What expenses reduce your tax?

What expenses reduce your tax?
What expenses reduce your tax?

Some of your expenses can reduce your tax through reductions or credits which are deducted directly from the calculated tax.

In the case of expenses giving rise to a tax credit, if the amount is higher than that of your tax, the difference may even be reimbursed to you by the tax authorities; which is not the case for the tax reduction.

Your personal expenses

Those concerning personal services are the expenses most often declared for entitlement to a tax credit. It is equal to 50% of payments made within the limit of €12,000 to €15,000, depending on the composition of the tax household.

If, for the employment of an employee of a home, you request this tax advantage for the first time, the ceiling is raised to €15,000 or €18,000. On the other hand, the ceiling is lowered for certain services: €5,000 per year for gardening; €3,000 for IT assistance; €500 for the little DIY.

Out-of-home care costs for children under 6 years old (as of 1er January 2023) entitle you to a tax credit equal to 50% of their amount up to €3,500 per child.

Tuition fees are affected by a flat rate reduction of €61 for a middle school child, 153 euros for a high school student and 183 euros for a student.

A 25% reduction is granted to people who have incurred dependency and stay costs in an EHPAD or in a long-term care section; this tax advantage cannot exceed €2,500 per year. Finally, the compensatory benefit is also covered by a tax reduction, the treatment of which depends on its payment conditions.

Your donations, subscriptions and contributions

Donations in cash or in kind made to organizations of general interest and non-profit associations entitle you to a tax reduction of 66% of their amount up to a limit of 20% of taxable income. It is increased to 75%, within the limit of 1,000 euros per year for organizations helping people in difficulty.

A tax credit of 66% within the limit of gross taxable income applies for union contributions and a tax reduction is granted for contributions paid to political parties up to 7,500 euros per person per year.

Your housing expenses

A tax credit has been established to enable elderly, dependent or disabled people to remain at home. It covers expenses related to the equipment and installations concerned. It is 25% within the limit of 10,000 euros for a married couple, increased by 400 euros per dependent.

Another concerns work related to the prevention of technological risks in your main residence. Its rate is 40% of expenses paid, up to 20,000 euros.

Finally, a tax credit of 75% of the cost of the equipment and installation costs, capped at 300 euros, applies for the installation of a charger for electric vehicles in your main and/or secondary residence. The purchase and installation of the equipment must have been carried out by an approved professional.

Your investments in the economy

An advantageous tax system allows the French to invest in the real economy. Thus, contributing to the capital of certain SMEs entitles you to a tax reduction of 18% for subscriptions made from 1er January to March 11, 2023 and 25% after this date.

The investment cannot exceed 50,000 euros (100,000 euros for a couple). The same reduction applies to investment fund shares (FCPI and FIP), up to a limit of 12,000 euros (24,000 euros for a couple). For subscriptions to shares in solidarity real estate companies, the reduction is 25% up to a limit of 50,000 euros (100,000 euros for a couple).

A credit reimbursed immediately

The withholding tax process does not take into account tax reductions and credits. However, in order not to harm the taxpayer on certain recurring expenses, their tax advantages give rise to the payment of an advance of 60% from the month of January preceding the declaration.

To pay a person working from home, it is also possible to immediately receive the related tax credit.

By activating the Cesu+ option on the Urssaf website, the credit is deducted from each of your payments. Finally, for all these tax advantages, remember that if it is not necessary to attach the supporting documents to your declaration, the tax authorities may very well claim them from you for four years.

Are there any expenses that reduce my IFI?

A reduction may be applied to the real estate wealth tax (IFI) in relation to cash donations made for the benefit of organizations of general interest, such as foundations recognized as being of public utility (FRUP), non-profit research or higher education or artistic education of general interest.

This reduction is 75% of the amount of donations up to €50,000 per year. Please note that the same donation cannot be subject to a tax reduction for its IFI and for its income tax at the same time. On the other hand, it is possible to break down the amount given on each of the two taxes.

Furthermore, certain debts can be deducted from the IFI’s liabilities. To do this, they must relate to taxable real estate assets, be the responsibility of a member of the IFI tax household and exist and be certain at 1er January of the tax year.

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