Polish Pensioners Receive tax Form: is EPD-21 Right for You?
Table of Contents
The Social Insurance Institution (ZUS) in poland has mailed the EPD-21 tax form to over 460,000 pensioners. This form allows eligible pensioners to potentially increase their “on hand” payments by avoiding tax advances on income up to PLN 30,000. However, ZUS cautions that submitting the EPD-21 request isn’t always the best choice, especially for those with income exceeding this threshold. Understanding the implications is vital for pensioners to optimize their financial situation.
Understanding the EPD-21 Form: Application for No Tax Advances
The EPD-21 form,officially titled “Application for not tax advances on income up to PLN 30,000,” is being submitted to ZUS by pensioners across Poland.This application can considerably impact the amount of money pensioners receive monthly, notably concerning additional annual benefits.
Here’s how it works: If a pensioner submits the EPD-21 application to ZUS, the institution will cease deducting tax advances from their pension, supplementary pension, and additional annual benefits like the “thirteen” and “fourteen” pensions. This applies as long as the total income from these benefits remains below PLN 30,000 for the year. Once this threshold is exceeded, ZUS will begin deducting a 12 percent tax advance from the benefit, without applying any reduction amount.
Who Benefits from Submitting the EPD-21 Form?
The decision to submit the EPD-21 application requires careful consideration. It is most beneficial for individuals who receive a relatively low benefit from ZUS and have no other sources of income. In such cases, income tax advances are primarily deducted from the additional annual benefits, resulting in lower “on hand” payments. While the overpaid tax is eventually refunded by the Tax Office after the year’s settlement, this can take a considerable amount of time.
By submitting the EPD-21 application, ZUS will not deduct the advance from the “thirteen” and “fourteen” pensions, leading to higher immediate payments. ideally, this eliminates the need for a tax overpayment refund from the Tax Office at the end of the tax year.
To assist pensioners in making an informed decision, ZUS included the EPD-21 application form and an explanatory leaflet with the PIT for 2024 sent to potentially interested individuals. This targeted group consists of over 460,000 clients who have previously had tax advances deducted solely from their “thirteen” and “fourteen” pensions.
When is the EPD-21 application Needless or Even Detrimental?
The EPD-21 application is not a universally beneficial solution. It is particularly unfavorable for individuals whose total annual income from all sources exceeds PLN 30,000. This includes pensioners who receive a second benefit from another institution or earn income from employment.
If a pensioner in this category applies to ZUS to stop deducting tax advances, they may face a notable tax underpayment when settling with the Tax Office at the end of the year. Moreover,once submitted,the EPD-21 application remains in effect for subsequent years unless the recipient withdraws it or submits another tax application. Therefore, pensioners must carefully weigh their options and consider allowing ZUS to continue collecting tax advances if their total income surpasses the PLN 30,000 threshold.
the customer always makes a decision about the application, but in this situation it is indeed worth considering that ZUS will remain when collecting tax advances.
Małgorzata Korba,ZUS spokesman in the Lublin Province
Making an Informed Decision
The Social Insurance Institution’s distribution of the EPD-21 form presents a valuable prospect for many pensioners to optimize their income. Though, it is indeed crucial to carefully assess one’s individual financial situation before submitting the application. Pensioners should consider all sources of income and accurately estimate their total annual earnings to determine whether the EPD-21 form is the right choice for them. Consulting with a tax advisor may also provide additional clarity and guidance.
Polish Pensioner Tax Relief: Decoding teh EPD-21 Form and Maximizing Your Retirement Income
Over 460,000 Polish pensioners received the EPD-21 form this year—but is it a golden ticket to increased retirement income, or a potential tax headache? Let’s find out.
Interviewer: Welcome, Professor Janowicz. You’re a leading expert in Polish pension and taxation law. The EPD-21 form has caused quite a stir among Polish pensioners. Can you break down exactly what it is and how it affects retirement income?
Professor Janowicz: Certainly. The EPD-21, or “Request for not tax advances on income up to PLN 30,000,” allows eligible Polish pensioners to opt out of advance tax deductions on their pension payments. This impacts their monthly income, especially concerning supplemental annual benefits like the “thirteenth” and “fourteenth” month pensions. Essentially, it lets pensioners receive their full pension amount each month without the tax being deducted upfront.However, it’s crucial to understand that this approach only benefits those whose total annual pension income, including supplemental payments, remains below the PLN 30,000 threshold.
Interviewer: So, who specifically benefits the most from submitting the EPD-21? Are ther certain profiles of pensioners for whom this is ideal?
Professor Janowicz: Absolutely. Those who stand to gain the most are pensioners with relatively low pension payments and no other critically important income sources. For them, the advance tax is primarily deducted from their supplemental annual payments, resulting in a smaller “on-hand” amount each month under the standard deduction regime. While this tax is eventually refunded, the refund process can be lengthy. The EPD-21 ensures they receive the full amount immediately and simplifies things, ideal for those with less financial complexity.
interviewer: But what happens if a pensioner’s income exceeds that PLN 30,000 mark? What are the potential downsides of submitting the EPD-21 in that situation?
Professor Janowicz: That’s where things become complex. If a pensioner’s total annual income from all sources—including pensions, other benefits, and employment income—exceeds PLN 30,000, submitting the EPD-21 can be detrimental. They risk significant tax underpayment at year-end, leading to a considerable bill. The Polish tax system needs the annual settlement to finalize the correct amount of tax and avoid either underpayment or overpayment. It’s crucial for pensioners to accurately calculate their total annual income before deciding.
Interviewer: Many pensioners might feel bewildered by this. What practical steps can they take to ensure they make the right decision?
Professor Janowicz: Here’s a simplified breakdown of steps pensioners should take:
- Calculate Total Annual Income: Carefully calculate your expected total income from all sources for the year. Even small amounts of outside income can influence calculations.
- Compare Threshold: Compare your total calculated income against the PLN 30,000 threshold.
- Consider Tax Liability: If below the threshold, the EPD-21 offers immediate payments and likely simpler tax reconciliation.If above, proceeding with the standard tax deduction system allows for better tax management throughout the year, preventing a large year-end tax obligation.
- Seek Professional Advice: If uncertain, consult a tax advisor or financial professional for personalized guidance.
Interviewer: The EPD-21 seems to remain in effect for subsequent years unless withdrawn. What are the implications of this?
professor Janowicz: Precisely. The application’s enduring nature emphasizes the importance of making a well-informed decision. Once submitted, a pensioner is committed to the tax treatment under the EPD-21 scheme until they actively withdraw the application or submit a new form.They cannot easily reverse their decision mid-year. This underscores the importance of proper readiness and understanding before submitting the form.
Interviewer: To summarize for our readers, what are the key takeaways from our discussion about the EPD-21 form?
professor Janowicz: The EPD-21 form offers a potential benefit to Polish pensioners—increased monthly income—but careful consideration of total annual income is crucial. Those with low incomes and no other sources of income are likely to benefit. However, those with other sources of income that already push their annual income beyond PLN 30,000 should strongly consider not using the EPD-21 to avoid a substantial tax bill. Accurate financial planning and perhaps professional advice are vital in making an informed decision.
Interviewer: Professor Janowicz, thank you for shedding light on this important topic.Readers, let us know your thoughts and experiences in the comments below, and share this vital information with your fellow pensioners!