You can maximise your IRS refund by using the e-Invoice to validate outstanding bills. Save money on taxes by learning how to record costs for things like health, education, housing, and regular household spending.
Many taxpayers advanced less money to the State in 2023 as a result of the modifications to the withholding tax tables. Because of this, your refund may be smaller or, in the worst case scenario, you may owe more tax when it comes time to file your IRS return.
If you take out the expenses you incurred during the year, you can either boost your refund or lower the amount of tax you owe. In order to accomplish this, you must, by the 26th February 2024, confirm the invoices that were issued during 2023 on the e-Fatura portal. To take advantage of deductions for general household expenses as well as those related to health, education, housing, and homes, link each item to its corresponding sector. Learn what to do for expenses that are not shown on the e-Invoice as well.
A portion of the VAT paid on lodging and dining expenditures, auto and motorbike repair shops, salons and beauty parlours, fitness centres and veterinary clinics can also be recouped. However, VAT paid on magazine and newspaper subscriptions, as well as monthly passes and tickets for public transit, is thought to benefit from VAT entirely.
When the Treasury is unsure about the spending category, they hold off on processing the claim until the taxpayer provides the information that is lacking for each invoice that is issued using his tax identification number (NIF).
After the 26th February 2024, invoices that are still unpaid are not deducted by the IRS. Put another way, you stand to lose money if you don't verify them.
How much you can deduct if you verify invoices
Each outstanding invoice needs to be verified individually, requiring a check. It can take a lot of time to complete the process, particularly if you have to examine the documents for multiple family members. Ideally, you should review the documents all year long. This is how invoices can be verified.
An invoice for children's spending is also required. The same's NIF needs to be included in it. The costs won't be immediately included into the e-Invoice and taken into account by the Tax Authorities for IRS reasons until then. Benefit-wise, there is no issue if the invoice has one of the parents' VAT numbers on it. However, the expense will only show up on one tax return if the parents file separate returns.
Up to 35% of general expenses can be written off by each taxpayer, up to a maximum of €250. In order to receive the maximum benefit, a household must spend more than 715€ annually on groceries, petrol, clothing and shoes, water and energy. A couple's IRS deduction is limited to €500 total. The deduction for any member's out-of-pocket expenses in a single-parent household is 45%, up to a maximum of €335. The highest advantage can be obtained for a yearly cost of €745. The number of children has no effect on the benefit cap in either scenario. General expenses are not deductible for dependents.
Expenses to deduct with the IRS
Ascertain the amount that can be subtracted from the 2023 expenses that you list on your IRS declaration.
Are there any unpaid bills visible on the Finance Portal? Learn how to manually enter charges, link prescription drugs, and validate invoices step-by-step.
How to validate invoices for the IRS
Ask for a password (if you don't already have one) for yourself and every member of the family, including the kids, in order to access the Finance Portal and e-Fatura. Within five days, the password is mailed to each person's tax address. In the event that the password has already expired, the portal instantly and automatically updates.
Navigate to the "IRS deductible expenses" menu from the e-Fatura main page. Next, select the "Acquirer" green button and input the password that Finance supplied you.
The amount that you have already accrued in relation to your taxpayer number's expenses, broken down by sector, is displayed on the following screen. If your General Family Expenses have already reached €250, you have reached the maximum deduction allowed in this category. At this point, you should stop worrying about groceries, clothing, electricity, and other expenses that don't fit into your budget throughout the year categories related to housing, residences, education, and health.
To view your outstanding invoices, click the "Complement Invoice Information" button on the portal. This is the area where merchants enter expenses that mix different economic activity. The Tax Authorities will then ask you to identify which sector each of the expenses relates to. The onus then shifts to the customer to explain to the tax authorities whose expense category the unpaid bills belong in.
The finance office only views costs in the areas of health, education, housing, homes, and general family expenses that are accurately submitted and validated on this platform as automatically deductible from the IRS. In addition to the total VAT paid for monthly passes, 15% of the VAT spent on veterinary care, restaurants, lodging, hair salons, beauty salons, automobile and motorbike repair and maintenance, physical exercise and newspapers and magazines is also included.
Full details on any unpaid bills to maximise your reimbursement.
Select the corresponding deductible spending category symbol for each overdue amount, then click the green "Save" button below. Look for paper invoices if you can't recall the name of the business or the costs you paid on the specified day. As an alternative, look for the business's address or commercial name using a search engine. You can pick an invoice and click "Change" if you associate the sector incorrectly or if you find an invoice linked to the incorrect sector.
Click "Associate prescription" and review the expenses indicated if the portal notifies you of invoices containing medical charges subject to the regular VAT rate without linkage with a medical prescription. In the "Do I have a prescription?" field, choose "Yes" if you have a prescription that supports any of these costs. Indicate the amount covered by the prescription, as the expense may include purchases made in addition to prescription drugs. Input the total amount if the entire cost is reimbursed.
In order for the IRS to deduct the expense, the medical prescription must be linked to medical bills.
With the help of an application from the Tax Authority known as e-Fatura, you can use your phone to verify outstanding expenses. The software, which is available for iOS and Android, enables each taxpayer to categorise the bills they receive and verify the benefits they have accrued. By scanning the QR code, invoices can also be registered. This application has been tested and verifies the application's security and usability, making it a viable substitute for certifying invoices until the 26th February 26.
You have the option to manually enter an expense when you notice that it is missing. Select "Register Invoices" from the "Invoices" menu. Next, complete the remaining fields: tax number of the merchant, invoice type and number, issue date, rate of VAT, and tax base (amount excluding VAT). However, take your time. The 20th of the month after the invoice is issued is when merchants and service providers have to enter expenses into the system. Consequently, do not make any manual insertions until the end of this period. Remember that insurance charges, user fees, tuition fees, and mortgage interest only enter the system later and do not need to be validated.
You can manually record a cost if you discover that it hasn't been done so in the e-Fatura.
Maintain documentation of every alteration you make. This will be the sole means of proving the claimed expense in the event of a dispute with the Tax Authorities. You have four years to save these proofs.
Independent Workers: in or outside the activity?
The inquiry "In the Scope of Professional Activity?" is presented to taxpayers who have an open independent activity (such as commerce or services) for each expense.
If the cost has nothing to do with your independent professional activity, choose "No."
If all of the costs are associated with independent professional activity, tick the box. The tax authorities account for the full cost in this instance.
If just a portion of the cost is associated with the independent activity, choose "Partial." For instance, you can justify a "partial" electricity cost if you work from home. In certain situations, 25% of each expense will be considered by the tax authorities.
If the activity generates less than €27,360 in revenue annually, there's no need to deduct expenditures for the profession. This is due to the fact that self-employed individuals have an automatic deduction of 10% of their income, with the option to deduct an additional 15% if necessary to cover their expenses. Finance subtracts €4,104 from each employee's pay, so only when the 15% income deduction surpasses that amount—which only occurs for employees making above €27,360 annually—is it essential to verify professional expenses.
By choosing the time, you can check the total amount of expenses previously attributed to professional activity on the e-Fatura portal by going to the "Check Invoices" menu.
Second confirmation of expenses
Every taxpayer has access to the global amounts allotted to them for deduction in the IRS for the prior year between the 15th of March and the 31st of March. These amounts include items that were not visible on the platform until February, such as rent for a home, interest on a mortgage, out-of-pocket fees, and expenses not covered by insurance. Verify whether any values are missing. This can be done immediately in e-Fatura by choosing the relevant year, or via the Finance site.
Did you know that the tax authorities take into account up to €1000, or 15% of healthcare expenses, with VAT or otherwise exempt? Check with the IRS to see what costs you can write off.
Deduct healthcare expenses with the IRS
15% of each household member's medical costs are subtracted by the tax authorities, up to a total of €1000 per household. The tax authorities divide the annual cap into €500 for each member of a married couple filing their IRS declaration individually. However, you still need to verify every spending in the e-Fatura. Whether you have already surpassed the deduction limit is a matter for the tax authorities to decide.
It is anticipated that a portion of the medical costs will be recorded in the appropriate category on the site, with the exception of user fees and health insurance premiums, which are only recorded in the e-Fatura from the 26th of February to the 15th of March. But if you see any of them in your outstanding bills, all you have to do is click the health expense icon to verify it.
Consultations, exams and hospitalizations
All invoices for services rendered by medical professionals—whether in a public or private setting—must be verified under this category.
Medicines
The health category includes all medications that are acquired in pharmacies, parapharmacies, or supermarkets and are either exempt from VAT or subject to a reduced rate (6%). If the invoice contains goods that are subject to a 23% VAT rate, the expense is still pending in a different field, awaiting the taxpayer's notification to the tax authorities that the purchase is warranted by a medical prescription. In such a scenario, select the "Associate Recipe" option.
You will be directed to the list of expenses that are pending validation, which includes the amount spent on goods with a 23% VAT rate, the taxpayer number, the name of the provider, the invoice number, and the date it was issued.
Indicate ("Yes" or "No") if you have a medical prescription for each invoice. If yes, list the amount of the expense that the revenue justifies. This value needs to be duplicated if the prescription pays the total amount shown.
Only medical expenses related to alternative treatments, including Chinese medicine, can be covered if the practitioner is certified by the Central Administration of Health Systems as a professional.
Glasses, frames, lenses and other prosthetics and orthoses
All bills for services rendered by optometrists, orthoptists, and ophthalmologists can be verified as medical expenses. Denture, crutch, ophthalmic lens, and dental correction device expenses are also accepted. If you have a medical prescription, which you should keep on file in case the Finance Department requests verification of, you can claim eyeglass frames as a health expense.
Incontinent Pads
As long as the commercial institution (such as pharmacies, parapharmacies, and some supermarkets) where the incontinent pads were purchased has open economic activity in the health sector, the invoices related to that transaction are considered health expenses. Even if your paediatrician prescribed them, baby nappies are not regarded as a medical expense. They fall under the general family spending category solely.
Intolerances
Only with a valid medical prescription can you legitimise the costs of gluten-free goods or other food items meant to ensure biological life (such as special milk for babies who are lactose intolerant) under the health category. To give to Finance in the event that you are asked for an inspection, in this instance, preserve all invoices and receipts.
Gyms and other physical exercise expenses
As long as the organisation that generated the invoice is affiliated with a health-related economic activity, you can verify the cost in the health category provided you have a prescription for a particular physical activity. In this instance, the expense is added to the batch of pending bills for revenue association as soon as you validate it. The next step is to select the "Associate Recipe" button, verify that you have the prescription, and specify how much of it is covered.
You can verify the invoice as a VAT benefit if the business that issued it is registered for the activities "sports and recreational education," "gym-fitness activities," or "sports club activities" and you do not have any income.
The remaining circumstances that were not addressed by the earlier theories should be the only ones that are accepted as typical family costs.
Spas and orthopedic products
It is necessary to have a prescription for medicine in order to classify these costs as health expenses. In this instance, the expense is added to the batch of pending bills for revenue association as soon as you validate it. The next step is to select the "Associate Recipe" button, verify that you have the prescription, and specify how much of it is covered. Verify the invoice under the "Others" category, referring to ordinary family spending, if you do not have a prescription.
Non-urgent patient transport
The provider must have an economic activity code in the health sector in order for this expense to be approved (this is the case with certain humanitarian firefighting associations). If not, it's seen as a typical family outlay.
Health expenses for ascendants
Health costs for ascendants (parents, in-laws, grandparents, etc.) or collateral up to the third degree (siblings, uncles, etc.), even if they are financially supported by you, can only be validated in your household if the recipients of the costs live with you in a common economy (table and housing sharing for more than two years) and do not earn more each month than the general scheme's minimum pension (€301.41).
User fees and health insurance premiums
They are immediately counted by the Tax Authorities for the health category, even if they are not initially available on the e-Fatura platform. They will be visible from the 15th of March to the 31st of March 2024, but just for verification.
Health expenses abroad
It is feasible to report medical costs incurred outside of the European Union. Nonetheless, it's possible that the tax authorities will contact you to request supporting documentation.
Were you aware that you can write off up to €800 for educational costs? Check your IRS to see what expenses are allowable and how to deduct them.
Deduct education expenses with the IRS
The Tax Authorities take into account 30% of each household member's educational and professional training costs in the IRS declaration, with a cap of 800€ for the total household. Children, adopted children, and stepchildren who are of legal age may only be regarded as members of the household until they turn 26 (counting from the last day of the age of 25) and until they have not earned more than the minimum wage of 14 payments in the preceding year, even if they are enrolled in school and do not have their own means of support. Stated differently, in order for the IRS, which is based on income received in 2023, to be provided in 2024, young individuals can only be considered dependent if, in 2023, they were under 26 years old and had an income of no more than €10,640 (14 x €760).
Whether or not the young person resides in their ancestors' home is irrelevant for this computation. You won't be regarded as a dependent in 2023, even if you still live with your parents, if you are already 26 years old or if your salary that year was at least 14 minimum salaries. The only exclusion is for people over 25 who are unable to work or support themselves. These might be regarded as a component of the total.
Even with the deduction cap, you can use e-Fatura to verify every item. The tax authorities are in charge of figuring out whether this has already been accomplished and they don't take into account unnecessary costs.
School supplies
The only materials that qualify as education expenses are school books, which are the only items that are offered with a 6% reduced VAT. Only general family expenses (or "Others") include backpacks, notebooks, pens, dictionaries, calculators, and other materials offered with 23% VAT.
Not all school supplies qualify as IRS-deductible educational expenses. Any materials that have a 23% VAT are not covered by the IRS.
Utilising modern technology has become a prerequisite for gaining access to education in recent years. These technologies include computers, tablets, smartphones, printers, and consumables like ink cartridges. According to studies some Portuguese families can claim this material as an education expense on their IRS filing. The lawmaker must keep a close eye on the everyday life of the people, and do so as soon as feasible.
Monthly fees for nurseries and other educational establishments
Any invoice from a public or private educational institution or professional training facility for registration fees, tuition, or monthly fees may be verified as an educational expense. As long as they are incorporated into the National Education System, pre-schools and comparable facilities, primary and secondary schools, and higher education establishments are all covered. As long as language, music, singing, or theatre schools are a part of that system, their tuition fees or monthly costs are also covered (verify with the Directorate-General for Schools and the Directorate-General for Higher Education).
Meals in school canteens
If school meal expenses are included on invoices titled "Provision of School Meal Services" and are paid by taxpayers listed as school meal suppliers in the files submitted to the Tax Authority within the legal deadline, they can be written off as educational expenses.
The invoices that title services rendered in relation to these kinds of meals must be properly identified and classified by the taxpayer as training and education expenses on their e-Fatura page.
Student accommodation
The only costs that qualify as education expenses are lodging bills for students under 26 whose family resides more than 50 km away from the educational facility. In order for the expense to be approved, it is imperative that the rental contract be registered in the student's name and that the displaced student status be recorded on the Finance site (follow Citizens > e-leasing > Register displaced student if you are having trouble accessing this link). Under these circumstances, the household deduction cap for ducational costs rises from €800 to €1000, plus an additional €300 for housing costs.
Books purchased in large supermarkets
The tax authorities will not distinguish between grocery expenses and purchases made for school assistance books from a large store, if you used the month's purchases for that purpose. To safeguard the private information of taxpayers, a description of the products or services is never included in the invoice data that is shared. This is the reason that bills from agents engaged in a variety of economic operations (like supermarkets) are still pending in e-Fatura. You have to go to the portal and link book invoices to the education category in order to get an IRS deduction.
Ensuring that an education expense is included in the deductions in this category may only be done in this manner. Invoices that include costs associated with more than one benefiting sector will be deemed general family expenses, which is not advantageous for IRS reimbursement accounts, according to the Tax Authorities.
Musical instruments
Despite being utilised in legitimate music courses, they are not recognised as educational expenses in institutions of higher learning that have received Ministry of Education recognition. Included under "Others," general family expenses.
Clothing and footwear
Even if they are required by the educational institution, like uniforms, they are not regarded as educational expenses. Included under "Others," general family expenses.
Study centers
Tutor receipt invoices, sometimes known as "green receipts," should be included in educational costs as long as they are VAT-exempt. Only if they are VAT-exempt can tutoring, study, or ATL centre invoices be recognised under the education category. They are classified as ordinary family costs ("Other") otherwise.
You may find out the sector of activity (CAE) of any company, association, or foundation in Portugal by using the economic activity classification information system. Enter the company name or tax number (NIPC) in the "CAE Consultation" section of www.sicae.pt.
Note that the Tax Authorities will only accept invoices from the following fields of operation as proof of education expenses, and that the same entity may have many CAEs:
section P, class 85 – education;
section G, class 47610 – retail sale of books, in specialized establishments; and daycare expenses, with activity open in section G, class 88910 – care activities for children without accommodation;
invoices issued by professionals registered with Finance with codes 1312 (childminders), 8010 (explainers), 8011 (trainers), 8012 (teachers) and 8013 (teachers or artistic educators) are also accepted.
In the event that the CAE on your child's ATL is incorrect, get in touch with Finance by phone at 707 206 707 or through the e-balcon.
School bus
It is not accepted as a cost of education. Included under "Others," general family expenses.
Study abroad
Generally speaking, no invoice from a foreign company will show up in the e-Fatura. They have to be manually inputted in order to account for any educational costs incurred outside of Portugal.
Find out which costs—such as invoices from restaurants or hair salons—are eligible for an IRS deduction under the housing, household, and VAT categories.
Deduct expenses on housing, houses and vat from the IRS
Only contracts concluded until the end of 2011 for the purchase of a house intended for personal or permanent housing, in national territory or in a country within the European Union, are subject to tax authorities' 15% interest payment obligations (rather than the entire installment). Not only does this value not need to be manually entered, but it is also not waiting in the e-Fatura for validation. In March 2024, it will be available for consultation exclusively on the internet.
This deduction is usually only allowed up to €296 annually. On the other hand, households with taxable incomes under €30,000 may find that their ceiling is raised to €459.
Amortizations
Even funds from retirement savings plans or housing savings accounts cannot be deducted by the IRS from amounts paid in excess of debt for housing loans.
Rents
It is not necessary to manually enter housing rent charges into the e-Invoice for certification, but in theory, they are not. Later, in March 2024, this sum will be available for consultation exclusively on the web.
Construction
With the exception of residences in areas designated as urban rehabilitation areas, they are not recognised as property expenses. "Others" refers to general family expenses that remain. This expense can be written off by landlords with the IRS, but the invoice must be validated under "Others".
Home insurance
The tax authorities do not consider them to be property expenses. Verify as a typical family outlay (under "Others").
Home
Up to a yearly cap of €403.75, the tax authorities deduct 25% of the amounts spent on houses and home support.
As long as these organisations have registered activities in this area, you can validate expenses related to home help, senior citizen homes and institutions, and independent living. The invoice needs to be authenticated in e-Fatura using the beneficiary's password, even if you plan to deduct charges of this kind from the IRS for a dependant or ascendant.
Expenses with vat benefit
The VAT paid on some expenses is partially or fully refunded by the tax authorities. This amount is included for calculating accounts even though it is not shown in the IRS declaration: if a refund to the taxpayer is involved, the VAT advantage is added to that amount; if further tax is due, it is subtracted from the total.
Important information: you may only receive the VAT benefit by certifying your expenses in the e-Fatura until the 26th February. Such sums will not be able to be manually put in the IRS declaration if this period is allowed to pass.
15% VAT benefit
Repairs for cars or motorcycles, lodging, dining out, hair salons, beauty salons, veterinarians, and physical fitness can all be justified under the appropriate category, allowing you to recoup 15% of the VAT you ultimately pay for these services. But only invoices from businesses registered as "sports and recreational education," "gymnasium activities - fitness," or "sports club activities" are acceptable when it comes to physical exercise. Mark the invoice as physical activity to keep the VAT benefit.
100% VAT benefit
To reclaim the entire amount of VAT paid, costs for magazine and newspaper subscriptions, as well as tickets and monthly passes for group public transport, must be validated in this category.
By the 31st of March, find out what to do if your expenses don't show up on the e-Fatura site so the IRS can deduct them.
Changes to IRS annex h
During the filling period, which runs from April to June, expenses that are manually recorded in the IRS declaration but do not appear in the e-Invoice by the 31st of March or are not approved in time, can be done so.
In Annex H's Table 6C, in response to the inquiry "Will you be declaring household expenses related to health, property, training and education, and other expenses as an alternative to the values communicated to the Tax and Customs Authority (ATA)?"
"No" if you want the values displayed in the e-Fatura to be taken into consideration by the Tax Authorities. Be advised that the values in the previously finished declaration will not be visible. The Tax Authorities make the assumption that the taxpayer has already reviewed the data in the e-Fatura.
"Yes" in the event that you find a mistake and wish to change the total amount of expenses listed in the e-Fatura. The following table's values need to be adjusted in this situation, and the Tax Authorities will only consider the data shown below. Store all of your documentation in case the Tax Authority calls to verify the values you adjusted.