With 2007 drawing quickly to a close, it is time to think about tidying up your tax affairs before the year ends. The following is a checklist of things to consider before we enter into a new tax year.
Medical expenses
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Remember to write your health insurance provider to get an annual statement about the bills that were not covered by the insurance. Since the insurance company should have all of the original invoices, the company’s statement of non-reimbursed expenses will serve as substantiation for your 30 per cent tax credit.
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Perhaps you forgot to get an invoice from your dentist or doctor. Now is the last opportunity before he/she closes the annual books. Remember that for each 100 euros of invoices you will save 30 euros off your IRS income tax. Enjoy a dinner out with the Mrs on the taxman!
Educational expenses
If you took a course in Portuguese, computer science or another interest that you might have, be sure to say “Factura, se faz favor!” and have your invoice ready to declare.
Housing
If you rented your abode, be sure to complete a proper rental agreement with your landlord. You will enjoy the same tax break just the same as if you were paying a mortgage.
Renewable energy
There is a generous credit (up to 761 euros per annum) for renewable energy equipment. An investment that is spread out between December and January can double your allowance (up to 1,522 euros).
Gifts to charity
The Finanças will give you uplift of up to 140 per cent on your contribution to a recognised Portuguese charity, one quarter of which will be granted as a tax credit. Now you can afford to be generous!
Computers
While personal computer equipment ceased being a tax credit in 2005, do not despair! It was reinstated in 2006 with the caveat that you are a registered student. Double your benefit by donating old hardware to your local school and get a charity credit as explained under the previous heading.
Sole traders
If you have been practising a business activity yet have not as yet registered, you need to take action before the end of the year to avoid unnecessary fines and penalties.
If you have ceased your business activity, be sure to de-registered (cessação de actividade), otherwise you will be charged a minimum tax.
Property sales
If you sold a property in 2007, be sure to assemble the following documents so that you will be ready for tax time:
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Deed of acquisition;
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Deed of sale;
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Invoices from expenses such as lawyers, notary, estate agent, etc;
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Bills from capital improvements to the property over the last five years.
Remember that notaries report all transactions to Finanças so your failure to report will assure the wrath of the tax inspectors.
As of November 2007, you may rollover your capital gain when you move your principal residence to anywhere in the EU or EEE. To be eligible, proof of new residency is required.
Remember to save your facturas and tidy up your affairs before year ends. With these simple steps, you should be able to save hundreds of euros in taxes next spring.
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tax returns, irs, portugal, finanças