Maybe it feels a bit far away now, because you don’t need to follow it until the spring of 2023 Tax departmentbut if you want to pay less, it’s now, before the end Fiscal Year 2022 When you should take action: You have the right to save taxes, but you must take action before January 1.To this end, OCU recommends that, to the extent permitted by law, they will allow you Reduce your tax bill.
Cropped shot of young Asian woman doing personal banking and finance business using laptop at home. Plan your budget and calculate expenses. Manage taxes and financial bills. wealth management. Digital banking habits.Technology Smart Bank
10 Tax Cuts
1- Utilize regional deduction
Many expenses can reduce personal income tax: Did you know that you can deduct child daycare expenses, education expenses, public transportation passes, housekeeping, water or energy-saving installations, rent and more?
It is important to first identify the tax reliefs to which you are entitled (depending on each municipality) and put them into practice.
In this table, you can see the fee deductions for different communities (if you incur any of these fees, you can take advantage of them).
Many regional deductions are available if the taxpayer does not exceed certain income limits. If you exceed these limits, you can reduce your income, obtain deductible expenses or request exempt compensation to be able to apply the deduction.
2- Communicate any changes in the family
Notify your employer of any changes in the family situation: if a child is born, if you get divorced, if there is a disability…the amount of personal income tax withholding depends on the family situation, etc., this way you will ensure that it is as strict as possible.
3- Convert cash wages to tax-free wages in kind
Getting some of your pay in the form of wages in kind is a great way to save taxes: Some compensation, like health insurance for workers and their spouses and children; food stamps, transportation and daycare checks… are exempt from personal income tax.
4- Check your job fees
If you pay union dues, professional association dues, or if you have had a labor dispute and paid attorneys and attorneys, those fees will be deducted from your employment income, so you pay less.
5- Donation
Donations are deducted, more so if you always donate to the same entity. If you donate to NGOs, foundations and non-profit entities, you can deduct 80% of the first €150 and 35% on the amount above will rise to 40%). same entity and each contribution is equal to or greater than the previous year).
6- Take advantage of housing deductions
If you are entitled to a tax deduction for purchasing a principal residence, you should pay off your mortgage by the end of the year. If you bought a home before 2013, you can deduct 15% of the purchase cost, up to a maximum of €9,040 (€18,080 if you paid 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 deduct energy efficiency works done in 2022 at your usual residence or at another of your rental properties that reduce heating and cooling needs or improve primary energy consumption. Or the energy rating of a home. Remember that in order to be deducted on your next claim, you must have an energy performance certificate before construction, and another subsequent certificate, with a maximum date of 31 December 2022.
7- Wait until you are 65 to sell your home
If you’re close to that age and are considering selling or donating your primary home, you’re interested in waiting until you reach that age because the gains you get from the transfer will be tax-free.
If the house is in the names of both spouses, both must be over the age of 65, otherwise only the gain corresponding to the spouse of that age will be tax-free. 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
If you are the owner of a rental property, you can deduct from your income subject to personal income tax the expenses incurred in acquiring the property: IBI, advertising, agency, insurance, community…repair and maintenance expenses and interest on loans to buy or improve the property It is also deductible, but does not create a negative return. 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- Savings Pension Plan
Contributions to a pension scheme of up to €1,500 reduce personal income tax. Not all taxpayers are interested in contributing to pension plans:
It is not advisable for those earning income solely through property leases, banking products or profits from asset transfers, as such income is not reduced by contributions to a superannuation scheme.
Yes, this is an interesting option for those who have income from work, professional/business activities and rental property (as long as you also have income from the first two types). If this is the case for you, on your next statement the maximum amount of superannuation contributions you can deduct will be the lesser of:
1,500 euros. If you donate more, you risk being penalized if you don’t request the excess amount back by June 30, 2023. For corporate donations, this limit is increased by €8,500.
30% of the sum of net income from work and economic activity. If you are unable to reduce all of your contributions because this limit applies, you will be able to reduce the excess from your general tax base for the next five years.
It’s important to choose a good plan (for example, OCU members can benefit from an interesting pension plan), otherwise the fees and low profitability can make it a poor investment.
10- Compensation for losses and gains
If during 2022 you made profits from selling or donating assets and accumulated losses in other investments, one way to save for your next return is to materialize those losses so you can offset them with profits, and vice versa The same is true, but considering:
Do not donate assets that generate negative personal income tax capital losses or returns, as the Treasury will not allow them to be reimbursed. To make up for the loss, it is best to sell the property and donate the money from the sale.
If you sell stocks or fund units to offset 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 from 2018. Before the end of the year, you can sell investments with equal profits to take advantage of it.