TAX BENEFITS
The Inland Revenue allows us to obtain discounts on taxes due on our income, “discharging from taxes” a whole series of expenses considered of particular social importance as they are generally incurred for the family and for the home. Among the main ones, we list, for example, health expenses, expenses for school and sports for their children, expenses for personal assistance staff, subsidies for insurance premiums and pensions, concessions for the home ( mortgages for purchase, renovation, energy-saving, lease agreements, …) and more.
These charges and expenses are divided into two categories:
- Deductible charges: charges and expenses for which a deduction is recognized from the gross tax calculated on taxable income (obtained by subtracting any deductible charges incurred from the total income);
- Deductible charges: charges and expenses for which a deduction is recognized from the total income (subtracting them from the total income you get the taxable income on which to calculate the taxes).
WHAT IS THE DEDUCTION
Some expenses, such as those incurred for health reasons, for education, or for interest on the home loan, can be used to reduce the tax to be paid.
Generally, it is not possible to deduct (i.e. decrease the gross tax), the entire expense incurred but only a percentage of the same that can vary according to the type of burden incurred (from 19% for health care expenses and of education, at 26, 30 or 35% for donations in favor of ONLUS, APS or OV, at 50% for the purchase of furniture for the furnishing of buildings and for renovations, upgraded to 70, 75, 80, 85% in the case of anti-seismic interventions carried out in highly dangerous areas or 110% of the same in the face of specific interventions falling within the so-called “Super bonus”), etc.
For some types of expenditure, the deduction is determined on a flat-rate basis without taking into account the costs actually incurred. In particular, these are deductions for lease payments calculated on a fixed basis based on the tenant’s overall income and the type of contract stipulated.
Furthermore, in many cases, the deduction cannot be calculated on the entire expense incurred but on a maximum amount set by law.
The following general principles apply to all charges and expenses that give the right to deduction from gross tax:
- Generally, in case of inability, that is when the tax due is lower than the deductions to which one is entitled, the part of the deduction that exceeds the tax cannot be refunded;
- any excess is therefore lost, as it cannot be requested as a refund or deducted in the subsequent tax period;
- however, there is an exception for deductions on rent for which, in the event of gross tax loss, a sum corresponding to the unused deduction is still recognized;
- The deduction is only for the charges and expenses indicated in the TUIR or in other legal provisions;
- For the cash principle, in principle, the charges and expenses must be indicated in the tax return referring to the year in which they were incurred and must be suitably documented;
- The deduction is only due if the charges and expenses are actually borne by the person who incurred them; therefore:
- – if the expenses have been reimbursed in full, the deduction is not due;
- – if, on the other hand, the reimbursement is lower than the expense incurred, the deduction must be calculated only on the part not reimbursed;
- – if the reimbursement concerns charges incurred in previous years for which the taxpayer has already benefited from the deduction, the reimbursed sums must be subject to “separate taxation”;
- Some charges and expenses (for example health expenses, insurance premiums, expenses for school, university, for children’s sports) give the right to the deduction even if incurred in the interest of the person’s “fiscally dependent”.
What are the Pre Tax Deductions?
Some expenses, such as compulsory and voluntary social security contributions or donations to non-profit organizations, can reduce the overall income on which to calculate the tax due.
The deduction, in many cases, cannot be calculated on the entire expenditure incurred but on a maximum amount set by law (examples: contributions paid to supplementary pension forms or supplementary funds to the national health service).
The following general principles apply to all charges and expenses that give entitlement to income deduction:
- The deduction is only for the charges and expenses indicated in the TUIR or in other legal provisions;
- The charges and expenses must be indicated in the tax return relating to the year in which they were incurred and suitably documented;
- The charges and expenses reduce the total income in the pre-tax deductions period in which they were actually incurred (“cash principle”);
- The deduction is valid only if the charges and expenses are actually borne by the person who incurred them:
- – if the expenses are reimbursed in full, the deduction is not due;
- – if the reimbursement is lower than the expense incurred, the deduction is calculated only on the part not reimbursed;
- – if the reimbursement relates to charges incurred in previous years for which the deduction has already been made, the sums reimbursed must be subject to “separate taxation”;
- In most cases, the deduction can be used only within the limit of the total income, so any excess cannot be claimed as a refund or deducted in the subsequent tax period; an exception to the rule is provided for the sums returned to the donor subject to taxation in previous years and for donations to the ONLUS or APS, for which it is possible to recover the portion not deducted in subsequent tax periods;
- For some expenses, the deduction is due even if incurred in the interest of “fiscally dependent” family members (eg social security and welfare contributions, contributions and premiums for supplementary and individual pension schemes) while for example for medical expenses and specific assistance for people with disabilities, the deduction is also recognized when the expenses were incurred in the interest of family members not “fiscally dependent”.
