Tax relief on IKZE in the annual PIT settlement - what is worth knowing?

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A taxpayer who saves for retirement under IKZE (Individual Retirement Security Account) will have to tax each withdrawal of funds with income tax. However, on account of the payments made, he may take advantage of the tax relief on IKZE in the annual tax return. Who is entitled to an IKZE allowance and what amount can be deducted in the tax return? We answer in the article.

Tax relief on IKZE - who can benefit?

Unlike most of the relief, the relief on IKZE is available not only to natural persons who settle accounts on general terms, i.e. on the basis of an employment contract, civil law contracts or rental or lease and they settle accounts on the PIT-37 declaration and entrepreneurs settling accounts on general terms (PIT-36), but also lump sums (PIT-28) and entrepreneurs paying tax linear (PIT-36L).

The IKZE discount is available to taxpayers who settle accounts individually as well as and jointly with their spouses. At the same time, it should be remembered that IKZE is assigned to a specific person, so the spouses' reliefs cannot be deducted by each other, i.e. the spouse cannot transfer part of his relief to the other spouse for deduction.

To download:

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Relief on IKZE - KIS brochure.pdf Description: manual filling

How much can the IKZE allowance be deducted?

Pursuant to Art. 26 sec. 1 point 2b of the PIT Act, the tax base may be reduced by the amount of the payment to the individual pension security account made by the taxpayer in the tax year, up to the amount specified in the provisions on individual pension security accounts. It is true that the legislator did not provide for the limit of deductions directly in the PIT Act, but the limitation results from the provisions relating to the Individual Retirement Security Account.

In accordance with the announcement of the Minister of Family, Labor and Social Policy of October 22, 2019 on the amount of contributions to the individual pension security account in 2020, the amount of contributions to IKZE in 2020, payments made to IKZE in a given year may not exceed the amount corresponding to the equivalent of 4% of the calculation basis of the pension insurance contribution for the previous year, announced in the Act on the social insurance system, i.e. for:

2020 values: 1.2 * 5 227.00 PLN = 6 272.40 PLN

However, according to the announcement of the Minister of Family and Social Policy of 19 November 2020 on the amount of contributions to the individual retirement security account in 2021, the limit is:

  • for natural persons who do not conduct business activity - PLN 6,310.80,
  • for natural persons running a business - PLN 9,466.20.

 

The remaining amount of the unused IKZE allowance is not deductible in the following years. In the case of a lump sum on recorded income, the IKZE allowance is deducted from the income, also within the limit of the above-mentioned amounts.

Example 1.

In 2020, Ms. Anna paid PLN 400 a month to IKZE. The annual sum of payments was PLN 4,800. Anna's taxable income in 2020 amounted to PLN 70,000. Anna may reduce this income by the entire amount of payments made to IKZE in the amount of PLN 4 800, because they did not exceed the limit of admissible payments in 2020, i.e. the amount of PLN 6,272.40.

Example 2.

In 2020, Mr. Grzegorz paid PLN 350 a month to IKZE. The annual sum of payments was PLN 4,200. Grzegorz's taxable income in 2020 amounted to PLN 3,000. Mr. Grzegorz may reduce this income in full by the entire amount of payments made to IKZE in the amount of PLN 4,200, because they did not exceed the limit of allowable payments in 2020, ie the amount of PLN 6,272.40. The remaining amount not deducted PLN 1,200 (PLN 3,000 - PLN 4,200) is not deductible in the following years.

Tax relief on IKZE - how much will the taxpayer gain?

The relief for IKZE is a favorable tax relief, which is limited by the annual deduction limit. Therefore, we will be entitled to the maximum amounts of tax deduction if we use the limits and they will also depend on the PIT tax rate the taxpayer is covered by.

In 2020, due to the maximum premium, the allowance for IKZE will not exceed:

  • for those settling according to the 17% tax scale the amount: PLN 1,066.31

  • for those settling according to the 32% tax scale the amount: 2007.17 PLN

  • for those settling their business activity according to the 19% flat tax: PLN 1,191.76

Under Art. 26 sec. 1 point 2b of the PIT Act, an entrepreneur saving on an individual pension security account has the right to have the IKZE allowance included in his annual settlement.

Example 3.

Mr. Stanisław accounts for the tax scale. In 2019, he paid the maximum amount of IKZE, i.e. PLN 5,718, and he entered this amount in the PIT / O attachment in his tax return. Accordingly, Mr. Stanisław reduced his tax liability by PLN 1066.31 (PLN 6272.40 * 17%).

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How should the IKZE allowance be deducted in the tax return?

If the taxpayer makes annual settlements on the PIT-28, PIT-36 or PIT-37 forms, in order for the IKZE allowance to be deducted, it will be necessary to attach a PIT / O attachment to the form. The amount to be deducted is entered in the dedicated field entitled: "Contributions to the individual retirement security account (IKZE)". On the other hand, the exception are entrepreneurs who settle according to a flat tax (PIT-36L), who enter the deduction directly into the tax return form in the item also entitled: "Contributions to the individual retirement security account (IKZE)".

Important!
From 2019, PIT / O is attached to the PIT-36L declaration, so the attachment shows the relief on IKZE, and not directly on the annual declaration, as in previous years.

Relief for IKZE in the wfirma.pl system

In the wfirma.pl system, the entrepreneur in the "Online Accounting" package will generate an annual tax return on the basis of the data entered in the system, on which he will be able to deduct the discount on IKZE. To generate an annual tax return, go to the tab: START »TAXES» ANNUAL DECLARATIONS »ADD DECLARATION and then select one of the appropriate forms:

  • Annual income tax declaration on general terms (PIT 36),
  • Annual flat income tax declaration (PIT 36L),
  • Annual flat-rate income tax declaration (PIT 28).

Then, in the next "Adding declaration" windows, indicate the PIT / O attachment. Then, in part B, in field 29 (for the taxpayer) or 30 (for the spouse), enter the value of the credit on IKZE (including the limit for 2019 - PLN 5,718).

In the draft of the PIT / O appendix for 2020, the relief in part B will be completed, in field 33 (for the taxpayer) or 34 (for the spouse). The value is entered in the limit of PLN 6272.40.