Brazilian individual taxpayers of income tax, known as IRPF, can benefit from different deductions that reduce the amount payable or increase the chances of a IRPF refund. In this article we will look at which expenses can be deducted.
The taxpayer can choose between two types of income declaration.
With the simplified statement, the taxpayer has a standard discount of 20% on taxable income and the discount is limited to BRL 15.880,89.
This type of declaration is intended for taxpayers who have higher deductible expenses, such as healthcare and dependents, they can deduct up to BRL 2.156,52 per dependent.
There are some expenses that can grant benefits to the individual taxpayer and are included in the income statement, which are called deductible expenses.
You can deduct from your income tax educational expenses, like enrollment and tuition fees. Expenses for school supplies, books, tutoring, language courses, preparatory courses for college, sport and music classes and similar activities are not deductible.
The limit of expenses to be deducted for each family member is BRL 3,375.83 per year. Among the educational expenses are: day care centers, kindergartens, elementary schools, high schools, colleges, specialized courses and professional courses. Professional courses are the ones that are accomplished after graduating from high school.
To benefit from the deduction of such costs, the taxpayer must always make the declaration in the complete statement type and save the proof of payment for a period of five years.
Medical expenses can be fully deductible, provided that they are related to the treatment of the taxpayer themselves or their dependents. There is no maximum limit for deductible medical expenses and can be deducted from payments for doctors, dentists, psychologists, physiotherapists, speech therapists, hospitals, for laboratory tests, orthopedics and orthopedic equipment and prostheses.
All payments for alimony can be deducted, but who receives the alimony is not considered a dependent of the taxpayer.
Contribution to Social Security Service
All contributions paid to the Social Security Service can be fully deducted, both as an employee as an individual or volunteer taxpayer.
Contribution to the Private Pension
With plans such as PGBL and Fapi, known as the Individual Programmed Retirement Fund, contributions to private pension funds that correspond up to 12% of taxable income can be deducted from the income tax. The taxpayer can only deduct the amount of contributions to PGBL in the complete statement declaration, where it is possible to specify the deductions.
Expenses recorded in the cashbook by autonomous service providers can also be deducted, such as employee remuneration, labor taxes and expenses necessary to maintain the production flow of the company.
Contribution to Social Security Service of domestic workers
The amount paid as an Employer Contribution to Social Security Service for domestic workers will be deducted from income tax, limited to BRL 1.152,88, including 13th salary and vacation. The value corresponds to 12% of the contribution paid by the employer to the INSS.
Donations that can be deducted from income tax must be related to the statutes and laws below. These donations can not exceed the overall limit of 6% from income tax:
- Audiovisual Incentive activity law
- Sports incentive law
- Rouanet or incentive culture law
- Children and adolescents statute
- Elderly statute