Fiscal year 2021 will be the last in which natural persons under a dependency relationship may request the Internal Revenue Service (SRI) the refund of the income tax paid in excess, based on their projection of personal expenses that was presented to your employer.
As of fiscal year 2022, according to the Organic Law for Economic Development and Fiscal Sustainability after the COVID 19 pandemic, personal expenses ceased to be deductible with respect to annual income, to now become a reduction on the income tax caused.
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Natural persons who work under a dependency relationship and whose employer withheld from them a value greater than that legally established in the table for the payment of annual income tax, can request that refund after first presenting the annex of personal expenses in February, according to a schedule, and then, their new annual income tax return until March, in which they will include their actual personal expenses that appear in the annex.
Therefore, those who had a higher value of personal expenses with respect to their projection given to the Human Talent department can request the return of this excess payment, without these exceeding 50% of their annual income and without exceeding the limit that is fixed for each fiscal year ($14,575.60 for 2021).
The annex and the declaration must be prepared and sent through the SRI website (https://www.sri.gob.ec/) in the “SRI online” option, which can be accessed with your ID number. identity card, which will be your user, and with the password provided by the SRI or later changed by the taxpayer himself.
An overpaid income tax refund request typically consists of five to six steps:
1) Submit an annex of personal expenses online with your username (identity card or RUC) and password.
2) Wait at least 48 working hours before submitting your new income tax return electronically so that the new values for personal expenses are reflected in the Natural Income form and the tax caused is recalculated, and at the same time the balance to be determined is determined. favor.
3) Register your bank account on the SRI website in the Payments option (Bank debit agreement registration), if you do not already have it entered.
4) Wait at least 48 hours to enter electronically, with your username and password, the request for automatic refund of the balance in favor of income tax (if it is less than $10,000), which must be validated by the SRI.
5) Within 48 hours maximum, you must check the status of the application online and accept or reject the value to be returned, unless you must correct your income tax return, after having detected the SRI that some items were not included, such as it could be the taxable financial income, for which you must return to step number 2 and prepare a substitute declaration in the Natural Income form.
6) If you agree with the value to be returned, you must provide some information requested in the return form, confirm the bank account where the SRI will transfer the balance in favor and wait for the resolution of the tax administration regarding to this return process.
The economic analyst Jorge Calderón says that with the new formula that applies from fiscal year 2022, which will be settled in 2023, it implies that resources will no longer come out of the SRI, but that the balance that is digitized in the accounts they are subtracting or returning , in such a way that there is no physical outflow or outflow of money.
“What was done before is that the papers for the return were presented and the SRI took up to 90 days to return it, but at the end of the day it returned it, in effect. Now everything remains as a tax credit,” says Calderón, who gave an example:
“After presenting all the papers, expenses and everything else, there is a balance in my favor, let’s say $360. If with the new formula I had to pay or they should deduct $700 in the year (for income tax ), but they have to return $360 to me, so they deduct the proportional amount, that is, 360 divided by 12 is $30, so each month of the value that I would have had to pay or that they withhold for income tax, I they must deduct $30 because the SRI is giving me back, in quotes, the value”, explains the expert.
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Pablo Guevara, a partner at Andersen, indicates that until fiscal year 2021, workers had the right to have personal and family expenses deducted: food, clothing, education, health, culture, etc.; together with the social security contribution with respect to their annual income for a lower income tax payment.
“All this calculation is done by the employer in January and is deducting the income tax based on that projection, in such a way that the worker at the end of the year has already paid his income tax through the withholdings that he made. the employer,” says Guevara, adding that last January the employer had to give the worker a 107 form with the description of all the values that were withheld, which must be exactly the income tax of that worker.
This 107 form can also be downloaded online on the SRI website with the worker’s username and password.
What happens with fiscal year 2022? Guevara points out that the employer is going to have to calculate, based on a projection of all income, the income tax of that worker, but this time only discounting the personal contribution that the worker makes to the social security system, it is no longer to deduct personal and family expenses because they ceased to be deductible expenses to become a reduction on the income tax caused.
With that base, the employer will calculate the annual income tax and if the worker presents the personal and family expenses projection form, he will have to apply the reduction, not to the taxable base, but to the income tax. caused, being that discount of 10% or 20% on the projected personal expenses and whose percentage to apply will depend on the amount of annual gross income of the worker.
Self-employed professionals or traders
The expert adds that there are also changes for professionals or self-employed traders. They will have to file their income tax return in March 2023, show all their income, subtract the insurance contribution, if they are affiliated, because it is part of their activity, and they will also have to subtract all the expenses incurred to carry out their economic activity.
“Once that was done, until 2021 they had the same right to deduct their personal and family expenses and calculate their income tax there; for 2022 they do exactly the same, but they no longer subtract (or deduct) personal and family expenses, but they will reduce the income tax to be paid, within the limits established by law, their income tax reduction ”, he maintains. (I)
Source: Eluniverso
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