In a period in which everything keeps going up, it’s time to grab your calculator and look for formulas to save on taxes by working. Although it may seem unbelievable, you can pay less if you know how to do it. And to help you save and balance your accounts better, we’re going to show you some measures with which you can cut taxes.
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1- Enjoy the regional deductions
It is important to keep in mind that many expenses can help reduce personal income tax and, consequently, taxes.
- You can deduct expenses such as childcare, public transport, domestic help, rent, etc. Including all these expenses in your tax return can help reduce your taxes.
- It is important that you inform yourself about the tax deductions to which you are entitled. Each autonomous community has its own. Knowing them is always synonymous with saving. Sometimes personal loans can also benefit from deductions.
- Many of the deductions can be enjoyed if the taxpayer does not exceed an annual income limit. If the limit is exceeded, these deductions are automatically eliminated.
2- Report family changes
If your family experiences any changes, it is important that you inform your employer so that they can make the appropriate changes.
- If you have a child, you should know that the income tax withholding must be lower.
- Divorce and disability also offer a deduction for personal income tax. It is important to notify the changes as soon as possible in order to save money.
3- Consider receiving salary in kind instead of cash
If you want to save even more, it may be a good option to receive part of your salary in kind instead of cash.
- It is important to do the math to see what the savings would be if you decide to receive part of your salary in kind. Sometimes the savings can be very significant.
- Some benefits in kind, such as health insurance, food vouchers or childcare, may be exempt from paying personal income tax. Of course, before applying for them, it is important to find out whether or not you can benefit from the exemption.
4- Make donations
We know that not everyone has the financial means to make donations. But if you do, you should always declare them to avoid having to pay more.
- Not all donations qualify for an exemption.
- If you make a donation to an NGO, non-profit organization or foundation, you can deduct up to 80% of the first 150 euros and 35% of the amount exceeding 150 euros.
- If donations are made for the third consecutive year or more, the exemption rises to 40%. To reduce taxes, it is usually recommended to always donate to the same foundation or NGO.
5- Review work expenses
Few people do it, but many work expenses can help us reduce our tax payments.
- Union dues are expenses that can be deducted from work income.
- Other expenses that can be deducted are fees to a lawyer or attorney, among others.
6- Enjoy housing deductions
If you are lucky enough to have purchased your home before 2013, you should know that you are entitled to housing deductions. Normally, these deductions are not included in the tax return, so you will have to include them yourself if you want to benefit from them.
The annual deduction you will be able to enjoy will be a total of 9,040 euros per year. If you want to enjoy the maximum deduction, try to pay an amount as close to that figure as possible to avoid losing money.
7- Sell your house after the age of 65
If you are close to retirement and want to sell your home to enjoy a better quality of life, it may be worth waiting until age 65 to pay less income tax.
- From the age of 65 you can be exempt from the transfer tax, which will save you a lot of money when selling your car.
- If the property is in the name of two people, then both must be over 65 years old to enjoy this discount.
8- Compensate losses
When the year is coming to an end, it is important to do the math to try to balance out your gains and losses.
- To avoid paying too much tax, you should not only include profits in your tax return , but also losses. Losses are subtracted from profits, which means you have to pay much less.
- It is important to avoid donating assets that may cause losses because this will result in a penalty in personal income tax.
- If you sell stocks at a loss to offset losses, you should know that you will have to wait at least two months to repurchase them.
As you can see, there are currently different options for saving taxes by working. The key to saving is knowing how to do it.
