The year end is approaching and if you want to not be caught off guard it is time to remember which expenses can still be deducted in your 2016 IRS tax return that will be submitted in April and May 2017.
Taxpayers may already know it, but It’s important to maintain the habit of asking bill with your NIF, to take advantage of all the deductions to the collection. Children’s expenses can be passed on the name of their parents, but always need to have one of the parents NIF to be valid.
To ensure that no deduction is “lost along the way,” taxpayers must verify that the expenditure is correctly inserted and categorized on the tax portal, in other words, each individual tax payer needs to validate their expenses, in order to be able to use these in their tax return.
You need to monitor and confirm all your invoices, to make sure they appear in the portal under the correct section. The confirmation of all the invoices needs to be made until February 2017 and it’s recommended to all taxpayers to do so, or to ask someone to do it on their behalf and on behalf of their children, as if theses invoices are not confirmed by February 2017, the tax payer may lose the right to deduct them from their IRS tax bill.
Make sure all the invoices issued to your family are available on the E-Factura tax portal under the correct section. Below you can find the list of expenses that you can use, to save tax on your IRS return:
- FAMILY EXPENSES (clothing, grocery, fuel, etc.) 35% of each invoice, with a maximum of €250 per taxpayer (if a couple this allowance will be up to €500)
- EDUCATIONAL EXPENSES 30% of education expenses and training of any household member, with an overall limit of €800 per year. Books and textbooks are also deductible.
- HEALTH EXPENDITURE 15% of the costs of any household member to an overall limit of €1,000. The private health insurance premiums are since 2015 allowed to be included.
- HOME EXPENSES 15% of the interest on your mortgage, up to a maximum of €296 per year; or 15% of your rent up to € 502 per year. These amounts are higher in case of lower income.
- FOOD PENSION In case you are divorced and pay a food pension, you can now deduct up to 20% of the pension without limit on your IRS.
- CHARGES WITH RETIREMENT (SENIOR) HOMES 25% of the cost, with a limit of €403.75 per year.
- VAT As per the previous years, all your invoices with hairdressers, car repair, restaurants and accommodation can be deducted on your IRS, plus Veterinarian expenses, since 2016. This deduction is based on 15% of the VAT on each invoice paid.
- Plans retirement savings Are deductible to the collection of IRS, 20% of the amounts invested by each taxpayer, in plans of retirement savings, with a ceiling of 400 euros per person under 35 years; a ceiling of 350 euros if the person has between 35 and 50 years; or a ceiling of 300 euros for those who have more than 50 years.
- Donations The IRS accepts 25% of donations allocated up to a limit of 15% of the IRS previously retained on source. These donations have to be made to institutions that are part of the approved list.
- Urban Rehabilitation Are deductible on your IRS, 30% of the charges related to the rehabilitation of buildings located in areas of urban regeneration, up to a limit of 500€.
If you have any other questions, please feel free to contact us; tax planning is critical and you and your company, cannot afford surprises. Pass by our office for a friendly chat and find out more about the tax strategy that might be more effective on your specific situation.
We take this opportunity to wish you all a Merry Christmas and a very prosperous 2017!