Deduct from Expenses in IRS?
Virtually, all the expenses are worth a discount on
the IRS. In this blog, we explain how to take advantage of them and thus pay the
least possible tax.
Education, health, real estate, homes, alimony,
deduction of VAT due to invoice requirement, and general family expenses. These
are the expenses that help to lower the invoice from the IRS. Next, we show you
how IRS expenses work, taking into account the rules applicable to the 2020
tax, to be declared in 2021.
Deductions and limits on IRS expenses
Education and training
Virtually all expenses related to school activity can
be deducted from the IRS: tuition for schools, daycare centers, and
kindergartens; tuition fees; school books and manuals; explanations; meals;
transport; accommodation of displaced students; and school supplies (if
purchased at school).
It is also possible to deduct expenses from the income
of displaced students. Displaced students are all those who are under 25 years
of age and who attend an educational establishment more than 50 kilometers from
the household's permanent residence. To deduct these charges from the IRS, it
is necessary to have a lease. In addition, the landlord must register the lease
on the Finance Portal and indicate on the rent receipts that the amount paid is
intended for the rental of a displaced student.
The deduction of education and training expenses
allows 30% of the contemplated expenses to be deducted from the IRS collection,
up to a maximum of 800 euros, per household. To reach this limit, it is
necessary to present expenses in the amount of 2,667 euros.
Increased benefits
However, if there are expenses for the income of
displaced students, the maximum ceiling for deducting education and training
expenses can rise up to € 1,000. But it is necessary that the difference
between this special limit (1000 euros) and the general limit (800 euros) is
due to those expenses. At most, only 300 euros can be deducted from rents.
There are also benefits for families with students
enrolled in educational establishments located in the interior of the country.
These households can deduct 40% of training and education expenses, up to a
limit of € 1,000.
Health
Health expenses also entitle you to deduct from the
IRS, regardless of the VAT rate. In this category, it is possible to deduct 15%
of the amounts paid, up to a maximum limit of 1 000 euros, per household.
The deduction of health expenses covers a wide range
of charges. Consultations, surgical interventions, hospital admissions,
treatments, medications, prostheses, orthodontic appliances, glasses (including
frames), and health insurance are some examples.
In this category, since 2020, expenses with breathing
masks and disinfectant gel are still deductible. Discover the precautions to be
taken to deduct respiratory masks and disinfectant gel at the IRS.
Note: Health expenses with VAT at 23% must have a
prescription. It is also necessary to associate this prescription with the
respective invoice on the personal page of the e-invoice, on the Finance
Portal.
Properties
In this category, interest charges on credit
agreements for the purchase of permanent housing concluded until 2011 are
deductible. Anyone who contracted a mortgage loan for the same purpose at a
later date is not entitled to this deduction. The same is true of those who
signed a housing loan agreement until 2011 and transferred it after that date.
The interest expense on home loans can be deducted by
15%, with a maximum limit of 296 euros. For those with lower income, the
deduction can be increased up to 450 euros.
In addition to the interest on home loans, it is
possible to deduct rental expenses from the tax. This, provided that the rented
house has the purpose of permanent housing and that the lease has been
concluded under the Urban Lease Regime or the New Urban Lease Regime.
15% of the amounts spent on rent are deductible from
the IRS, up to a maximum of 502 euros. This deduction can be increased for
lower-income, up to 800 euros.
Whoever, last year, moved to the interior of the
country and rented a house can deduct from their 2019 IRS the expenses they had
with the respective rents, up to 1 000 euros, instead of the usual 502 euros.
But for that, it is necessary that you have transferred your permanent
residence to the new rented house.
Homes
This deduction includes expenses with home support,
homes, and other institutions supporting the elderly of taxpayers (taxpayer and
spouse), as well as charges for homes and autonomous residences for people with
disabilities, dependents, ascendants, and collaterals up to the third degree
that does not have incomes higher than the national minimum wage (665 euros in
2021). 25% of expenses can be deducted with a maximum limit of 403.75 euros.
Alimony
Those who pay maintenance payments fixed by sentence
or court agreement can deduct 20% of the amounts paid and not be reimbursed
from the IRS. Alimony can be awarded in favor of children, adopted,
stepchildren, and older civil godchildren, and those who, until the age of
majority, were subject to guardianship.
Deduction of VAT due to invoice requirement
Asking for an invoice in specific sectors of activity again entitles you to a tax benefit, corresponding to the deduction of a percentage of the input tax: 15% in the costs of repairing automobiles and motorcycles, accommodation and catering, hairdressing, and veterinary activities, and 100% in charges with monthly public transport passes.
Congratulations!
For more information, please contact us.
(Author)
Raj Don
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