How do I file my income tax return for the first time?

Filing your income tax return for the first time can seem like a daunting task, but it doesn't have to be. With a little guidance and basic knowledge, you can easily navigate the process and ensure that your declaration is done correctly. 

How do I file my income tax return for the first time?

Filing an income tax return for the first time can be an important step in many people's financial lives. For some, it can be an intimidating and confusing experience, while for others, it can be a milestone of independence and financial responsibility. Regardless of how you feel about it, understanding the process and the basic requirements is essential to ensure that you fulfill your tax obligations correctly and efficiently. 

Step 1: Gather your documents

Before you start filing your income tax return, it's essential to gather all the necessary documents. This includes

• Proof of income: such as income reports provided by employers, financial institutions, self-employed pay slips, among others.
• Deductible expense documents: such as medical receipts, proof of education expenses, private pension receipts, etc.
• Information on assets and rights: such as ownership documents for real estate, vehicles, investments, etc.

Step 2: Download the Receita Federal program

The next step is to download the specific Receita Federal program for the current year's income tax return. This program is available on the official Receita Federal website and is free to download.

Step 3: Fill in your personal details

When you open the Receita Federal program, you will be asked to fill in your personal details, such as full name, CPF, date of birth, address, among others. Make sure you fill in this information accurately to avoid future problems.

Step 4: Enter income

The next step is to enter all the information about your income. This includes salaries, rental income, investment income and so on. Make sure you enter this information accurately, as mistakes can lead to problems with the IRS.

Step 5: Declare the deductions

After entering your income, it's time to declare your deductions. This includes deductible expenses, such as health care, education, private pensions, among others. Make sure you have proof of these expenses to hand, as the IRS may request these documents for verification.

Step 6: Check and send the declaration

After filling in all the information, it is essential to check that all the data is correct before sending the declaration. You can use Receita Federal's own tool to do this check. Once you have confirmed that everything is correct, you can send the declaration to the Receita Federal.

What is the purpose of income tax?

Income tax is one of the most significant forms of taxation in many countries around the world, including Brazil. Its main purpose is to finance government activities and ensure the proper functioning of the state machine, providing the necessary resources for the provision of public services and the implementation of government policies.

The purpose of income tax can be divided into several dimensions:

Financing public services

Financing public services is one of the main purposes of income tax and plays a crucial role in maintaining and improving the population's quality of life. These services cover a wide range of areas that are essential to the functioning of society and the country's socio-economic development.

• Health: The funds collected from income tax are used to finance the public health system, including hospitals, health centers, vaccination programs, the supply of medicines and medical treatment. These services are essential to guarantee universal access to health and to promote the physical and mental well-being of the population.
• Education: A significant part of the public budget for education is financed by income tax. This includes building and maintaining schools, paying teachers' salaries, buying teaching materials and funding educational programs. Investment in education is fundamental for human development, economic growth and the reduction of social inequality.
• Public Security: Income tax funds are also used to finance public security forces, including police, firefighters, civil defense and the prison system. These services are essential for guaranteeing public order, protecting citizens against crime and natural disasters, and promoting the safety and tranquillity of the population.
• Infrastructure: Part of the funds from income tax go towards investments in public infrastructure, such as roads, bridges, public transport, basic sanitation and drinking water supply. These investments are essential for economic development, job creation and improving the quality of life in communities.
• Social Assistance: Income tax also funds social assistance programs aimed at vulnerable and socially vulnerable groups, such as the elderly, children, people with disabilities and low-income families. This includes benefits such as pensions, Bolsa Familia and other cash transfer programs.

Redistributing income and fighting inequality

Income redistribution and the fight against inequality are fundamental aspects of the tax system, and income tax plays a crucial role in this process. 

• Progressive taxation: Income tax generally follows a system of progressive taxation, where rates increase as income rises. This means that those who earn more are subject to proportionally higher taxation of their income. This progressivity is designed to ensure that taxpayers with greater financial capacity contribute more to financing public services and combating inequality.
• Reducing income disparities: By taxing higher incomes more heavily, income tax helps to reduce income disparities between different social strata. This is important for promoting a more equal society, where everyone has access to fair opportunities and decent living conditions.
• Income transfer programs: Part of the funds collected from income tax go towards income transfer programs, such as pensions, Bolsa Familia and other social benefits. These programs help provide additional financial support to those in situations of economic vulnerability, reducing income inequality and promoting a more equitable distribution of wealth.
• Investments in education and health: Financing public services such as education and health through income tax also contributes to reducing inequality. By investing in quality education and universal access to healthcare, the government helps to level the playing field, offering equal opportunities to everyone, regardless of their socio-economic background.
• Stimulating inclusive economic development: Progressive and well-structured taxation can promote more inclusive and sustainable economic development. By reducing income inequality, income tax helps to create a more cohesive and stable society, where everyone has the chance to contribute to and benefit from economic progress.

Promoting social justice and solidarity

Income tax reflects principles of social justice and solidarity, since all citizens are called upon to contribute based on their financial capacity. This means that those who have more financial resources should contribute more to the common good, helping to finance public services that benefit society as a whole.

• Proportional contribution: Income tax is designed to ensure that everyone contributes based on their financial capacity. This means that those with more financial resources pay a higher proportion of their income in tax, while those with lower incomes are taxed at a lower rate. This principle of proportional contribution helps to promote social justice by ensuring that everyone contributes according to their ability to pay.
• Intergenerational solidarity: Income tax also promotes intergenerational solidarity, where wealthier generations help fund public services and social benefits that benefit not only themselves, but also future generations. This is especially evident in the financing of programs such as social security and public health, where the resources collected today are used to guarantee the well-being of future generations.
• Reducing socio-economic disparities: By progressively taxing higher incomes and investing the funds collected in public services and social programs, income tax helps to reduce socioeconomic disparities between different social strata. This promotes a more cohesive and supportive society, where everyone has the opportunity to prosper and contribute to the common good.
• Promoting equal opportunities: Financing public services such as education and health through income tax helps promote equal opportunities by offering universal access to essential services regardless of income or social background. This helps to level the playing field and ensure that everyone has the same chances of success in life.
• Social responsibility and citizenship: By contributing to the payment of income tax, citizens exercise their social responsibility and citizenship by helping to fund public services that benefit society as a whole. This promotes a sense of collectivity and belonging, where everyone has a role to play in building a fairer and more supportive society.

Regulating the economy

Income tax also plays a role in regulating the economy, encouraging certain economic behaviors and discouraging others. For example, tax deductions can be offered to encourage investment in certain sectors, while higher rates can be applied to certain types of income to discourage speculative or harmful practices.

Fiscal sustainability

Fiscal sustainability refers to the government's ability to raise enough revenue to cover its spending and public services in a responsible and balanced way, without resorting excessively to debt or creating unsustainable budget deficits. Income tax plays a key role in ensuring this fiscal sustainability. 

• Revenue collection: Income tax is one of the main sources of government revenue in many countries. By taxing the income of individuals and companies, income tax generates a stable and significant source of revenue that can be used to fund public services and government programs.
• Equity and fiscal justice: Equitable and progressive taxation is fundamental to long-term fiscal sustainability. Income tax helps to promote this equity by ensuring that those with the greatest ability to pay pay a fair proportion of their income in taxes. This helps to reduce economic disparities and promote a more equitable distribution of the tax burden.

• Controlling public debt: Adequate tax collection, including income tax collection, helps the government to control its public debt and avoid excessive debt accumulation. By financing a significant part of its spending through tax revenues, the government can reduce the need to borrow to cover budget deficits, thus limiting the growth of public debt.
• Budgetary flexibility: A solid base of tax revenues, including income tax, gives the government greater flexibility in planning and allocating resources. This allows the government to respond more effectively to changes in economic and social conditions, and to unforeseen crises, without compromising long-term fiscal sustainability.
• Sustainable economic growth: An appropriate tax policy, including fair and efficient taxation of income tax, can help promote sustainable and lasting economic growth. By financing investments in infrastructure, education, health and other critical areas for economic development, income tax contributes to increasing productivity, creating jobs and improving the population's quality of life.

Don't forget your income tax

Filing your income tax return for the first time can seem daunting, but by following this step-by-step guide, you can complete the process with confidence. Make sure you gather all the necessary documents, fill in the information accurately and check it carefully before submitting your return. With a little effort and attention to detail, you can fulfill your tax obligations without any problems.

See also: Rent Adjustment: How much is allowed by law?

March 31, 2024