The first quarter of self-employed obligations is intertwined with the beginning of the Income Statement 2023. From next week until Tuesday, April 2, you can make your declaration online and by telephone.
Therefore, you must know all those expenses that are considered deductible. They can reduce your profit by making your taxation more profitable, saving you some good money.
What are Considered Deductible Expenses in 2024?
Deductible expenses are considered investments you make in purchasing goods or services to develop your economic activity.
To understand that an expense is deductible, you must meet specific requirements:
- First, link to the economic activity you do. That is, it is necessary to develop it.
- The corresponding invoices, receipts, or tickets must justify it.
- And it must be conveniently recorded in your expense and investment books.
- Your deductibility means that when you post them, they will reduce your income.
Personal Income Tax is a progressive tax, meaning that as your income increases, the percentage of your income paid in taxes also increases. Therefore, if you have deductible expenses, they can reduce your taxable income, potentially lowering the amount of tax you owe. This is a fundamental concept in tax planning.
The importance of understanding deductible expenses lies in optimizing your tax liability. You can legally reduce your taxable income by identifying and utilizing eligible deductions, resulting in a lower tax bill. Here is a list of deductible expenses that can serve as a guide for individuals to consider when preparing their taxes, aiming to maximize deductions and minimize their overall tax liability for the year 2024.
Deductible Expenses
Exploitation costs
Operating consumptions are all purchases made in 2023 of merchandise, raw materials, and other current acquisitions of goods made to third parties.
Wages and salaries
If you have them, they are deductible salaries, extra payments, allowances for travel expenses, and rewards for your employees.
Other personnel expenses
In the same way, you must include in the list the training expenses of your personnel, the contributions as a promoter to your pension plans, the indemnities derived from an injury or damage to your workers, accident insurance, and any other that is not as pure liberality.
Social Security contributions
Yes, the fees you pay per month are also considered deductible expenses.
Leases and fees
We talk about the expenses originating from movable or immovable property rentals. But also those amounts paid for the right to use patents, trademarks, and other manifestations of industrial property.
Repairs and conservation
All those expenses you have had and have been necessary to maintain your real estate, without including the expansion and improvement.
Services of independent professionals
You can also deduct the amount you paid throughout 2023 from different professionals: economists, lawyers, auditors, notaries, etc.
Other external services
Transports, insurance premiums, banking, similar services, advertising, propaganda, and public relations limit 1 percent of the net amount of the tax period turnover.
Fiscally deductible taxes
There are taxes and non-state surcharges, Parafiscal charges, fees, surcharges, and unique contributions deducted. The Tax on Economic Activities (IAE) and the Tax on Real Estate (IBI) fall on elements affected by the activity.
On the other hand, non-deductibles are the penalties, the penalty surcharge, the late filing of tax returns and settlements, and tax self-assessments.
Financial expenses
The expenses from using the financial resources of third parties necessary to finance your company’s activities are also deductible.
Amortizations
The counted amounts corresponding to the effective depreciation suffered by the different elements of your business due to operation, use, enjoyment, or obsolescence will be deductible.
Provisions
Expenses derived from implicit or implied obligations and those related to remuneration and other employee benefits are generally not deductible. Still, they are deductible if they meet the conditions established in article 13 of the Corporate Income Tax Law.
Conclusion
In summary, understanding deductible expenses becomes pivotal as the first quarter of self-employed obligations aligns with the commencement of the Income Statement for 2023. Knowing what qualifies for deduction—from operational costs to personnel expenses, leases, and more—is crucial for optimizing taxation. Compliance with documentation and recording requirements ensures the legitimacy of deductions.
The comprehensive list provided for 2024 serves as a guide, emphasizing the significance of reducing taxable income through justified and recorded expenditures. This strategic approach not only aids in tax optimization but also underscores the financial prudence essential for effective business management.
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