, but due to the small amount (and covering them with a lump sum), these revenues will not be included in the annual tax return.
Deduction of contributions in the case of an entrepreneur
An entrepreneur paying ZUS contributions for himself is obliged to deduct from his income only the amount that was paid in a given year. The specific year to which the premium paid relates to does not matter here. The taxpayer pays contributions in the next month for the previous month, e.g. the contribution for December 2018 should be paid in January 2019. This means that the entrepreneur will be able to include the contribution for December only in the settlement for 2019. The deadline for paying contributions may differ depending on hiring employees or paying contributions only for yourself:
- by the 10th day of the following month in the case of paying the premium only for yourself;
- by the 15th day of the following month in the case of paying contributions for yourself and your employees.
The entrepreneur has the option of deducting ZUS contributions in the tax return, which were also paid for previous years.
What contributions cannot be shown?
There are cases in which the payer cannot show contributions in the annual tax return, namely:
- premiums that were previously classified as tax deductible costs,
- contributions that have been deducted in the flat-rate tax,
- contributions that have been deducted from the tonnage tax,
- contributions that have been returned to the taxpayer,
- contributions for which the basis for calculation was tax-exempt income or for which tax collection was abandoned.
Importantly, the entrepreneur himself decides whether to include ZUS contributions directly in tax deductible costs or deduct them from income. However, it should be remembered that the taxpayer cannot show the same contributions in the tax costs and in the tax return at the same time. In addition, a person running a business may also deduct from the income tax contributions for their own health insurance, but - importantly - they must be paid in advance.
Deduction of contributions of an employed person running a business
In the case of an employed person and additionally running a business, ZUS contributions are paid for each title. A taxpayer may deduct ZUS contributions for any activity and vice versa. It is worth remembering that if the taxpayer does not, for example, use the deduction of ZUS contributions in the flat-rate return, he may do so in the settlement on different terms.