Taxes: what to do when planning to retire in 2023

Inflation obliges, the government has decided to revise upwards the tax scale. Very concretely, this means that French men and women will pay, on an equivalent income, less tax than was initially planned. And if their income increases during the year, due to an increase in their salary, for example, they will still pay less than what they would have had to pay before the reform of the scale. This is not necessarily true for retirees who finally decide to put an end to their professional career: they are generally entitled to a retirement indemnity. Which is obviously imposed… but in a very specific way.

In 2023, as in 2022 or before, the retirement indemnity constitutes a so-called “exceptional” income. It is actually taxable, which therefore means that it must be included on your declaration for year n 1 in relation to the year of departure n (2023, if you leave in 2022), indicates Climb (ex TacoTax). The exact amount of the tax will depend on the exact nature of the retirement, underline the Bercy teams on the website of the Ministry of Economy, Finance, Industrial and Digital Sovereignty. The article in question was updated in May 2022, shortly before the re-election of the President of the Republic.

Some scenarios provide for full taxation of the retirement indemnity. This is precisely what happens in the absence of breach of contract. Generally, this follows a gradual pre-retirement. In general, even with termination of the contract, early retirement entails the taxation of all indemnities, except in the case of voluntary departure.

Similarly, any voluntary departure (outside the social plan) entails the taxation of all the compensation received. In this case, they will have to be declared as income. The other scenarios provide for total or partial exemptions, which must then be requested. Explanations.

The retirement indemnity, when it is at least partially taxable, must be declared to the tax authorities the year following its collection. It is normally pre-filled by the administration, but sometimes this is not the case.

When it is not pre-filled, you must then enter the total of the premium or the indemnity in box 0XX of the complementary declaration 2042 C. Do not include it with other declared income, recalls the official platform.

Then remember to subtract the amount of the bonus from the total pre-printed income and then detail, for each member of the tax household who received a retirement bonus, its amount and its nature. You must opt ​​for the box “Exceptional or deferred income to be taxed according to the quotient system”.

Fortunately, there are a number of tricks to limit the reality of tax, as Capital reminds us. What there is to know.

Several solutions make it possible to avoid the explosion of its imposition, underline our colleagues. The spreading of the declaration of the amount collected is no longer part of it since the finance law for 2020.

The first solution therefore remains the quotient mechanism. It makes it possible to calculate the additional tax on the single quarter of the sum in question, which is then multiplied by four and then added to the tax. Basically, this is an opportunity to limit the tax impact, explain the Capital teams, since this makes it possible to minimize the progressivity of the tax.

You could also opt for retirement savings to reduce your taxable income before departure… without skimping on the preparation for your retirement.