Unless you are a professional in accounting terms or you love the subject, the truth is that at any time you may have doubts regarding the payment of taxes. Specifically, when you work independently, one of the most frequent is usually what can you deduct if you work for fees? If you are one of those who keep purchase receipts to request thousands of invoices with the illusion that all your expenses can be deducted, you should read carefully. In this article we will tell you what this tax regime is about and what you should consider for your tax deductions.
Natural person regime with professional services (fees)
This scheme corresponds to those natural persons who receive income for the provision of professional services independently. Its services are aimed at companies, dependencies or individuals in general. This means that those who work for fees provide their services but do not receive a fixed salary or benefits for them, but rather a remuneration known as fees.
Within this tax regime we can find a diversity of professionals such as designers, musicians, writers, architects, engineers, doctors, lawyers, accountants, among many others.
If you are within this regime, then you have the right to make monthly deductions for raw materials, supplies, expenses or essential investments for the development of your activities.
This you can deduct if you work for fees:
To begin with, there are authorized deductions and personal deductions.
Authorized deductions are all the expenses or investments made by the taxpayer based on the services they provide or their work activity, that is, they include those expenses that are essential to carry out their activities.
On the other hand, personal deductions are those that can be made regardless of the activity that the taxpayer performs to generate income. This type of deductions can only be made by natural persons.
To put it another way, the authorized deductions are those that you have the right to deduct on a monthly basis, that is, the expenses or investments that are strictly essential to carry out your activity, for example: water, electricity or telephone services, items stationery or desktop, computer equipment, including investments in fixed assets such as office equipment, vehicles or construction.
You can also deduct the lease of the offices or premises that you use to carry out your work. The payment of wages that you make to your employees or collaborators (if you have them, as well as the employer contributions paid to the IMSS) are also expenses that you can deduct if you work for fees.
Of course, within these authorized expenses there will be many more specific ones that are linked to your profession.
To delve into what expenses you can deduct if you work for fees, within personal deductions, as indicated in article 151 of the Income Tax Law (ISR), you can deduct health-related expenses, such as medical expenses, services dental and professional, both nursing and nutrition and psychology, purchase of devices for patient rehabilitation, prosthetics and analysis, clinical studies, premiums for medical insurance (alternative to IMSS) as well as prescription optical lenses worth up to $2,500 pesos.
This type of expenses may be deducted as long as they have been incurred by the taxpayer or his/her spouse, partner, parents, grandparents, children or grandchildren. You should also check the more specific conditions. We tell you more about it in this article on how to deduct medical expenses.
In addition, within the educational field, there are deductible expenses such as school fees, from preschool to upper secondary education or high school, provided they meet the established limits:
- Preschool up to $14,200 pesos,
- Primary $12,900 pesos,
- Secondary $19,900 pesos,
- Technical professional $17,100 pesos and
- Baccalaureate or its equivalent: $24,500 pesos.
In order for the deduction to be valid, you must have proof of payment. You should know that, if a taxpayer makes these expenses in the same fiscal year at two educational levels, the annual deduction limit that may be reduced will be the one that corresponds to the greater amount of these levels.
School transportation will be deductible only if it is mandatory and registration or re-registration payments cannot be deducted; just the tuition.
Other expenses and final recommendations
Other expenses that you can deduct if you work for fees and count as authorized deductions are:
- Funeral expenses, as long as they correspond to the death of the spouse or partner, parents, grandparents, children and grandchildren.
- The actual interest actually paid during the year for mortgage loans on your home as INFONAVIT, FOVISSSTE, etc., provided that they do not exceed seven hundred and fifty thousand investment units.
- Donations (only valid if they are granted to institutions that are previously authorized by the SAT to receive them).
- Voluntary contributions from your retirement plans AFORE as well as local taxes for salaries, provided that the rate does not exceed 5 percent
These expenses can be deducted, but remember to keep the respective tax receipts that cover them. Take into account that, to make them valid, you must pay them by transfer, payment by credit card, debit card or services, or by personal check.
- Cash payments cannot be deducted.
- By presenting your deductions in the annual declaration, you can obtain a favorable balance.
Now that you know in greater detail what those deductible expenses are for taxpayers who are taxed under the fee regime, we recommend you keep this information in mind and update your accounting. Thus, you will not have any inconvenience when making your annual declaration.
And, as we know how complicated it can be to do the accounting of your projects yourself, we invite you to learn about the benefits that QuickBooks offers you, so that you know how it can simplify these tasks of a complicated nature.
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