Swiss Army knife, life insurance with its many facets. Reverse of the medal, the complexity of the product. A fact that also applies to taxes: if you have to withdraw money from your life insurance in 2021, no less than 12 boxes must be checked in the declaration!
Do you pay your income tax for the year 2021?
Non! Like the Equity Savings Plan, life insurance is a tax envelope. As long as you do not make withdrawals, or redemptions in jargon, you have nothing to declare! Thus, contrary to the interest in the taxed bank passbooks, neither the 2021 remuneration of your fund in euros nor the possible gains on your holdings in units of account have been included in your income statement.
When is life insurance income impossible?
a complicates in case of redemption in 2021, whether partial or total: the public treasury taxes the life benefits of the insurance at the time of withdrawal. To calculate income tax, the taxman will save dpts and capital gains.
For a single and total redemption, the imp will only be on the capital gain, so the difference between the sum of the payments, since the opening of your contract, and its final value, at the time of closing. For a partial redemption, you have imposed on the part of the capital gain included in the amount withdrawn, in proportion (1). Of course, in case of impairment, you will not have to pay any taxes!
Example. You have 10,000 on life insurance, so 4,000 in capital gains. In other words, you have about 6000 years ago and the performance of the contract during this time has allowed you to earn 4000.
In the event of a total redemption in 2021, the tax authorities will only pay 4,000: this is your taxable profit. This does not mean that they will be impossible (see next question)!
In the event of a partial withdrawal of 5,000, the tax authorities calculate the share of taxable gains (no longer necessarily taxable) on a pro rata basis: the public treasury retains 2,000 capital gains in this withdrawal.
When do you benefit from tax benefits?
Keep in mind the general rule: you benefit in all cases from one discount of 4600 euros (9200euros for a couple) and your life insurance contract a more than 8 years at the time of redemption. A rebate valid each year and which only applies to the share of earnings in your withdrawal, not the full amount withdrawn.
A simple example: you are withdrawing a few thousand euros, in 2021, on a life insurance of more than 8 years, and on which you have not had any money for several years. In this case, you do not pay taxes on your earnings thanks to the rebate! You must declare these gains, thoriquement pr-filled at 2CH houses: the public treasury itself applies the rebate.
Example. Let’s take the same simplified example, developed above. The contract is over 8 years old. Even if you withdraw 10,000 in 2021, the share of taxable earnings is only 4,000. Less than the rebate! You will pay no, no income tax for this life insurance.
Are some gains related to the single tax?
An additional brick is added to this declarative Rubik’s Cube: the flat tax, or flat-rate levy (PFU): 12.8% income tax + 17.2% of social security contributions. Entering into force in 2018, the simplified tax regime of the PFU concerns redemptions from payments made on life insurance since September 27, 2017, which must therefore be distinguished in the declaration.
Result: The tax office will have to sort your earnings according to two separate schedules:
- depending on the opening date of your contract (more or less 8 years old),
- depending on payment data: before starting on September 27, 2017. Before: the old tax system. Aprs: at the single tax.
Life insurance: why your earnings tax is now so lucrative
How to sort life insurance earnings?
The good news is that your insurer has historically sent you a unique tax form (IFU) detailing the amounts you have provided to the tax office. Your insurer had to calculate, on a pro rata basis, the share of earnings from your payments before or after September 2017. The amounts indicated in this IFU are logically prefixed in your statement.
In total, in this 2022 return, two potential cases are related to the earnings issued by Assurance Vie, under the heading securities income and capital.
Contras over 8 years old? 5 case checker!
If you have been in need of life insurance for more than 8 years, do not apply the annual rebate yourself! The tax office is in charge. Earnings can occur in five different cases. The first two concern the payments made before September 2017subject to the old tax regime:
- 2DH: the capital gains on which you have opted for the flat-rate library loan (PFL) 7.5%.
- 2CH: if you have renounced the PFL, favoring a tax on the bartender after abatement.
You have already made this choice, whether you opt for the PFL or not: you had to specify it to your insurer at the time of withdrawal in 2021. And this decision is irrevocable: you can no longer change your options at the time of declaration. It is only a matter of filling in the correct box, depending on the choice made at the time of redemption.
The other three boxes are for payments made after September 2017:
- 2VV: earnings from small contracts, impossible 7.5%.
- 2WW: earnings from large contracts (the share of earnings exceeding 150,000 euros per taxpayer), subject to the flat tax (12.8% income tax).
- 2UU: the total of the two amounts above, automatic calculation for the online declaration. If the insurer has already applied a levy on these gains, at the time of withdrawal, the amount is theoretically filled in box 2CK (tax deposit reducing your tax pay).
Namely: if your earnings are divided into several of these 5 boxes, the tax authorities will benefit from the deduction of 4600 euros (per taxpayer) in priority on earnings from payments made before September 2017.
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Contras under 8? 4 case checker!
Zro abatement! For recently opened life insurance, taxation is less favorable … but the breakdown is simpler. corpse payments made before September 2017 are imposed under the old regime, and one of the following two lines is postponed:
- 2XX: if you opted for the PFL (35% or 15% depending on the length of detention) at the time of withdrawal.
- 2AA: if you renounced the PFL at the time of withdrawal, preferring a progressive bar tax.
The share of profits is achieved thanks to dpts performs april september 2017it is necessarily subject to single taxation (12.8%), and the earnings concerns must declare all the lines 2ZZ. The tax levy, when withdrawn by the insurer, must be indicated in the box 2CK.
You have to check and possibly correct – the amounts entered, but you can change your chosen tax option: again, the decision taken at the time of withdrawal (reminder on the IFU sent by your insurer) is irrevocable. Only option available: waive the flat tax, for the amounts concerned, by checking box 2OP, but this will impact all of your investment income. An interesting option for non-taxable households.
3 bonus cases for social security contributions
Social security contributions (17.20%) are either deducted directly from the source, each year on the remuneration of the fund in euros, or at the time of redemption (on the share of earnings withdrawn, taking into account the payments already made). But again, the date of the payments concerned and the option chosen at the time of withdrawal changes.
The following cases are probably pre-filled but you need to check the amounts provided. Social security guidelines are so complex, feel free to click on the tax return provided by your insurer.
- 2CG: earnings from redemptions not entitling the deductible CSG. In particular, all earnings already subject to the flat-rate library tax (PFL), or those subject to the flat tax (PFU) are pre-filled.
- 2DF: capital gains from payments made before September 27, 2017if you did not opt for the PFL when withdrawing: they open the deductible CSG.
- 2BH: Check this box for earnings from raliss payments aprs september 2017 if you opt for the barma option (by checking the 2OP box). If these amounts were more than 2CG line, they must be carried forward to 2BH. Earnings completed on 2BH are eligible for the deductible CSG if and only if you check the 2OP box.
A: The tax office automatically calculates the deductible CSG (you have nothing to change the 6DE line).
Taxes and life insurance: Do I have to correct the deductible CSG on your return?
(1) For more details on life insurance taxation.