There are only a few weeks until the end of the year. Among many other things, now is the time to act to pay less taxes next spring. How? Putting into practice some basic tips that will help you cut your personal income tax: we remind you.
How to pay less taxes
Do you want to pay less taxes on your next return? Perhaps now you still see it a bit far, because until the spring of 2021 you do not have to settle accounts but if you want to pay less then, it is now that the 2020 financial year has not yet finished when you must take action: it is in your power to save taxes, but you must act before December 31st.
10 steps to cut your taxes
Take advantage of regional deductions
Many expenses can lead to a cut in personal income tax: did you know that you may be able to deduct for childcare, educational expenses, public transport pass, domestic help, installation of water or energy saving devices, rent, etc. ? It is very important to first make sure of the tax deductions to which you are entitled, which vary depending on each autonomous community, and put them into practice.
Communicate changes in the family
Inform your employer of any changes in the family situation: if a child is born, if you divorce, if there is a disability … The amount of personal income tax withholding depends, among other things, on family circumstances. and thus you will get it to be as tight as possible.
Change salary in cash for salary in kind
Obtaining part of your salary as salary in kind is a good way to save taxes: some benefits such as health insurance for the worker, his spouse and his children; food vouchers, transportation checks … are exempt from paying income tax.
Review your expenses like a professional.
If you pay union dues, fees to the professional association or if you have had a labor lawsuit and have paid fees to the lawyer and attorney, those expenses are deducted from the income from work, so you pay less for them.
Make donations
Donations deduct, and if you always make them to the same entities, more. If you make donations to NGOs, foundations and non-profit entities you can deduct 80% on the first 150 euros, and 35% on what exceeds that amount (that percentage rises to 40% if it is the third year that you donate to the same entity and each donation has been equal to or greater than the previous one).
Amortize mortgage
If you have the right to take advantage of the tax deduction for the purchase of a habitual residence, you should pay off your mortgage before the end of the year. If you bought your house before 2013, 15% of what you paid to buy the house is deducted, on a maximum of 9,040 euros, if you pay less than that, or 18,080 if you pay it with your spouse and declare separately, you are interested early amortize an amount that reaches that limit and thus take full advantage of the deduction.
Wait until you turn 65 to sell your house
If you are close to reaching that age and you are considering selling your habitual home, you are interested in waiting to fulfill them, because the profit you will obtain from the sale will be tax free.
If you are a landlord, take advantage
If you are the owner of a rental property, you can deduct from the income subject to personal income tax the expenses made to obtain it: IBI, advertisements, agency, insurance, community … and also the repair and maintenance expenses and the interest on loans for the purchase or improvement of the property (these with a limit).
Save on pension plan
Contributions of up to 8,000 euros to a pension plan cut the personal income tax bill, but be careful: it is very important to choose a good plan (for example, the Associated Pension Plan that OCU proposes to its partners), otherwise the Expenses and poor profitability can make it a bad investment.
Compensates for profit and loss
If you are an investor, if you have assets to sell … remember that profits outweigh losses (and vice versa). Act accordingly.
And remember…
It is very important to keep all supporting documents for deductible expenses (receipts for payment of courses, donations …) to prevent possible problems.