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As an individual taxpayer, you may be gearing up to file your annual tax return, and it is essential to understand your right to include personal deductions. However, not all expenses qualify as deductions. This guide will help you better understand which expenses you can declare and maximize your personal deductions.

What are personal deductions?

Personal deductions are expenses that you, as a taxpayer, have the right to report in order to reduce your taxable income in the Annual Declaration, thus helping to lower your tax burden.

Let’s examine each of them in detail, along with their specifications and corresponding limitations:

Healthcare Services

All medical, dental, psychological, and nutritional service fees are considered personal deductions but only if provided by individuals with professionally issued and registered titles from competent educational authorities.

Hospital expenses and medicines included on hospital invoices are deductible, but pharmacy receipts are not accepted.

Fees for nurses, analyses, clinical studies, as well as the purchase or rental of devices for patient recovery or rehabilitation, including prosthetics, are also deductible. Additionally, expenses for purchasing prescription optical lenses to correct visual impairments can be deducted.

Premiums for medical insurance, complementary to or independent of health services provided by public social security institutions, are also deductible.

These health-related expenses are deductible when incurred for you, your spouse or partner, your parents, grandparents, children, and grandchildren.

Educational Services 

Tuition fees paid to private educational institutions with official recognition of studies are considered personal deductions, from preschool to high school or equivalent levels. The maximum annual deduction amounts are as follows:

  • Preschool: 14,200 pesos
  • Primary school: 12,900 pesos 
  • Secondary school: 19,900 pesos 
  • Technical vocational school: 17,100 pesos 
  • High school or equivalent: 24,500 pesos 

To take advantage of this benefit, it is necessary to have the corresponding payment receipt. If payments are made in the same fiscal year for teaching services corresponding to two educational levels for the same person, the annual deduction limit will be the one corresponding to the higher amount of the two levels, regardless of whether it is the level that concluded or the one that began. 

Enrollment or re-enrollment fees are not deductible. Regarding school transportation, it is only deductible if it is mandatory. 

Important: Payments must be made using a check drawn from the taxpayer’s account (your account), electronic funds transfer, credit, debit, or service card. You cannot deduct any expenses made by cash. 

Other Deductions 

  • Funeral expenses  
    • For your spouse or partner, parents, grandparents, children, and grandchildren can be made using any payment method.
  • Real interest   
    • Accrued and paid for mortgage loans for your primary residence, contracted with financial institutions, INFONAVIT, or FOVISSSTE, among others. 
    • Can be deductible if the credit granted does not exceed seven hundred and fifty thousand investment units. 
  • Donations    
    • Institutions registered with SAT to receive donations.  
    • Amount must not be burdensome or remunerative.   
      • Must not exceed 7% of the cumulative income used to calculate the income tax for the previous year, before applying personal deductions. 
  • Retirement contributions  
    • Made to the voluntary contributions sub-account of your personal retirement plans (Afore). 
  • Local taxes on salaries, not exceeding 5% rate .

The total amount of personal deductions, excluding certain exceptions, cannot exceed five annual Units of Measurement and Update (UMA) or 15% of your total income, including empt income, whichever is lower. 

It is important to note that the deadline to submit your fiscal year report to the SAT is April 30. 

Make sure you are taking advantage of all your tax deductions by contacting Mextax for expert advice. Our experienced accountants will ensure you maximize your deductions while remaining tax compliant!