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Reduce Your Taxes With Personal Services

Reduce Your Taxes With Personal Services

More and more people are turning to home help. Whether it’s cleaning your home or maintaining your garden at the end of the week, the fees accumulate and you begin to wonder if the help in question is useful. Good news for you: the employment of an employee at home opens the right to a tax reduction, the services to the person also. How does the tax credit for home help reported in 2017 and 2018 work? How to declare his cleaning lady in her tax return? In which box? Is hedge size tax deductible? 

The different types of home trades involved

Several types of home help trades can make you benefit from this tax exemption . You may be eligible for a tax rebate or rebate whether you own or rent a home or a principal residence. It suffices that the work in question takes place in France, that the services fall within the framework of the family jobs and are carried out by someone who is your employee, or an association or approved company.

Here is a non-exhaustive list of home helpers eligible for the tax credit:

  • Babysitting
  • Gardening
  • Housekeeper
  • School tutor
  • Cook
  • Sick guard
  • Etc.

Are not concerned by this device:

  • game wardens
  • members of your tax household
  • people employed without a work contract (“black”)
  • a young foreigner au pair
  • an employee of the establishment who lodges you
  • an employee hired for your professional activity (unless it is specified in his employment contract that part of his activity is dedicated to your service)
  • an employee employed by the trustee of your co-ownership
  • a gardener registered with the MSA (Mutuelle sociale agricole)
  • an intermediary association for work done in workshops
  • and finally, companies

Tax reduction and gardening

The tax credit for gardening works (introduced in 2017) is limited to 5000 euros per year and per tax household. The size of the hedges is deductible from taxes provided that they do not exceed 3m in height. Also concerned are the work of picking fruits and vegetables and brushing. On the other hand, agricultural and forestry work, earthworks and the design of landscaped parks are not eligible for the tax credit. These services do not fall into the category of “routine garden and vegetable maintenance services” required to benefit from a tax reduction.

ESATs: tax reduction and support for RMCs

Individuals whose green spaces require regular maintenance may enter into a contract with a Service and Assisted Employment Facility (ESAT). It is a medico-social organization, financed by the Health Insurance, facilitating the insertion of people with disabilities into the labor market. 

What are the conditions to benefit from this tax credit?

Good news for taxpayers: since 2017, the tax credit for home help is widespread to all French (Article 82 of the Finance Act for 2017). Prior to this date, it applied only to jobseekers and employees. A situation that penalizes pensioners (although the first affected by home help) and non-taxable persons. In France, 3.6 million people benefit from a home service . Three quarters of the beneficiaries are elderly people. People with disabilities represent just under 10% and families 15%. 

To benefit from it, your tax residence must be located in France. The home intervention must be your home or that of an ascendant. And you must report the services received on your tax return.

Home-help tax credit: a concrete example

Let’s take a concrete example: you employ a cleaning lady at home, who comes to your home once a week, without going through an agency. You become what we call a private employer . As such, you must declare it to taxes but also to the CAF (which can grant you financial support according to your family quotient) and the URSSAF.

How to declare your home help to taxes?

To qualify for the tax credit, you must indicate the income paid to your cleaning lady on the whole year on cerfa 2042 RICI, or cerfa 15637 . This is a form that allows you to group and indicate the reductions and tax credits you can claim under last year under the category “Personal services: home work”.

Simply fill in  box 7DB or 7DF  according to your situation in  the heading “Discounts and tax credits” :

In the case where you are employing an employee for the first time, check  box 7DQ  to obtain the increase of the ceiling of the expenses retained:

If a member of your tax household holds the disability card, check  box 7DG . Then enter in  box 7DD  the amount of the expenses incurred for your ascendant who benefits from the personalized autonomy allowance (APA) or who fulfills all the conditions allowing to benefit from this allowance.

Finally, in  box  7DL , enter the number of ascendants over age 65 for whom you incurred APA expenses and beneficiaries.

There is no need to attach supporting documents, but keep them in case of request from the tax authorities.

Special case: childcare 

Tax deductions for childcare are not the same depending on whether your child is being cared for at home or cared for by an institution (such as a nursery or recreation center). If your child is under the age of 6 and cared for by a childminder  (who welcomes children at home), a nursery or daycare  in the day or evening, you can claim a tax credit (provided that the child is your responsibility). The tax credit is equal to 50% of the actual expenses borne by the parents (any aid from the Family Allowances Fund or the employer must therefore be withdrawn), up to a limit of € 2,300 per child . 

Do you have your children looked after by an employee at home (liberal profession or childcare sent by an agency)? This entitles you to the 2018 Home Assistance Tax Credit.

Be careful, make sure to distinguish between home help and work at home, which does not give him any special tax advantage. You can receive this tax reduction  for home help by fulfilling a few conditions . The work must be done in France , whether in your main home or in your second home .

The work can also be done in the residence of one of your parents , grandparents or great-grandparents . However, this person must be a beneficiary of the Personalized Autonomy Allowance so that you can recover the tax benefit.

You can directly employ the person doing the work or you can go through two different organizations :

  1. A private company approved for assistance to the person
  2. A non-profit organization or association approved by social security

What are your tax benefits?

You can deduct from your income 50% of the expenses incurred . The deductible amount is, however, limited to € 12,000. The expenses taken into account are increased to 500 euros and 2 hours of maximum intervention in a row for the small jobs, 5,000 euros maximum for gardening, 3,000 euros for computer assistance. The total taken into account must not exceed € 12,000.

This limit is increased by € 1,500 per dependent child (€ 750 per minor child in alternate residence) and for each member of the household over 65 years of age. At most, the limit can not however exceed  € 15,000  (which corresponds to a maximum benefit of € 7,500).

There are some exceptions:

  • the first year of employment of an employee at home gives the possibility to increase the limit to 18 000 €.
  • if you are disabled (and need help from someone else in your day-to-day life), have a disabled dependent, or have a member of your household with a disability card for a disability more than 80%, then the ceiling is 15 000 € is raised to 20 000 euros.

The tax benefit you receive depends on your activity. There are two possibilities :

  • either you receive a tax reduction
  • you benefit from a tax credit .

In both cases, the amount of this tax benefit is 50% of your expenses . The tax reduction will be granted to you if you are retired , inactive or employing a home help at a parent (dependent on you). You will receive a tax credit if you are active or unemployed registered at the Employment Center. 

However, you must limit the total amount of your tax reduction to € 12,000 . In some cases, tax reductions for personal services are capped. This means that the total expenditure allocated to this work must not exceed a certain amount :

  • 500 € for small DIY work,
  • € 3,000 for home computer assistance
  • and € 5,000 for gardening work.

You must report all your expenses on your income tax return in May. Do not forget to keep all your receipts for 3 years , tax audit period.

Home service: the growing role of jobbing platforms

The Internet has redefined the world of work and its components: more and more individuals now go through service sales platforms such as Youpijob, Frizbiz or Needhelp for everyday jobs (mowing the lawn, laying parquet, cleaning, ironing, babysitting, etc.). Rather than calling on professionals (certified, but more expensive), a simple announcement posted online is enough to find his provider. 

Does this type of service provide the right to a tax reduction? This is the argument put forward by Bertrand Tournier, the CEO of Youpijob (which has 15 000 jobbers and 45 000 “postereurs”), who says that using a jobber opens the same rights to the tax reduction (ie 50% of amount paid) to go through an organization or a certified professional.

The employer is nevertheless required to declare the jobbeur to the URSSAF (most of the platforms of services between individuals propose the assumption of responsibility of the declarative part). For his part, the jobbeur indicates his additional income on form 2042-C of his tax return.

Income Tax: Sources of Tax Exemption Related to Your Daily Expenses

Income Tax: Sources of Tax Exemption Related to Your Daily Expenses

Tax exemption is probably much more within your reach than you imagine. Expenses for your family, your principal residence, your good works … are entitled to reductions, deductions and tax credits.

Deductions, reductions and tax credits are possible thanks to many solutions such as rental investment (Pinel, Malraux …), retirement savings products (PERP, Madelin), or investment funds in SMEs. But do you know that there are other ways, directly related to your daily life, that allow you to reduce your taxes?

Family tax reductions and deductions

Family life generates many costs. A nanny to keep the youngest, saving books for your eldest’s studies, a helping hand from an employee for ironing and cleaning … All of this is expensive, but these amounts can be deducted from the amount of your tax or income before tax calculation. Especially :

  • compensatory benefits paid in the event of divorce,
  • alimony,
  • childcare costs for young children,
  • the expenses for the employment of an employee at home,
  • a package for dependent children continuing their studies.

Sources of tax exemption related to your home

At home, you have isolated your attic and installed photovoltaic panels. These works improve the comfort and energy performance of your home. This financial effort for sustainable development may entitle you to a tax credit at the rate of 30%. This concerns investments in:

  • energy-saving appliances (condensing boiler, micro-gas generation …),
  • insulation materials for walls, roof, floors, shutters …
  • energy production equipment using a renewable energy source,
  • energy performance diagnostics, individual meters …

A tax credit for assistance to persons

You host an elderly or disabled person and you want them to feel comfortable and as independent as possible. So you put a banister, changed your bathtub to facilitate access, installed a centralized control for the shutters … As part of the assistance to people, a tax credit can be granted for:

  • adapted sanitary appliances,
  • safety and accessibility equipment (support bars, vertical lifting devices, remote control systems, etc.).

Pay less taxes thanks to your charitable commitments

Solidary and committed, you do not hesitate to donate your time and money to charities. You are right, especially since your generosity is recognized by the tax services.

  • Donations to organizations providing assistance to people in difficulty such as the Restaurants of the Heart, the Red Cross, the Secours Populaire … benefit from a tax reduction of 75%,
  • Donations to organizations of general interest established in France are entitled to a single reduction rate of 66%.
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