Tax deductions or tax credits?

Tax credits and deductions are tax benefits that reduce the amount of tax owed. 

However, it is important to note that tax reductions benefit only taxable households and can only be fully beneficial if their amount exceeds the tax due. If the amount of the reduction is less than the tax due, the difference is forfeited and cannot be refunded or carried forward to subsequent years’ taxes, except in specific cases. In contrast, tax credits are more advantageous. When the amount of a tax credit exceeds the amount of tax due, the difference is automatically refunded to the taxpayer. Thus, a tax credit benefits all taxpayers, including those who are not subject to tax.

Donations to Public Interest Organizations

Donations made to certain public-interest organizations are eligible for a tax deduction. The deduction rate varies depending on the recipient organization and the amount of the donation.

Adapting the Home to Declining Independence

A tax credit is available for installing equipment for seniors or people with disabilities in your primary residence. The tax credit is equal to 25% of the total invoice amount (including tax), with a spending limit that varies depending on your family situation.

Installation of charging stations for electric vehicles

If you had an electric vehicle charging system installed last year at your primary residence and/or second home, you may be eligible for a tax credit. This credit is capped at 75% of the cost of the charging station and installation fees, up to a maximum of 300 euros.

Costs of Care for Dependent Individuals

Tax households in which one member resides in a nursing home or similar facility are eligible for a tax credit. This credit covers only long-term care expenses and/or housing costs and is equal to 25% of the expenses incurred, up to a limit of 10,000 euros per person.

Childcare Costs

Parents who have had their children under the age of 6 cared for outside their home are eligible for a tax credit equal to half of their expenses, after deducting any assistance received from the Family Allowance Fund (CAF). These expenses are limited to 3,500 euros per child.

Hiring a Domestic Employee

If you have employed one or more people in your home, you are entitled to a tax credit equal to half of your expenses (wages plus payroll taxes if you employ them directly, or the invoice paid to the service provider). Your expenses are taken into account up to a limit of 12,000 euros per year, with possible increases depending on the number of dependent children and the ages of the members of your tax household.

In conclusion, tax deductions and credits are valuable tools for reducing your tax bill. It’s important to fully understand the conditions and limitations of each program to get the most out of them. Don’t hesitate to consult a professional to help you navigate these tax benefits.