Income tax return: aspects to take into account

The following is an explanation of aspects to be taken into account by taxpayers so that filing income tax returns is not a headache.

Penalties that may be generated for not filing the income tax return on time are equivalent to 5% of the tax payable.

On August 10, 2021 the deadlines for individuals to file their income tax return for the taxable year 2020 begin. The most important novelty is the change in the order of the last digits of the NIT for filing. This year the first to file will be taxpayers whose NIT ends in 01 and 02.

It is worth remembering that by means of Decree 1680 of December 17, 2020 the Dian established the tax calendar for the filing this year of the taxes for individuals and companies corresponding to the taxable year 2020.

In the case of the income tax return that applies to individuals, this term begins on Tuesday, August 10 and ends on October 21, so, from the point of view of Ángela González, tax associate partner at EY Colombia, there are three aspects that all taxpayers obliged to comply with this requirement must take into account.

Order of due dates

The first aspect is related to the order of the deadlines for filing the return in connection with the last two digits of the NIT, which, in the case of individuals, corresponds to the last two digits of their identity card.

The deadlines to file and pay the income tax return corresponding to the taxable year 2020 begin next August 10. These deadlines begin for individuals whose NIT ends in 01 and 02 and end on October 20 for individuals whose NIT ends in 99 and 00.

To declare or not?

“The second point that must be taken into account is to know if the person must declare income or not, taking into account that declaring does not necessarily mean paying the tax.”

The second point that must be taken into account is to know whether the person must declare income or not, taking into account that declaring does not necessarily mean paying the tax. If a person meets at least one of the following requirements, he/she acquires this obligation, says Gonzalez.

1. Income level: if he/she received during 2020 income over $49,850,000, which corresponds to 1,400 UVT (including those generated by cryptoassets).

2.Gross assets: if the sum of the assets and rights appreciable in money, without taking into account the debts you have, exceeds $160,232,000, corresponding to 4,500 UVT.

3.The value of purchases and consumptions: if you have had credit card consumptions higher than $49.850.000, corresponding to 1.400 UVT.

4.Bank deposits and investments: if you have had deposits in bank accounts in Colombia higher than $49,850,000, corresponding to 1,400 UVT.

5.Deposits: if you have had bank deposits in excess of $49,850,000, corresponding to 1,400 UVT.

It is recommended that the obligated taxpayers gather all the documents that support the amounts explained above, such as bank statements, property and vehicle tax payment receipts (to determine the value of the assets), investment certificates, among others, which will serve as a guide to establish if they must file the tax return.

Penalties for not filing or filing late

A third aspect is the penalties that the taxpayer may incur for not filing the return or filing it late. Alexandra Gnecco, associate partner of EY Colombia, warns: It is important that people are clear about the importance of filing the income tax return, as it is a legal obligation before the Dian. If the person does not have the money available to pay when filing the income tax return, it is better to leave the payment pending and file the income tax return anyway, because if he/she delays in doing so, or does not do it, the penalties are higher than the default interest.

The penalties that may be generated for not filing the income tax return on time are initially equivalent to 5% of the tax payable, before any type of withholding at the source, since the income tax return is settled by subtracting the tax paid for withholding at the source during the taxable year.

This penalty percentage may increase according to the days or months in which the filing or payment of the tax is delayed. The Dian offers a benefit for people who cannot file or pay within the deadlines, but have had a good behavior in previous years.

The penalty may be reduced by 50% if it is evidenced that in the last two years the natural person has filed the returns on time.

It must be taken into account that, if the person obliged to file and pay the income tax return is deceased, his attorneys-in-fact or representatives must assume that obligation. Gonzalez comments in this regard:

In the process of liquidation of the succession, that is, in the distribution of assets and obligations of the deceased person, one of his representatives must comply with the obligation to file the income tax return in order to be able to continue the succession proceedings before the judge or notary.

It must be taken into account that Colombian residents in the country are obliged to report worldwide income in their tax return. Likewise, they must report the assets owned in Colombia and abroad. The latter likewise must be reported in the annual declaration of assets abroad, to the extent that such assets exceed 2,000 UVT.

Source: Actualize