Education Expenses in IRS: What Can You Deduct?

Introduction For parents, education expenses represent a significant part of the family budget. However, the Portuguese IRS allows for certain education costs to be deducted, helping families recover a portion of these expenses. But which expenses qualify for deductions, and how can you ensure you take full advantage of them?

How Much Can You Deduct? Education-related deductions in the IRS have a limit. Each household can deduct 30% of eligible education expenses up to a maximum of €800. Expenses from institutions officially recognized by the Direção-Geral do Emprego e das Relações de Trabalho or integrated into the National Education System qualify for these deductions.

Who is Considered a Dependent? A dependent is classified as a child, stepchild, or adopted child under 25 years old, provided they do not earn more than 14 times the national minimum wage (in 2024, €820 x 14). If these conditions are not met, they are not considered dependents for tax purposes.

Additional Benefits Certain circumstances allow for higher deductions:

• Students studying more than 50 km from home can deduct up to €400 per year for rent. This increases the total education deduction limit to €1,100, as long as the additional amount pertains to accommodation expenses.
• Families with children attending schools in Portugal’s interior regions or autonomous regions can also benefit from a 10% increase in deductions, with the overall limit reaching €1,000.

How to Register as a Displaced Student To benefit from these deductions, students renting accommodation must:

1. Sign a rental contract and ensure rent receipts are issued electronically.
2. Register their status as a “displaced student” annually on the Portal das Finanças under Cidadãos > e-Arrendamento > Registar estudante deslocado.

What Types of Education Expenses Are Deductible? Eligible education expenses include:

• Tuition fees, nursery, kindergarten, and school fees.
• Schoolbooks and educational materials (subject to 6% VAT).
• School meals (when consumed in the school cafeteria).
• Private tutoring and study centers (if the invoice is VAT-exempt or subject to 6% VAT).
• Rent for students living away from home (if declared properly).
• Extracurricular activities such as music, theater, or language classes, provided the institution is recognized by the Ministry of Education.
• Driving schools.

Private Tutoring and Study Centers Expenses for tutoring and study centers qualify for deductions if they fall under specific economic activity codes (CAE):

• 85 (Educational Institutions)
• 47610 (Bookstores)
• 88910 (Childcare services without accommodation)
• 8010, 8011, 8012, 8013 (Tutors, trainers, teachers, and arts educators)

Education Expenses Outside Portugal Education expenses incurred abroad can also be deducted if manually entered on the Portal das Finanças and supported by proper invoices. Keep all original documents, as the Tax Authority (AT) may request proof within 15 days.

Expenses That Are NOT Deductible Certain education-related expenses do not qualify for deductions, particularly those taxed at 23% VAT. These include:

• Computers, calculators, and musical instruments.
• School supplies such as notebooks, pens, and backpacks.
• School uniforms.
• Transportation costs.

Proposed Changes by DECO Consumer rights organization DECO has proposed expanding deductible education expenses to include school supplies like notebooks, dictionaries, and drawing materials. Their suggestion includes reducing VAT on these items from 23% to 6%.

Steps to Register Education Expenses on IRS Education expenses are automatically transferred to e-Fatura, but they can also be manually registered:

1. Include Annex H in your IRS declaration.
2. Confirm eligibility in Table 6C1, Field 01.
3. Authenticate all household members in the IRS Family Aggregate section.
4. Select appropriate codes for expenses:
   • 660 for school meals.
   • 661 for student rental expenses (requires completion of Table 7).
   • 662 for education and training expenses subject to 6% VAT or exempt.
5. Register all expenses together, even those already reported by AT.

Tips to Maximize Education Deductions

• Always request invoices with the NIF of a household member.
• Ensure the supplier is registered under an eligible CAE and charges either 0% or 6% VAT.
• Separate invoices when buying schoolbooks from supermarkets to ensure they qualify.
• Check e-Fatura regularly and correct any missing invoices before March 31.
• Keep original invoices for four years, as AT may request verification.

Final Thoughts Education deductions are an important tool for reducing IRS liability. By following the proper registration and verification steps, families can ensure they receive the maximum benefits allowed by law.

Related Articles:

• IRS for Separated Parents: What You Need to Know
• How to Request Family Allowance
• How to Reduce Your Tax Burden
• Updates on IRS for 2025

This article is for informational purposes only and does not replace consultation with official tax authorities.