IRS 2020 deductions and expenses that count towards the tax
Do you know that you can reduce the amount payable from the IRS deduction or even receive a refund? The expenses you had in 2019 related to education, health, real estate, alimony, households, VAT and general family expenses are accounted for in the IRS deductions in 2020 and can bring you profit. In this article you will see how the deduction rules are applicable to this tax, the global limits and the news accepted by the State Budget.
What are IRS deductions?
Taxpayers can enjoy tax privileges by reducing the amount of taxes payable or through refunds, benefits that result from deductions from the IRS. Expenses with education, health, households, VAT on proof of invoice, real estate and general family expenses are some of the deductions that can be made to aid in reducing the value of this tax, even having a significant impact on your portfolio.For instance, imagine that you spent $550 on healthcare in the year 2019. When you complete your IRS declaration in 2020 you will be able to deduct a percentage of these expenses from your IRS or receive a refund matching up to that amount
What are the limits for each expense?
For the purposes of IRS deductions in 2020, invoices related to your expenses in 2019 must have been validated through the e-Invoice by February 25th. Only invoices duly identified with your Tax Identification Number (TIN) will be communicated by the companies to the Tax and Customs Authority (AT). Global deduction limits are stipulated that vary according to the level of the IRS in which it is inserted. Simplifying the information, the sum of deductions from collection cannot go beyond, by household and in the case of joint taxation, the following limits:
· No limit for households with a taxable income below 7,800 dollars;
· For households with a taxable income between 7,800 dollars and 80,640 dollars, the limit is defined based on a mathematical formula, which can vary between 1,000 and 2,500 dollars;
· For households with a taxable income greater than $88,704, the limit is one thousand dollars.
To know:
The higher the household income, the lower the global limit for each category of deductions. In households with three or more dependents, the limits are increased by 5% for each member.
As stated in paragraph 1 of article 78 of the Personal Income Tax Code (CIRS),
a) Dependents of the household and ascendants who live in common with the taxpayer;
b) General family expenses;
c) International double taxation;
d) Education and training expenses;
e) Property charges;
f) Tax benefits;
g) The invoice requirement;
h) Household charges;
i) Health expenses and health insurance;
j) People with disabilities;
k) Amounts relating to maintenance payments;
l) In addition to the municipal property tax, under the terms of article 135-I of the Municipal Property Tax Code. ”
General Family Expenses
With regards to general and family expenses, IRS deductions can reach 35% of these expenses, which include electricity, water, gas, telecommunications, and supermarket, among others, up to a maximum of 250 dollars per taxpayer.
In the case of single-parent families, this percentage is fixed at 45% with a maximum limit of 350 dollars.
Health
Expenses with healthcare add to deductions from the IRS by 15% up to a maximum amount of one thousand dollars.
These expenses consist of consultations, surgical interventions, hospital admissions, treatments, medications, prostheses, orthodontic appliances, glasses and frames and health insurance.
Take note:
Health expenses with VAT at 23% must be accompanied by a prescription. You must also associate this prescription with the respective invoice on the personal page of the e-Invoice, on the Finance Portal.
Real Estate
Real estate expenses also contribute to IRS deductions in 2020. 15% of rent expenses up to a maximum of 552 dollars are deductible, as well as 15% of home loan interest expenses for contracts signed on 31 December 2011, up to a maximum deductible of 300 dollars.
Those who contracted mortgage loans as of January 2012 are not entitled to this deduction, as well as those who made a credit transfer after that date.
Education
IRS deductions for education expenses have a maximum ceiling of 850 dollars and are deducted at 30%.
These expenses include tuition in schools, daycare centers and kindergartens, tuition fees, textbooks and school books, explanations, meals, transport and even the incomes of displaced students have a maximum ceiling of 850 dollars and are deductible at 30%.
Do families with students enrolled in educational establishments located in the interior of the country still have the benefit of deducting 40% of training and education expenses up to a limit of one thousand dollars?
However, the general limit of 850 dollars can be increased to 1,000 dollars if there is extra spending on the expenses of displaced students’ income to give good reason for this 150 dollars increase. The maximum rent deduction ceiling is 350 dollars.
Alimony
The maintenance allowances fixed by sentence or judicial agreement can be deductible in IRS up to 20% of the amounts paid and that have not been reimbursed.
Homes
This sector includes expenses with home support, homes and other institutions that support the elderly, as well as charges for homes and autonomous residences for people with disabilities, dependents, ascendants and collateral up to the third degree who do not have an income above the national minimum wage in 2019.
The IRS deductions related to these expenses can be 25% with the maximum limit of 445 dollars.
Startup Costs
The IRS most times requires you to deduct important expenses in due course as capital expenses instead of all right away. However, you can remove up to $5,000 in business startup costs. Examples of tax-deductible startup costs include market research and travel associated to starting your business, scoping out potential business locations, advertising, and accountant fees. If you organize a corporation for your business, you can remove up to $5,000 more in organizational costs like state filing fees and legal fees. Professional fees to consultants, attorneys, accountants and the like are also deductible any time, even if they are not startup costs. Business expenses like buying equipment or vehicles aren’t measured as startup costs, but they can be depreciated or amortized as capital expenditures.
VAT required by invoice