Either because they have already been taxed or because they are exempt, there is income that you do not have to declare to the IRS. Know what they are.
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Submitting the IRS declaration is part of the annual tasks of almost all Portuguese people. As a general rule, taxpayers are obliged to declare to the tax authorities the income they obtained in the previous year. Whether they come from pensions, wages or other sources. However, there are income you do not have to report to the IRS.
There are several reasons why this happens. Either because they have already been taxed before in another way, for tax policy reasons or simply because they are tax-exempt income.
In 2023, the period for submitting the annual tax return will run from April 1st to June 30th. If you are in doubt about what you should or should not include in your tax return, check the list of income you do not have to declare to the IRS below.
What income do you not have to declare to the IRS?
In 2023, you will have to file a declaration of everything you earned in 2022 with the Tax Authorities. However, there are some incomes that you do not have to declare to the IRS. Take note of these examples.
1
Santa Casa Games Awards
If you are one of those people who try their luck at gambling, know that winnings from games at Santa Casa da Misericórdia do not have to be declared to the IRS.
This is because the prizes of the State’s social games, worth more than 5 thousand euros, are already subject to a Stamp Duty rate of 20%. For this reason, they do not need to be declared, as when they reach the hands of the winners, they are already net of tax.
Subsidies awarded by Social Security, such as Social Insertion Income or unemployment benefit, are part of the income that you do not have to declare to the IRS, as they are not subject to taxation.
If you were unemployed during the last year and receiving this subsidy, you do not need to declare the amounts received.
If you have money in a term deposit, Savings Certificates or bonds, and you have received interest from these savings, you do not have to declare this income.
These amounts are already subject to withholding fees, provided for in article 71 of the IRS Code. That is, they have already been taxed before and reach the taxpayers’ accounts after the taxes have been collected by the State.
However, it should be noted that this rule does not apply to taxpayers who opt for income aggregation.
Medical leave is also part of the income that you do not have to declare to the IRS in 2023. If you were on leave last year, and even if this was your only means of subsistence, this income does not enter the annual declaration.
The same happens with parental leave and family allowance, which are also not declared in the IRS.
5
Literary, artistic and scientific awards
Among the income that you do not have to declare to the IRS are literary, artistic or scientific prizes, since they are exempt from tax.
However, to take advantage of this exception, such prizes must meet certain criteria, namely: they cannot involve the transfer of copyright, they must be awarded in a public tender (with defined award conditions) and participation cannot be subject to restrictions that do not relate to the nature of the prize.
6
Scholarships and prizes awarded to athletes and coaches of high competition sports
Scholarships awarded to high-performance athletes and their coaches by the Portuguese Olympic or Paralympic Committee, under the contract-programme for preparing for the Olympic, Paralympic or Deaflympic Games, or by the respective federation that holds the sporting public utility status, are also not they pay tax. As such, they do not have to be declared.
Prizes for recognizing the value and merit of sports successes are also excluded from IRS and exempt from declaration.
If you receive a daily food subsidy, in cash, up to 5.20 euros, your income is income tax free. As for cards or meal vouchers, the non-taxable limit is 8.32 euros per day.
Above these values, it is mandatory to declare the amounts received, and taxpayers will be taxed with IRS only for the surplus.
8
Compensation for Bodily Injury, Illness or Death
Indemnities and pensions attributed as a result of personal injury, illness or death, road accident, fulfillment of military service or pursuant to contracts, court decisions, or paid by the State, are exempt from IRS. For that reason, they do not have to be included in the declaration.
9
Income from work or pensions below 8,500 euros
Taxpayers who, in 2022, received income from dependent work (category A) and/or pensions (category H) up to 705 euros per month (or 9870 euros in the year) are exempt from IRS.
These taxpayers are covered by the so-called minimum existence, the income limit up to which pensioners and workers do not have to pay tax.
But being exempt from IRS does not meannecessarily, that you do not have to declare such income.
According to Article 58 of the IRS Codeonly those who are exempt from delivering the annual declaration workers or pensioners what did not earn more than 8,500 euros nor did they do withholding. If they opt for joint taxation, among other conditions, the waiver no longer applies.
Those who only have isolated acts up to 4 times the IAS (1772.80 euros in 2022 and 1 921.72 euros in 2023) are exempt from submitting the annual declaration.
11
Income of student workers up to 2216 euros
Income from dependent or independent work (including isolated acts) earned by students up to the annual limit of 5 times the Social Support Index (2216 euros in 2022 and 2402.15 euros in 2023) does not pay IRS. Therefore, they are left out of the annual declaration.
In order to benefit from this exemption, student workers must be dependents and submit, through the Finance Portal, by February 15 of the year following the year to which the tax relates, a “document proving attendance at an official or authorized educational establishment ”.
12
Earnings of recent graduates
Under the IRS Jovem, part of the income from dependent work (category A) or income from independent work (category B) of young people (non-dependent) between 18 and 26 years old are exempt from IRS. Find out all the details in this article:
