Income tax donations: use your tax return to make a difference

Taxpayers can use their income tax returns to make charitable donations at no extra cost, benefiting society at large

Many taxpayers may not be aware, but it is possible to make donations directly through their income tax returns. The Brazilian Federal Revenue Service has increasingly encouraged this form of cash contribution in recent years.

Charitable donations allow taxpayers to allocate a portion of their tax due to support social and cultural projects, thereby having a positive impact on society. This provides a way to contribute to meaningful causes while fulfilling the requirement to file the annual tax return.

How donations work on your tax return

Firstly, it should be noted that making this choice does not cost the taxpayer any extra money.

• If the tax return results in Tax Payable, the donation amount will be deducted from the outstanding balance.
• If the tax return results in a Tax Refund, the allocated donation will be added to the refund amount.

Rules for donating directly through your tax return

There are specific rules and limits set by the Federal Revenue Service for this type of donation. Check out the details below: 

• Donations can only be made by taxpayers who itemize their legal deductions on their tax return using the full form. The simplified form does not offer this option.
• Through the tax return, up to 3% of the tax can be allocated to funds for the protection of children and adolescents, and an additional 3% to funds for the protection of the elderly.
• Donations cannot be made if the tax return is filed late.

On the tax return, you must fill out the form titled "Donations Directly in the Tax Return".

Eligible causes

Charitable contributions can be claimed directly through your tax return to:

• Funds for the Rights of Children and Adolescents (FDCA);
• Funds for the Rights of the Elderly (FDPI).

For these options, donations can be directed towards funds at the national, state, or municipal levels.

Calendar-year donations

Besides the method described above, taxpayers can also make cash or non-cash contributions over the course of a given calendar year to be written off in the following year's tax return.

For instance, if a taxpayer made charitable donations throughout 2023, they simply need to include the receipts issued by the benefiting fund in their 2024 tax return. This will ensure that the donated amounts are accounted for this season, and these must be reported in the "Donations Made" section.

It is important to note that this procedure is valid only for projects previously approved by the Government. Furthermore, this benefit can only be claimed by those who have itemized their deductions using the full income tax form.

In addition to donations to the Funds for the Rights of Children and Adolescents and the Funds for the Rights of the Elderly, this option also supports efforts to foster culture, audiovisual activities, sports, healthcare, and recycling supply chains.

Taxpayers may allocate up to 6% of their tax due, or 7% if a portion of the contribution is directed towards sports projects. Money can also be directed to the National Program to Support Health Care for People with Disabilities (Pronas/PCD) and the National Program to Support Oncological Care (Pronon), with each of these deductions capped at 1%.

Tax Compliance for Individuals

DPC’s Individual Tax Compliance department provides in-depth guidance on all aspects related to the filing of Individual Income Tax returns. You can rely on our expertise to adopt the best practices for fulfilling this tax requirement. Contact our team for support: dpc@dpc.com.br.