Taxes are necessary expenses but what if they were also a source of income savings? You can pay less tax legally. The key is to plan well in advance and apply a series of tricks to deduct expenses and delay the passage through the Treasury box.
Most taxpayers think about saving on taxes when it comes time to make an income tax return. The reality is that at that point the savings options will be rather limited. And when it comes to optimizing the fiscal invoice it is necessary to differentiate between saving by planning the payment of taxes and saving when making the IRPF. The first of the options is the most interesting. These are the formulas to save taxes:
• Bring out gains to compensate with losses: If you are one of those who say they do not want to pay extra taxes and you have lost money with your investments, you can take advantage of the rent. Most savings products allow you to offset losses with income with income tax. In other words, by including your investments you can subtract the money you have lost from the money you have earned, so that you will only pay taxes for the real benefit.
Treasury allows to compensate capital gains and losses among themselves. These are the ones that refer to stocks, investment funds, forex investments, among others. In addition, in the yearly income you can also subtract patrimonial losses to 20% of the income from movable capital, which includes dividends, bonds and bank account interest, mainly.
• Do not pay dividends: Dividends are no longer exempt from tax on income. The new dividend taxation means that the money received in cash goes directly to be taxed as return on movable capital within savings income.If they offer you the possibility of collecting a dividend in the form of shares, use it to pay feweramounts in taxes this year. In the end you will have to pay for that money, but you will have deferred the payment of taxes and earned time.
• Invest in pension plans:The taxation of pension plans is its great asset as a long-term savings product. And it is that pension plans pay differently to the rest of investment formulas except for PPAs.In order to pay less in income tax, pension plans allow deductions in the IRPF. The money you invest can be subtracted from your tax base and saved. As an example, if you have contributed 5,000 euros to your plan and have earned 30,000 euros, the Treasury will allow you to reduce those 5,000 euros, so that it would be as if you had only won 25,000 euros.
The IRPF is a progressive tax. That’s why they save more with pension plans who have higher incomes.
• Wait to rescue your pension plan: Most savers will retire and immediately rescue the pension plan. It seems logical to do so, since the plan should serve as a complement to the public pension to enjoy a better retirement.
The problem is that logic and taxation do not always go hand in hand. Recovering the pension plan the same year that you retire can cause you to pay more taxes, especially if you do it in the form of capital. The reason is that the money in the plan is added to the income from work, that is, to your salary and also to the pension. Normally your income will be higher in the year of retirement, when you still receive a salary, than when you have retired and have only received the public pension.
• Collect and save your invoices: The IRPF allows a multitude of deductions, especially when there are children involved. Search and collect all your invoices for school supplies, clothing, footwear and even language classes. Later you can use them to pay less taxes.
• Make a donation: Another formula to pay less taxes is planning your donations. The donations deduct in yearly income and their taxation has changed for the better.Right now you can deduct up to 75% of what you have donated depending on the case. In this sense, the Treasury distinguishes between donations above and below 150 euros.For what you donate up to 150 euros Property tax allows to deduct 75% of the section to the NGO or foundation.When you have exceeded 150 euros in donations you can continue to deduct, although it will be less in amount. In this case you can deduct 30% of the contribution made in general. That percentage rises to 35% when you have collaborated with the same NGO the previous two years.
With this formula you can get a tax relief legally and contribute to a good cause.
Remember that no matter how much you donate, the deduction may not exceed 10% of the general taxable income of the IRPF.
• Pay less taxes being autonomous: A separate issue is the self-employed workers. The self-employed have more formulas to save on income and taxes in general. The first thing is to clear the deductions that you can practice in the IRPF. Among the deductible expenses that you may not have in mind are the insurance as self-employed and the household expenses if you work from home.
In addition you should not forget the VAT either. Most VAT deductions can be transferred to the IRPF, but not all.
Conclusion: The term “tax relief” may seem a bit confusing, because it is a broad term that covers a wide range of situations that result in a lower amount of tax collected by the government. The only thing that all tax cuts have in common is that they modify a pre-existing tax law or implement a new one that effectively reduces the amount of taxes you have to pay.