Around 700,000 people are experiencing the same situation this year.
It's a puzzle like the French administration has a secret. One of those regulations that makes you headache and wonder: why isn't this simplified? Retiring is a major step in life that is not easy to take. Compiling your file takes time and, financially, it generally represents a significant cut in the budget. Did you think you were done with administration since you received your pension? Not so fast, taxes are coming...
The year you retire, completing your tax return is a little more complex than usual. You must enter the salaries received in the first part then the pensions in another. Above all, when you permanently leave the world of work, additional income is paid by the employer: the retirement bonus. Although certain exceptional financial supplements are tax-exempt, this departure gift must, however, be declared to the tax authorities, who will deduct part of it.
To properly notify the General Directorate of Public Finances (DGFiP) that you have received this compensation, you must do things meticulously. The amount of the bonus is automatically sent by your employer to the tax authorities. However, the latter counts it as traditional salary. However, it is preferable to make an adjustment when completing your declaration. It is therefore recommended to:
This method allows you to reduce the amount of tax paid on the departure bonus and, above all, avoids increasing your withholding tax rate since you indicate this compensation as exceptional income and not usual income.
With around 700,000 retirements in 2023, as many French people are affected by this important step when declaring their income. Two exceptions exist, however: new retirees forced to leave as part of a social plan are not taxed on their entire departure bonus and those retired by their employer are exempt on part of this compensation.
