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IRS 2018 Expenses: Health Insurance and other expense

Last updated on 27th January 2020

This is a weekly series of articles about the rules and changes in the IRS system which will apply to the individual income tax declarations for 2019. The respective series about IRS income can be read in The Resident and the series about IRS procedures are to be found in Portugal News.

15% of Health Insurance premiums are now eligible to be added to general medical expenses. The combined maximum limit for the tax credit for both medical expenses and health insurance is €1,000.

                  Question:  I pay thousands of Euros in premiums for my health insurance yet my tax credit is still relatively small. Are there no alternatives?

                  euroFINESCO:  Other than dependence on the National Health Service in Portugal, the alternatives for private medical insurance are relatively expensive.

Question:  As part of my mortgage, I have to carry life insurance. Can I claim a credit?

euroFINESCO:  No. Premiums for life insurance are no longer eligible for a tax credit.

                  Question:  My Insurance Company used to send me annually a Declaration regarding my car insurance.  Why haven’t I received one this year?

                  euroFINESCO: There was a small part of your car insurance for Personal Accident coverage. This portion formerly benefited from a small tax credit.  However, this tax break disappeared several years ago.

Other Deductible Expenditures

1)   Alimony – If you pay court-ordered alimony or child support, there is a 20% tax credit for court ordered payments up to a maximum of €5 030.64 per annum. You will need to provide the Portuguese Fiscal Number of the recipient. In certain instances, this requirement can prove awkward if the “ex” never lived in Portugal and does not have a Portuguese tax identification number.

2)   Nursing Homes and Home Care

25% of expenditure, limited to €403.75, on home care or nursing home fees for oneself, or for elderly relatives whose income is below the national minimum wage.

3)   Approved Savings Schemes: Because of the 8 year lock up period, these schemes are rarely interesting to foreign retirees.  Your subscribing bank should be able to give you full details for your personal situation if you choose to proceed with this type of investment plan.

The following is a broad outline of benefits:

Maximum Tax Savings   Investment necessary to maximise tax savings
age single married single married
< 35 €400 €800 €2.000 €4.000
35-50 €350 €700 €1.750 €3.500
> 50 €300 €600 €1.500 €3.000

Capitalisation Public Regime

Tax credit of 20% of the amount invested in individual accounts managed under the capitalisation public regime up to €700 per couple and €350 per individual.

Next Monday: Donations to Charity

Dennis Swing Greene

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