For some expenses it is good to prefer electronic payment instruments such as credit cards and bank transfers. From next year you will be entitled to deductions in 730 for medical expenses, only if paid with traceable instruments
In order to take advantage of the tax deductions in the next tax return, payments for some expenses must be made with traceable tools. And the trend to use electronic payments is steadily increasing. An upward push that began with last year’s lockdown, when online shopping boomed. But that then continued with the program State cashback, initiated with the Conte government and confirmed, at least for now, by the Draghi government. Here, then, is why it’s best to forget about cash to make these payments.
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TRACEABLE DEDUCTIONS AND PAYMENTS
The limit for using cash for payments today is set at 2 thousand euros. The threshold is set to drop to one thousand euros from January 2022. In some situations, however, it is better not to pay in cash, even if the amount remains below the permitted limit. Specifically, there are some payments – like those for medical expenses – which is good to pay with traceable payment instruments. The risk, otherwise, is that of not being entitled to deductions in the tax return. The advantage of paying with apps or debit / credit cards also increases thanks to the State Cashback or the receipt lottery. All initiatives introduced by the government in order to encourage the use of electronic payment instruments to combat tax evasion.
MEDICAL EXPENSES
Returning to medical expenses, for some it is essential to pay with a traceable method to be entitled to the 19% deduction in tax declaration. The 2020 Budget Law has established that to take advantage of the tax discounts, it is necessary to pay the expenses for the doctor or dentist, the gyms for the children and the veterinarian only through traceable payment methods. Cash can continue to be used for the purchase of medicines in pharmacies and for health services provided through the national health system.
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HOW DEDUCTIONS WORK
Medical expenses and those incurred to purchase medicines, can be deducted in the tax return, with one deduction of 19%. There is a deductible of 129 euros: the amount of medical expenses incurred, net of the deductible, can be deducted to 19%. Let’s take an example: between drugs, tickets and specialist visits, 500 euros were spent in 2020. Therefore, 500 euros minus 129 euros francs, or 70.49 euros, can be deducted. To be entitled to the deduction, remember to buy the medicines by presenting your own health insurance card. In this way, the expense incurred is automatically loaded into the tax drawer, and the taxpayer finds it in the pre-filled declaration.
HOME RENOVATION
Paying in cash also puts home deductions at risk. To be entitled to tax deductions following the renovation of the cash register or for thepurchase of furniture, you will need to pay with a bank transfer, or with a traceable means of payment. As for appliances, the traceable payment is proof of purchase, and will also be useful to activate the guarantee.
LOANS AND PAYMENTS IN INSTALLMENTS
The speech is the same also for loans or loans payments in installments, where it is always recommended to pay by card. Traceable payment methods are preferred also for condo fees or rent. The receipt of payment becomes the proof to be shown in case of checks and controls. Cashless payment is also to be considered for the balance of the caregiver or a domestic worker: also in this case the traceability avoids disputes. Be careful also to give your child a gift: if it is a considerable sum of money, it is better to make a gift transfer, to avoid checks by the tax authorities. In that case, you must always be able to prove where the money came from.
CONTRASTING EVASION
The government’s intent is to discourage the use of cash. From January 2022, the new limit for paying in cash will be one thousand euros. Today the maximum ceiling is set at 2 thousand euros, as decided in the 2020 Budget law. The executive’s effort is to make more and more payments with electronic instruments, in order to combat tax evasion. In 2017, taking into consideration the latest available estimates of the Mef, the undeclared in Italy reaches a record figure of 108.8 billion euros. The figure is calculated as the difference between what the state should have received in terms of taxes and contributions and what it actually received.
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