The change in IRS withholding tax from July could now result in a smaller refund or tax to be paid, says Deco, which advises taxpayers to check invoices carefully to minimize this effect.
Speaking to Lusa at a time when the start of the annual IRS tax return is counting down, Soraia Leite, spokesperson for Deco Proteste, warns that the fact that the withholding tax tables, changed in July 2023, “gave taxpayers an immediate relief in their wallets, can now be made payable when the IRS tax return is filed”.
This context, she says, means that the process of checking and validating invoices with expenses deductible from the IRS has gained even more relevance this year, with the head of the consumer protection association advising taxpayers to check whether the amount of deductions calculated by the Tax and Customs Authority (AT) – which became available on the Finance Portal in the middle of this month – includes all invoices with TINs and to refuse it or complain if they find that there are missing invoices.
Taxpayers “should mirror” the deductions when they submit their tax return, “to minimize the impact of the changes to the withholding tax tables”.
If there are gaps in the expenses for home, education, health or nursing homes, “when the taxpayer is filling in the IRS”, from April 1st, “they should delete the pre-filled amount and replace it with the correct amount”, says Soraia Leite, noting that everything helps to minimize the tax payable.
The absence of invoices for general family expenses or those that allow part of the VAT paid in sectors such as restaurants, gyms, workshops and hairdressers to be deducted from the IRS must be claimed from the AT by the end of this month.
“All the deductions that have actually been made […], you should present them in your personal income tax return so that they minimize the impact of the change in the withholding tax tables, which, of course, meant that the taxpayer gave less money to the state and, therefore, may now have an impact on the amount to be paid in personal income tax or even on the refund to be made,” he said.
The automatic IRS will be extended to more taxpayers this year, covering those who have investments in retirement certificates, a change that makes this automatic system “more comprehensive” and adds the public capitalization scheme to the list of tax benefits that were already covered – namely donations and PPRs.
On the other hand, taxpayers who want to benefit from the tax regime for young people should refuse the automatic IRS and fill in the tax return ‘manually’.
The fact is, Soraia Leite points out, that young people who want to take advantage of this tax benefit “will not be able to” automatically submit their personal income tax return”, and that ignorance of this fact, she admits, may have meant that in previous years some eligible young people were left out of the scheme.
Under the IRS Jovem, there is an exemption from the IES on all income up to a maximum of 40 times the social support index (IAS). In the second year, the exemption covers 75% of income (categories A and B), while in the following two years there is a 50% exemption and 25% in the fifth year.
The IRS tax return is due between April 1st and June 30th, during which time it can be corrected and replaced free of charge.
Substitution within 30 days of the deadline, on the other hand, could result in a fine depending on whether or not, as Deco points out, the error is detrimental to the tax administration.
Over the last few years, refunds have been arriving earlier for taxpayers covered by the automatic IRS, a situation that should continue for this year’s campaign.