Is a tax benefit in excess of the tax due lost?

Question to an expert

If the tax benefits to which I am entitled exceed the amount of tax I have to pay for the year, what happens to the excess?

Three mechanisms make it possible to reduce the income tax: the deduction, the reduction and the tax credit. A deduction reduces the amount of taxed income – payments into a retirement savings plan (PER), for example, are deductible from income.

A tax reduction, on the other hand, lowers the amount of the tax itself; this is the principle of the tax advantage for donations, or the Pinel rental investment scheme.

Finally, the tax credit, for example for childcare expenses or for home employment, also makes it possible to reduce the amount of tax, after deduction of tax reductions, but with one particularity: if it exceeds the tax due, the excess is paid to the taxpayer by the tax administration.

No refund for a tax reduction

On the other hand, the excess is not refunded in the event of a tax reduction greater than the tax due. However, certain reductions can be carried over to tax due in subsequent years. Thus, the Malraux reduction [qui facilite la ­restauration immobilière dans l’ancien] can be carried forward three years, it is five years for the Girardin reduction, and six years for the Scellier and Censi-Bouvard reductions.

Read also Home employment: the tax credit will continue to apply to services rendered outside the home

Please note, the global cap on tax loopholes limits the amount of benefits that a taxpayer can obtain over a year. But deductions from income are not affected by this limitation. The ceiling is set at 10,000 euros for the general case and 18,000 euros for investments overseas and in the cinema. But here too, there are exceptions and postponements are sometimes possible …