How does tax relief on professional fees work?

How does tax relief on professional fees work?

Professional services regime (fees)

* The payment of these expenses must be made by taxpayer’s nominative check, electronic funds transfer, credit card, debit card or service card. The deduction does not apply if the payment was made in cash.

The total amount of personal deductions (except for medical expenses due to disability and incapacity, donations, voluntary contributions and complementary retirement contributions, as well as tax incentives) cannot exceed five annual UMA or 15% of your total income, including exemptions, whichever is less.

What expenses can I deduct for fees?

You can deduct expenses and investments that are strictly indispensable to carry out your activity. Payment of wages and salaries. Contributions you have paid as employer to the IMSS. Lease of the premises you use for the rendering of your services.

How much tax is paid on fees?

What taxes you must declare

❖ Income tax (ISR). Flat rate business tax (IETU). Value added tax (VAT). No annual calculation is made, only information on monthly payments is presented.

What are the tax obligations of a fee-based individual?

They have as tax obligations to keep their electronic accounting and electronic invoicing; to file monthly returns and payments, as well as annual returns. They must also file the Informative Declaration of Operations with Third Parties (DIOT) and annual informative declarations.

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Professional services regime

Individuals who obtain income for rendering professional services independently (not as salaried employees) to companies, government agencies or individuals in general, for example: lawyers, accountants, architects, doctors, dentists, engineers, among others, are taxed under this regime.

In order to prove your income, you must issue electronic invoices for the rendering of your services. If you have employees, you must provide them with a payroll voucher for the payments and withholdings you make.

All income for which you have not issued an invoice, and all expenses for which you have not received an invoice, must be registered through the My Accounts application. There is a desktop or mobile version.

What expenses are deductible for salaried individuals?

Know what you can deduct

Medical, dental, nursing and hospital expenses, including the rental or purchase of devices for rehabilitation, prosthesis, analysis and clinical studies. Prescription optical lenses up to 2,500 pesos. Funeral expenses. Payments for medical insurance premiums.

How much is the ISR withholding for 2020 fees?

Currently, this tax is based on Article 106 of the Income Tax Law, which states that: “when a taxpayer renders any service, such tax must be withheld as a provisional payment and, in this case, it must be 10 percent of the amount of the fees”.

What is the fee payment?

Fees are a type of payment made to someone who independently performs a task or service for a company or person. It is understood that this economic consideration received by a professional for the provision of services.

Sat Fees

You have probably heard phrases like: “you can deduct this from your taxes” or “these are deductible expenses” and you have wondered if you really understand how everything related to this concept works. In fact, many people are not clear that a tax deduction exists, how it can be done or how to claim it.

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You should not confuse tax deductions with exemptions. A tax exemption is a tax that you will not pay. On the other hand, a tax deduction is based on the assumption that you have already paid the tax and, due to certain conditions stipulated in the current regulations, you will be refunded the money.

In order to carry out a successful tax deduction, it is very important to fill out your annual tax return correctly and comply with the guidelines to make them valid. The process has some important limits to know and requires submitting the appropriate documentation for the SAT to review, this implies:

Deductions can result in a balance in favor of the taxes you must pay when you file your annual return.    Do your paperwork on time and in the right way to achieve this, now you just need to know what is tax deductible.

How much tax do I pay as an individual?

The income tax law is responsible for establishing the regulations for this tax. With respect to corporations, the law establishes that they must pay a fixed rate of 30%, while individuals pay a variable rate ranging from 1.92% to 35%.

What is the change of tax regime?

Changing tax regime is necessary when the per capita income of an individual exceeds the income established by the SAT tax administration. This income is listed at the end of the fiscal year of each company or individual.

How to handle the change from Rif regime to business activity?

Enter the SAT portal. Select the “Person” modality, the “RFC Procedures” section and the “See more” option. Expand the “RFC Update” menu and click on the option “File the notice of update of economic activities and tax obligations as an individual”.

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Fees for professional services regime 2021

Individuals who obtain income for rendering professional services independently (not as salaried employees) to companies, government agencies or individuals in general, for example: lawyers, accountants, architects, doctors, dentists, engineers, among others, are taxed under this regime.

In order to prove your income, you must issue electronic invoices for the rendering of your services. If you have employees, you must provide them with a payroll voucher for the payments and withholdings you make.

All income for which you have not issued an invoice, and all expenses for which you have not received an invoice, must be registered through the My Accounts application. There is a desktop or mobile version.

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