There are cases where individual taxpayers are exempt from paying income tax, and this applies for people with chronic medical conditions. In this article you will learn how the tax benefit is given and who is eligible to apply for it.
The income tax exemption for people with chronic medical conditions is granted only to individuals whose income is related to their retirement or pension fund. Brazilians can retire for three possible reasons: age, contribution time and disability.
People with severe medical conditions or diseases are exempt from income tax provided that the taxpayer does not receive payments from employment activity. In addition, the individual must have one of the following conditions or diseases:
- Mental disorder
- Severe heart disease
- Radiation contamination
- Late stages of Paget Disease
- Parkinson disease
- Multiple Sclerosis
- Ankylosing Spondylitis
- Cystic Fibrosis
- Severe Nephropathy
- Severe liver disease
- Malignant tumor
- Irreversible and disabling paralysis
Requesting the Tax Benefit
The first step to request the income tax exemption is to attend an official medical service (Union, States, Federal District or Municipalities) and request a medical report proving the condition or disease. If possible, the medical service must indicate the date which the condition or the disease was contracted or began developing. Otherwise, the date that the report was issued will be considered as the date on which the condition or disease was contracted.
In addition, the medical service must indicate if the condition or disease can be controlled, and if so, it must specify how long it will take and the treatment required as the exemption will only be valid during this period.
Retirees or pensioners who have one of these conditions or diseases must visit the Social Security agency where the retirement pension was granted. The applicant will have to complete an application form and attach the original report provided by the medical service alongwith copies of other reports and supporting examinations.
The documentation will be reviewed by a medical expert at the National Institution of Social Security, known as INSS. In cases where the income tax exemption request is rejected, the applicant can appeal against the decision with the Board of Social Security Resources.
Even if the applicant is approved and receives the income tax exemption, it is still necessary to submit the income declaration statement annually.
Income Tax Refund for People with Chronic Medical Conditions
If the medical report indicates that the condition or disease was contracted prior to the medical report and the individual has paid income tax to date, they will be entitled to a refund on the amount already paid.
If the report indicates that the condition or disease was contracted during a month in the current year the taxpayer may request a refund through the Annual Adjustment Statement of the following year, declaring the income exemption from the month of when the benefit was granted.