With the arrival of the income tax return filing period, many taxpayers are looking for ways to reduce their tax bill and maximize their refund. The Contas-poupança podcast recently released three essential episodes with valuable tips to optimize your tax return. If you want to pay less tax or ensure you receive the maximum possible refund, keep reading.
1. Maximize Your Deductions and Tax Benefits
The first essential tip is to ensure that all deductible expenses are correctly declared. Some of the main categories include:
- Health: Medical expenses without VAT or with VAT at 6% (e.g., consultations, exams, and medications).
- Education: Tuition fees, school supplies, and tutoring.
- Housing: Mortgage interest (for contracts up to 2011) and rent paid (if you have a registered contract).
- General and Family Expenses: Everyday purchases with a Tax Identification Number (NIF) that allow you to recover up to €250.
The most common mistake is relying solely on the Automatic IRS without checking if all expenses have been correctly accounted for in e-Fatura.
2. Joint vs. Separate Filing: Which is the Best Option?
Couples can choose to file their income tax return jointly or separately. The choice can have a significant impact on the tax payable or the refund received.
- Separate filing can be advantageous if one spouse has very low income or significant individual tax benefits.
- Joint filing may be better if incomes are very different, as it allows for a division of the tax burden.
Simulating both options on the Tax Authority Portal (Portal das Finanças) before submitting the declaration can make all the difference.
3. Self-Employed Workers: How to Reduce Your Tax Bill
If you receive income under category B (self-employment), you can choose between:
- Simplified regime – Automatically benefits from a fixed deduction on income, without the need to present expenses.
- Organized accounting – Allows you to deduct actual expenses but requires hiring a certified accountant.
Check which regime is more beneficial for your situation and ensure that all eligible expenses are correctly declared.
4. Attention to the Young Person’s IRS (IRS Jovem)
If you are between 18 and 26 years old (or up to 30 years old if you have a master’s or doctoral degree) and are working for the first time, you can benefit from the Young Person’s IRS, which allows for partial tax exemption on your first employment income.
Many young people do not know that they need to select this option manually in the declaration. Make sure you are taking advantage of this benefit.
Conclusion
Income tax doesn’t have to be a nightmare. Small details can make a big difference in your refund or the amount payable. The most important thing is to dedicate some time to reviewing your declaration and using the available tools to simulate different scenarios.
If you want to delve deeper into these strategies, it’s worth listening to the three episodes of the Contas-poupança podcast this week. It could be the key to a larger refund!
Need help with your IRS? At FA Accounting & Management, we help ensure your declaration is correct and optimized to obtain the best possible result. Contact us!