How can I reduce income tax

The best way to save income tax

Income tax savings are a hot topic for everyone once a year. Often the guiding principle is: the higher the income, the more important the tax advisor becomes. For those with high or very high incomes, it is the first port of call when it comes to the question of how to save income tax.

But even low-wage earners can deal with it. In contrast to high income groups, however, they can hardly reduce their tax burden by buying real estate, because you have to have the appropriate capital to do so. Let's take a closer look at which tax-saving tips are useful for all taxpayers.

Appeal against tax assessments

The taxpayers' association assumes that every third tax invoice is wrong. Often not all expenses were recognized as business expenses, special expenses or extraordinary expenses.

Sometimes tax exemptions are not granted because you are supposedly not entitled to them. Or you have forgotten something yourself, such as deducting the expenses for the education of your children.

It can also happen that a receipt is only found late and the tax return has already been submitted. In all of these cases, you should always object to the tax assessment and thus save yourself income tax.

Receipts lost or not received

If you have lost an income tax receipt or never received a receipt, you can issue a receipt yourself as an internal invoice.

This applies in particular to things such as cleaning work clothes in your own washing machine or parking fees as a freelance or self-employed entrepreneur. These receipts can be submitted to income tax and will then be deducted from the tax-relevant income.

Lower income tax

Anyone who renovates their apartment as a tenant can claim up to € 1,200 per year for renovation and refurbishment. Of course, only if these costs have not been borne by the landlord.

If a litigation involves a taxpayer's existence, the tax office must accept the litigation costs as deductions from income tax. There is also a federal court decision (BFH - BStB1 1996 II p. 596) that helps save income tax.

Tax offices today all have a website. It makes sense to read through the latest information there every year for tips on how to save even more income tax. Anyone who has to support adult children or look after their parents is also entitled to deductions from their income.

Basically: The costs for the initial training can always be deducted. But parents of eternal students can also claim extraordinary burdens.

You should also state your payments to the insurance company. In addition to liability insurance and health insurance, the pension insurance contributions for extended pension provision also apply.

Saving income tax: other options

Anyone who owns a share portfolio and whose exemptions are too low can transfer part of their portfolio to their children. Then you don't have to pay the 25% flat tax on everything.

If the children do not yet have their own income, this is particularly advantageous for interest, dividends and profits from the sale of securities. The income then remains tax-free beyond the saver lump sum up to the amount of the basic tax allowance of € 8,652.

If you don't want to afford a tax advisor, you can calculate your taxes yourself online or using software. There you can usually get tips about the amount of the deductions for the corresponding tax year. This is because the maximum amount of the deductions is set anew every year. So you can definitely save income tax.

Excessive taxes: Finance minister wants to raise top tax rate Finance Minister Olaf Scholz is thinking about a higher top tax rate - this would affect all incomes because of the tax progression. > read more


© Verlag für die Deutsche Wirtschaft AG, all rights reserved