Last tax year invoice and income tax
With the end of the calendar year, taxpayers face a serious task - to settle the income earned in the period that is coming to an end. While full-time employees should not have major problems with this, settling their settlements on the basis of PIT-11 received from the employer, entrepreneurs running their own business may face slightly more difficulties. One of them are cost invoices relating to expenses from the previous tax year, which in practice may still be received for many months from the end of December. How should the invoice from the previous tax year be correctly shown? We explain.
When does an expense become a tax deductible cost?
The key principle on the basis of which it is possible to include expenses in tax deductible costs is their inextricable relationship with the conducted business activity. Pursuant to Art. 22 sec. 1 of the PIT Act, the obligation must be incurred in order to obtain income or to maintain or secure its source. Importantly, the expense cannot appear in the catalog indicated in Art. 23 of the Act - it includes such expenses that cannot obligatorily claim to be tax costs.
When it comes to the deadlines for tax-deductible costs, the PIT Act in Art. 22 sec. 4 indicates that tax deductible costs may be deducted only in the tax year in which they were incurred. This is the basic rule for taxpayers who keep their accounts in the form of a tax book of revenues and expenses.
Accordingly, when a trader receives an invoice for a company purchase made, he can usually include it in his KPiR already at the time of receipt. It is worth remembering, however, that both the taxpayer and his contractors are human and therefore have the right to make mistakes or be forgotten. Therefore, you often have to face a situation in which the invoice documenting the expense arrives at the company later than when it is incurred, or it is lost among the documentation and discovered after the settlement. What should I do in such a situation?
Posting a late invoice
In the case of income tax, the basic settlement period is the calendar year. Therefore, revenues and costs are calculated cumulatively for the entire year, and finally they are included in the annual declaration. During the year - as every, even inexperienced entrepreneur knows - advance payments for income tax are made, calculated on the basis of the income earned, less costs incurred. Importantly, these advances are not documented with any declarations - the need to submit PIT-5 and PIT-5L has not been in force since the beginning of 2007.
Therefore, if you receive a “delayed” invoice during a given tax year after the end of the billing period, you should not post the cost retroactively. First of all, it is not possible to make an adjustment reducing the advance payment already paid, especially since there is no declaration that could be corrected.How to cope? Costs during the tax year can be booked on an ongoing basis - as the tax will be finally settled and paid at the end of the year anyway.
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An entrepreneur who settles income tax monthly, received a cost invoice for March in May. As March is closed and the tax is paid by the deadline on April 20, it is no longer possible to go back to the correct period. Thus, the entrepreneur can post the cost to the KPiR in May.
For maintenance purposes, it is a good idea to use a specific date for posting this type of delayed costs - e.g. 1 day of the month (in the example - May 1).
Last Fiscal Year Invoice - Posting
Thus, the booking of omitted costs during the year does not seem to be very problematic. What to do in a situation where the invoices relating to the previous tax year will not be received by the taxpayer until the new year? In such a situation, it will be necessary to "go back" to the previous year - but also on certain terms. In accounting practice, costs of this type are recognized in December of the last fiscal year.
It is worth remembering that the accounting documentation should be numbered in accordance with the numbering resulting from the KPiR. Therefore, posting the cost from, for example, May until this month would involve the need to renumber all documents, starting from May until the end. Therefore, in this case, it is also best to choose one specific date - e.g. December 31st. In this way, the expenses will be included in the appropriate tax year, and their booking will not create additional obligations.
It is worth paying special attention to invoices that cover expenses from both the previous and the current tax year. Such a situation often takes place in the case of expenses for telecommunications services - the subscription is charged for the period in which the invoice was issued, but the costs of calls refer to the previous month. What in this situation?
In this case, you should divide the expenditure shown on the invoice by recording its parts to the appropriate tax years - as in the example below.
On January 15, 2018, the entrepreneur received an invoice for telecommunications services documenting the subscription for January 2018 in the amount of PLN 50 net and charges for calls made in December 2017 in the amount of PLN 70 net.
The amount related to telephone calls - PLN 70 should be entered into the KPiR as of December 31. The subscription, however, should be included in January in the amount of PLN 50 net.
Late invoices and annual billing
If you've ever wondered why taxpayers have so much time to submit the annual tax return - in the case of general rules and flat tax until April 30, in the case of a flat rate until January 31 - delayed invoices are one of the reasons. The entrepreneur can freely book the delayed documents flowing to him until he submits the annual tax return. The posted costs will be included in the submitted declaration.
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However, if it happens that the cost invoices will reach the company after the declaration has been submitted, after their posting it will be necessary to prepare and submit a correction of the annual declaration. When filling in such a correction declaration, the taxpayer must remember to include in it the reason for the correction.