From July 1, income tax reduction, for personal expenses, which came into force with the Decree on the Organic Law for Strengthening the Family Economy. For this purpose, on June 30, the Tax Administration (SRI) presented resolution 020, which establishes rules for tax reduction for dependents, as well as rules for the presentation of information related to family expenses and personal expenses.

For the current fiscal year 2023, the resolution established a transitional provision that allows dependent workers to present a new form for the projection of personal expenses in the month of July.

The limited amount of expenses that can be deducted is $15,294 per yearwhich is equivalent to 20 basic family baskets.

Previously, the deduction was 10% and 20% of personal expenses, capped at about $5,000; this equated to a rebate of between $500 and $1,000, depending on income level. Now the discount will be 18%but the upper limit of costs and discounts varies depending on family obligations.

According to the resolution, employers must take into account the income tax deduction from their employees’ personal expenses for the calculation retention which are held every month.

Also specify obligations of workers who will benefit. These taxpayers must in February, they submit a form for the projection of personal expenses to their employerswhich is available on the website and contains a box for reporting the number of dependent members to be reduced.

To fill out the form, workers must consider information that relates to their income in the dependency ratio projected for the entire fiscal period.

At that time, when you work for two or more employers, the sum of all your wages or money collected in the dependency relationship will be communicated to the employer with which you generate the most income; or the one the worker chooses when he receives the same amount of income.

An employer responding to act as a withholding agent must take into account deductions for personal contributions to the IESS, except when paid by the employer.

Family obligations

The new form for the projection of personal expenses includes a framework for determining the amount of personal expenses.

In this regard, the resolution stipulates that they will be considered dependents parents, spouse or common-law partner, and children up to 21 years of age or with disabilities of any age, provided that they do not earn taxable income and are dependents of the taxpayer.

In this case, the norm indicates that it will be understood that family responsibilities dependent on the passive subject (taxpayer) when it covers practically all of their personal expenses within the fiscal year in question.

Reported family obligations will be taken into account for the reduction of income tax, even when they ceased to be in the same year, except in the event that the burden generates taxable income in the corresponding fiscal year, in which case it will be excluded.

The important part of the resolution is that it specifies this In no case can two or more taxpayers consider the same person as a family burden.

number of fillings baskets upper limit of consumption markdown stop
0 7 $5362.97 $963.53
1 9 $6,882.39 $1238.83
2 eleven $8411.81 $1514.13
3 14 $10,705.94 $1,927.07
4 17 $13,000.07 $2340.01
5 or more twenty $15,294.20 $2752.96

The worker must deliver to his employer documentation proving family obligations What’s wrong with that. Among the documents to be presented are a copy of the identity card of a married or common-law partner, as well as children without developmental disabilities up to 21 years of age; a copy of the identity card and disability card issued by the competent authority.

Projection of personal expenses

The rule dictates that the form must include a projection of the personal expenses they estimate will be incurred in the current financial year. This information must contain concept and the amount of the estimated cost corresponding to the fiscal year, in the format specified in this resolution. Expenses of food, health, education and clothing which corresponds pets the taxpayer must be included in the appropriate item of expense that appears on the form.