Now is the time to take action and pay less tax on your next tax return.
Not much left A few weeks until the end of the year. Among other things, now is the time to take action to pay less tax on your next income tax return. As? Putting some basic tips into practice will help you reduce your personal income tax.
How to pay less tax
Do you want to pay less in taxes on your next tax return? Maybe you are still looking a little far away now, until spring 2024 You do not have to settle your accounts with the Treasury, but if you want to pay less tax than you do now, you must take steps before the end of the 2023 financial year: Tax savings are within your power, but you must take action before January 1.
At OCU, they’ll remind you of 10 tax tips that can help you, always within the law. They will allow you to reduce your account with the Treasury.
10 tax cuts
1. Take advantage of regional deductions
Many expenses can lead to personal income tax deductions: Did you know that you can deduct child day care expenses, education expenses, public transportation passes, housekeeping services, installation of water or energy-saving devices, rent, etc.?
It’s important to first ensure the tax reliefs you are entitled to, these will vary depending on the circumstances The functions of each autonomous region, and put it into practice. Many regional deductions are available if the taxpayer does not exceed certain income limits.If it exceeds, you can reduce your income, deduct expenses, or claim compensation Exemptions from claiming deductions.
2. Communicate any changes in the family
Notify you employer Any changes in family circumstances: if a child is born, if divorced, if there is a disability…the amount withheld from the account Personal income tax depends on family circumstances, etc. This way you can make it as tight as possible.
3. Exchange cash wages for tax-free in-kind wages
Receiving part of your compensation in the form of wages in kind is a great way to save taxes: some compensation, such as employee health insurance Workers, their spouses and children; Food stamps, transportation and daycare checks…are exempt from personal income taxes.
4. Donate
this Donation deduction, especially if you always perform these operations on the same entities.If you donate to NGOs, foundations, and non-profit entities, you can 80% off the first 150 eurosand 35% anything over that amount (This percentage will rise to 40% if you make a donation to the same entity for the third consecutive year and each donation is equal to or greater than the previous year).
5. Take advantage of the housing deduction
If you are entitled to a deduction Purchase habitual residence tax, you should pay off your mortgage by the end of the year. If you bought your home before 2013, you can deduct 15% of the purchase price, up to a maximum of €9,040 (€18,080 if you paid together with your spouse and declared separately). Therefore, for tax purposes, it is important to amortize amounts up to that limit in advance in order to take full advantage of the deduction.Early cancellation fees charged by some entities are also Deductible up to €9,040.
Don’t forget that by meeting certain requirements you can Deduction for energy efficiency works, to be completed in 2023 at your usual residence or another property you rent, to reduce the need for heating and cooling, or to improve the consumption of non-renewable primary energy or the energy rating of the home. Remember, in order to deduct it on your next return, you must have an energy efficiency certificate before construction, and another subsequent certificate, up to a maximum date of December 31, 2023.
6. Take advantage of electric vehicle and charging station credits
If you bought a new electric car on or after June 30, 2023, and registered it before January 1, 2024, you will be able to deduct 15% of its value, including fees and taxes, on your next return. Deduct public assistance. , about Up to 20,000 euros.
This deduction applies to models whose price does not exceed the maximum amount established by the MOVES III program and only applies if: for private use. Amounts paid for these vehicles in 2023 may also be deducted on the 2023 return if 25% of its acquisition value As long as you purchase the car before December 31, 2025. If you live in Asturias, Castilla y León and La Rioja, don’t forget to check if you are entitled to a regional deduction for the purchase of a new car.
via mounting point electric vehicle charging, A deduction of 15% of the installation price, less any public subsidies or aid that may be received, can be deducted, up to a maximum of €4,000, provided the installation is completed and paid for in 2023, is for private use and is not paid in cash.
7. Wait until age 65 to sell your home
If you are approaching that age and are considering selling or donating your primary home, you may be interested in waiting until you reach that age because of your profits The income you will receive from the transfer is tax-free.
If the house is in the names of both spouses, both spouses must be over 65 years old, otherwise only the proceeds are tax-free. Spouse corresponding to this age. You can apply for an exemption even if you have ceased to live in your habitual residence, but this must have occurred within a maximum of two years before moving.
8. If you are a landlord, take advantage of
What if you are Rental property owners, you can deduct from the income subject to personal income tax the expenses incurred in obtaining this income: IBI, advertising, agency, insurance, community… Repair and maintenance expenses and interest on loans for the purchase or improvement of property are also deductible, but not will produce negative returns. Review deductible expenses, including amortization, and if at the end of the year you find that your performance will be positive, you can defer some deductible expenses until December to reduce your next personal income tax.
9. Save on pension plans
this contribute pension plan They can cut personal income taxes.
It is not feasible For those who derive income solely from the rental of properties, banking products or profits from property transfers, as such income is not reduced by contributions to pension schemes.
Yes, it is an interesting option for those who have income from work, professional/business activities and property rental (as long as you also have income from the first two types). If this is you, the maximum amount of pension scheme contributions you can deduct on your next statement will be the lesser of:
– 1,500 euros per year, plus 8,500 euros if the increase comes from corporate contributions or workers’ contributions to the company The same employment plan depends on the amount contributed by the company.
– 30% of the total net income from work and economic activities.If you are unable to reduce all of your contributions because of this restriction, you may reduce Excess portion of the general tax base in the next five years.
It is very important to choose a good plan (for example, OCU members can benefit from interesting pension plans), otherwise fees and profitability will be low They could make it a bad investment.
10. Compensation for losses and gains
If you made profits from selling or donating assets during 2023 while accumulating losses in other investments, one way to save on your next return is to materialize those losses as be able to compensate them with profitsand vice versa, but considering:
– Do not donate assets that generate negative personal income tax capital losses or returns because The Ministry of Finance will not compensate. To make up for the loss, it is best to sell the property and donate the money from the sale.
-If you sold stocks or fund shares to recoup losses incurred on sales this year, you must wait two months before buying them back (or buying another similar portfolio fund). If you don’t do this, you won’t be able to recoup your losses until you sell them again.
Don’t forget that your next filing will be the last one you can use to offset the balance of your pending losses for 2019.Before the end of the year, you can Take advantage of it by selling investments with equal profits.
Keep evidence
Remember, it is important to protect all resources Proof of deductible expenses (of course payment receipt, proof of donation…) to prevent possible problems.