What should I do to save taxes?

Saving taxes in 2020/2021: tips and tricks

Around 20 million people in this country have to submit their income tax return for 2020 to the tax office by July 31, 2021. Don't panic: with the right tax software and the following tips from COMPUTER BILD you can easily do it and you will probably even get hundreds of euros back from the tax office - saving taxes made easy.

Content:

Compulsory assessment: who has to file the tax return?
By when does the tax return have to be submitted?
Application assessment: by when can the tax return be submitted?
Tip 1: Use the home office flat rate
Tip 2: set off the study
Tip 3: Drop off work equipment
Tip 4: use the commuter flat rate
Tip 5: deduct actual travel costs
Tip 6: Don't cheat on distances
Tip 7: Don't cheat on working days
Tip 8: Drive your company car cheaper
Tip 9: Use a company bike tax-free
Tip 10: collect grants tax-free
Tip 11: collect meal allowances
Tip 12: Save grandma's travel expenses
Tip 13: bring home more child benefit
Tip 14: extend child benefit
Tip 15: Do not use the children's accounts
Tip 16: get back maintenance costs
Tip 17: Tax on short-time allowance
Tip 18: save when moving
Tip 19: Use the driver's flat rate
Tip 20: Save multiple times as a landlord
Tip 21: membership in the association
Tip 22: take advantage of tax exemptions
Tip 23: Let the state pay the craftsman
Tip 24: Higher net salary through tax exemptions
Tip 25: Change tax class combination
Tip 26: sell specialist books
Tip 27: push your limits
Tip 28: Make the most of flat-rate advertising costs
Tip 29: make donations
Tip 30: Get married before New Year's Eve
Tip 31: double deduct nursing home costs
Tip 32: Taxing Bitcoin & Co. cleverly
Tip 33: stick to the checklist

Mandatory assessment - who has to submit?

In addition to the self-employed, freelancers and tradespeople, many employees, married couples and pensioners are also "compulsorily invested". That means: You have to fill out the income tax return and submit it to the tax office by July 31st at the latest. For example, those who have booked wage replacement benefits, a pension of more than 1,500 euros or rental income in 2020 are compulsorily assessed. Part-time jobs, deviations from the tax class combination 4/4 for couples and tax exemptions on the income tax card also require submission. A list of all criteria is available from the income tax aid association.

Submission deadline July 31st - don't forget!

Until 2018, tax returns in the case of a compulsory assessment had to be with the tax office by May 31 of the next year - by December 31, if a tax advisor or income tax aid association helped. Since 2019, all taxpayers have two more months, i.e. either until July 31, 2021 (mandatory assessment) or until February 31, 2022 (application assessment). If you don't make the deadline, you applied for an extension of the deadline to the tax office earlier. But be careful: Due to the extended submission deadlines, this is now only granted in exceptional cases. If you miss the deadline, you must expect late payment surcharges of at least 25 euros for each month of delay commenced. These are no longer set by the clerk, but are automatically set by the financial management. So there is no point in hoping for a mild tax officer.

Application assessment: the voluntary submission

But why wait so long to submit it? Around eight million citizens even submit their tax returns without a compulsory assessment. The reason: 90 percent of all taxpayers receive money back from the state, for example due to the flat-rate advertising fee - an average of around 1,000 euros! In addition, there are various tax exemptions that automatically reduce the tax liability. COMPUTER BILD has summarized the most important changes in tax law 2020/2021 for you. Incidentally, "volunteers" do not bear any risk: If the tax software calculates an additional payment instead of a reimbursement, one simply waives the levy. And even if the tax office unexpectedly requests an additional payment, the voluntary assessment can still be revoked up to a month after receipt of the tax assessment.

Tip 1: Use the home office flat rate

The corona pandemic took millions of employees to the home office in 2020. Associated costs such as the proportionate energy consumption can be deducted from the tax as part of the so-called home office flat rate - initially limited to the tax years 2020 and 2021. The tax authorities deduct 5 euros per day from taxable income, but cap the flat rate 600 euros - so for 120 working days. The flat rate is in the Investments both Advertising expenses registered; good tax return programs do this automatically. Important: Unfortunately, the home office flat rate does not apply in addition to the previous advertising cost flat rate: If the total advertising costs are not more than 1,000 euros, the home office flat rate does not bring any benefit.

Tip 2: set off the study

Anyone who wants to deduct their office from tax must continue to meet strict requirements of the tax authorities. Only if the home office is the focus of professional or operational activity can up to 1,250 euros be deducted from tax as income-related expenses (employees, civil servants) or business expenses (self-employed) - and that per user. Typical examples are judges, teachers, freelancers and employees for whom the employer demonstrably does not provide a (permanent) job. Only if the home office is permanently ordered by the employer, the study can also be deducted for employees. You bear the costs in line 43 of Investments one or in the control software at the Advertising expenses under Workspace a. Good programs help to determine the running costs of the study proportionately from the building costs. Furnishings can be deducted indefinitely, see next tip.

Tip 3: Put down work equipment

Whether you use a locked office or work at home in a corner of the living room: Professionally used purchases such as a computer, desk, an ergonomic office chair, but also the Internet and telephone bills can be tax deductible. Up to a gross value of 952 euros they are immediately deductible as "low-value assets"; more expensive items are depreciated over their useful life. Good tax programs also assist with this.

Tip 4: use the commuter flat rate

For working days that were not spent in the home office, the "simple" way to work (outward) can still be tax deductible - at 30 cents per kilometer ("distance flat rate"). It doesn't matter whether you covered the distance by car, train or bike. So if you occasionally ride your bike to work, you are not only doing something for your health, but also for your wallet. Simply enter the one-way route (i.e. only the way there) and the number of working days on page two of the Investments a. In control programs you will find the corresponding input fields in the area Advertising expenses at way to work.

Tip 5: deduct actual travel costs

Since many commuters spent the year 2020 at least partially in the home office (see above), the usual tax refund will be significantly lower in many places this year. This is particularly annoying when tickets, such as monthly tickets for the train, continue to be paid for due to the sometimes unclear situation. Tip: In this case, deduct the actual travel costs. Every good tax program allows not only the calculation of the mileage allowance but also the input of these expenses and automatically selects the cheaper variant for the tax calculation. For this reason, you should also keep your ticket receipts or proof of payment.

Tip 6: Don't cheat on distances

Anyone who lives about 15 kilometers from the workplace and can schedule the possible 230 working days per year despite Corona will already achieve the so-called advertising fee of 1,000 euros, which every employee is automatically entitled to. From this amount, every euro spent professionally has a full effect on the reimbursement. Therefore, there is a great incentive to cheat on getting away from the job. But be careful: even tax officials know Google Maps and know how long your commute to work really is. In terms of advertising costs, only the simple and shortest route - or the most convenient route - is deductible. Tip: If you take a detour because it is cheaper (faster), you should occasionally refuel along the way. Then you have a route receipt in case the tax office comes up with queries.

Tip 7: Don't cheat on working days

Another obvious trick for exhausting the flat rate for distance travel is to exaggerate the number of working days. Therefore, the clerks quickly become suspicious if you enter too many working days in the distance flat rate. Since days of absence due to vacation and illness are to be deducted from the working days, the tax office accepts a maximum of 230 working days for a five-day week and a maximum of 280 working days for a six-day week. Good control programs offer an assistant who determines the number individually. Important: The so-called "first place of work" is considered the way to work. Other trips are business trips and as such must be billed separately. Advantage: When traveling on business, unlike on the way to work, the entire route, i.e. the way there and back, can be covered.

Tip 8: Drive your company car cheaper

Anyone who drives a company car has to pay tax on the "monetary benefit" resulting from private use - this includes the way to work. Company car drivers have the choice between the rather annoying logbook procedure and the so-called "1 percent rule". A flat rate of 1 percent of the gross vehicle list price is taxed per month - that can be cheaper. If you want to reduce the company car tax, you can switch to a new electric or hybrid vehicle. Because then the 1 percent rule only applies to half the gross list price or half the rental or leasing costs - so you only pay half! You don't have to do anything to do this: the employer automatically takes the benefits into account in the payroll. The subsidy initially only applied to vehicles purchased by 2021, but was extended to 2030 under the Annual Tax Act 2019.

Tip 9: Use a company bike tax-free

A company bike is even cheaper because it has been completely tax-free and social security-free since 2019 and initially until 2021. This also applies to an eBike if the motor can reach a maximum of 25 kilometers per hour. The improved 1 percent rule from the previous tip then applies to faster electric bikes. It is also important for the company bike: It must be left to the employee in addition to their regular income. In the case of a salary conversion, the tax exemption does not apply.

Tip 10: collect grants tax-free

Does your employer pay subsidies for buses and trains or even provide a job ticket? Up to now, such services were considered a pecuniary benefit and were fully taxable. They have been tax-free since 2019, provided they are paid in addition to regular income. This even applies if you also use your ticket privately. If you already receive travel allowances, you don't have to do anything - your net income increases automatically. If you still drive to work in your own car, this is a good opportunity to switch to public transport.

Tip 11: collect meal allowances

All employees are entitled to flat-rate benefits on business trips. In the 2020 assessment period, these rose by 2 euros to 14 euros for the day of arrival and departure or at least eight-hour business trips without overnight stays and 28 euros for every day the employee was not at home. You are on page 2 of the Investments as Advertising expenses to be entered. If the employer has already reimbursed the costs in full or in part, they cannot of course be deducted again. Anyone who has tax software can enter such reimbursements - for example free meals for training courses - and have them automatically deducted from the flat rate. The corresponding input mask can be found in the Advertising expenses either at way to work and External activity or under Traveling expenses.

Tip 12: Save grandma's travel expenses

The corona-related closure of schools and day-care centers has posed major problems, especially for working parents. In many places relatives stepped in to ensure childcare. What many do not know: Even if, for example, the grandmother looks after her grandchildren free of charge, her travel expenses can be deducted from tax. To do this, you have to reimburse these expenses "as is customary" - by bank transfer. The tax office does not accept cash payments. Basically, childcare costs - usually expenses for daycare or a childminder - are tax-deductible up to 4,000 euros per child and up to the age of 14. They make appropriate expenses in the plant child apply on page 3. In a control software, you can find the recording under children and Childcare costs. By the way: There are also important tax information for senior citizens. You can find this in the tax guide for pensioners.

Tip 13: bring home more child benefit

In addition to child benefit, the state has been promoting the construction or purchase of residential property since 2018 with what is known as "Baukindergeld". The offer is valid up to a household income of 90,000 euros for one child - for each additional child in the household, the income can be 15,000 euros higher. If this is the case, the state will add 12,000 euros in child benefit for each child under the age of 18 - spread over ten annual installments. The construction child benefit is applied for in the grant portal of the Kreditanstalt für Wiederaufbau (KfW).

Tip 14: extend child benefit

Child benefit is actually only paid until the end of the first vocational training. If a child is studying, the bachelor's degree was the end of it. The Federal Fiscal Court overturned this regulation at the end of 2015: If the higher master's degree is required for the desired profession, the grant must also be paid when continuing the studies. If it does not take place, parents can lodge an objection with the relevant family benefits office. The website Familienkasse-info.de shows, among other things, which cash register is responsible for your location. Child benefit is paid at most up to the age of 25 - for older children who have no income, however, parents can deduct all payments as extraordinary burdens - see tip 16. By the way: students should also make a tax return. The tax advisor for students explains why this is so.

Tip 15: Do not use the children's accounts

Even when the interest rate is low, the following applies: if you transfer the money you have saved so hard to your children's account, you may save on capital gains tax, as children have their own savings allowances. But be careful: if you get the money back later, you have automatically evaded taxes and in the worst case you will face the family court. Because from a legal point of view, the money in the child's account belongs to the offspring. So that suspicious tax officials do not assign the interest income of the children to the parents anyway, corresponding transfers should be declared as gifts. This also applies to transferred share portfolios, for which the flat rate tax would otherwise be due.

Tip 16: get back maintenance costs

Divorced? If you pay maintenance to your ex-partner, these expenses can be tax-deductible up to a maximum of 13,805 euros per year as special expenses on page 2 of the cover sheet. The catch: Since the ex has to pay tax on your payments in this case, you need the consent (Appendix U present at the tax office) or would have to compensate for the corresponding disadvantage. Tip: If that doesn't pay off or leads to legal disputes, claim up to 9,408 euros as an extraordinary burden, depending on the income of the ex-partner in the 2020 tax year - and save yourself the trouble. You carry your expenses on page 1 of the Plant maintenance a. Search in control programs for Exceptional costs or General expenses, then Support for those in need or Maintenance to needy people.

Tip 17: Tax on short-time allowance

More than 10 million Germans received short-time work benefits in the wake of the corona crisis. Although this is in principle tax-free - including any additional services provided by the employer - it increases the tax rate for the remaining taxable income ("progression proviso"). Employees who were on short-time work in 2020 should therefore prepare for a possible tax back payment with reserves. The ostrich principle does not help in this case: As with other wage replacement benefits, the receipt of short-time work benefits automatically entails a compulsory assessment (see above). Employees concerned must therefore submit their tax return for 2020 by July 31, 2021, even if they have never submitted a tax return before.After all: some manufacturers offer their software free of charge in this hardship, for example the tax savings declaration of the academic working group.

Tip 18: save when moving

If the move is professional, the state pays heavily. This applies, for example, if the employer moves or the change of residence shortens the easy way to work by at least half an hour. The amount of the lump sum depends on when the move took place: If it took place before March 1, 2020, you can write a flat rate of 811 euros for single people, 1,622 euros for married or single parents and 357 euros for children and others in the 2020 tax return Depose relatives. Since March 1, 2020, the flat rates have been 820, 1,639 and 361 euros. Instead of the flat rates, you can also use the actual moving costs in Investments, Record lines 45-48 as income-related expenses. And: If the prerequisites for a job-related move are missing, forwarding invoices, for example, can still be used as a household-related service in the Mantle bow Submit from line 69. A move for health reasons, on the other hand, is considered an extraordinary burden and is Mantle bow entered from line 61.

Tip 19: Use the driver's flat rate

Truck drivers benefit for the first time with their next tax return from the flat-rate driver's allowance introduced on January 1, 2020. Anyone who has been on the move for a long time and therefore had to spend the night in the truck's sleeping cabin can deduct a flat rate of 8 euros per working day from the tax. This means that, for example, costs for showers, toilets and coffee in the rest stop can finally be claimed even if there are no receipts.

Tip 20: Save multiple times as a landlord

Thanks to the sustained low interest rates, savers like to invest in "concrete gold". Mortgage loans are cheaper than ever and are even tax-deductible: If you rent a financed apartment, you can deduct the debt interest on page 2 of "Annex V" in line 36. If you use tax software, record the interest under, depending on the provider Income: interest, pensions, rental or property at the rented property. The input field Debt interest can be found under Determination of income and then at Advertising expenses. By the way: Anyone building a rental apartment has been able to make higher depreciations since 2019 and thus deduct building costs more quickly. If these are not more than 3,000 euros per square meter, a total of 28 percent of the expenditure can be written off in the first four months. This applies to building applications from September 1, 2018.

Tip 21: membership in the association

Sometimes there are also deteriorations in tax law: For example, membership fees for sports and cultural associations are no longer tax-deductible since January 1, 2020, because according to the legislature they are mainly used for recreational activities. This also applies if the respective association is non-profit. Membership fees paid in 2020 are therefore no longer deductible in the 2021 tax return. Anyone who has so far refrained from leaving the club for tax reasons could save money with it. Donations to non-profit organizations, however, can still be deducted.

Tip 22: take advantage of tax exemptions

All taxpayers benefit from tax exemptions that reduce the tax burden. Tax refund programs, tax apps and online services automatically take these into account when calculating the tax burden. The most important is the basic tax allowance, which in the 2020 tax year was 9,408 euros for singles or 18,816 euros for married couples and registered civil partnerships. Maintenance payments, for example for children who are studying, can be credited to the same amount, see tip 16. In addition, the child allowance increased to a total of 7,812 euros per child in the 2020 tax year.

Tip 23: Let the state pay the craftsman

Invoices for work around the house can be entered on page 3 of the cover sheet to reduce tax, either under Craftsman bills or as Household services. This includes, for example, the chimney sweep including the fireplace show. You enter these expenses in the control program under General costs and Craftsman services. In addition to cleaning staff and nursing staff, they can also include Help and services in the household even the garden maintenance, the piano tuner, the pet care or the winter clearance service on public sidewalks - as before minus any material costs.

Tip 24: Higher net salary through tax exemptions

Anyone who regularly claims income-related expenses, special expenses or extraordinary burdens in their tax return can apply to the tax office for appropriate allowances. These are entered in the ELStAM electronic income tax card and sent to the employer. Advantage: Due to the tax exemptions, your taxable income decreases and you automatically receive a higher net salary - a kind of early tax refund, so to speak. The most popular allowances relate to the commuter allowance as well as maintenance payments and childcare costs. The tax exemptions for the current year can be applied for by November 31, 2020 - the form is available in your tax office or in the form management system (FMS) of the federal tax administration. Exemptions apply from the following month for a maximum of two years and must then be re-applied for.

Tip 25: Change tax class combination

Married couples with a single earner or a salary difference from 60 to 40 usually benefit from a change to tax brackets 3 and 5. If the low-wage earner moves to the higher taxed class 5 and the higher-income earner to the cheaper class 3, the bottom line is often a benefit of several Thousands of euros a year. That can be calculated exactly with the net wage calculator from COMPUTER BILD. You will receive an application to change the tax classes in your tax office or in the form management system (FMS) of the federal tax administration. Important: Up until now, it was only possible to change the tax class once a year. Since January 1, 2021, you can switch several times a year. This can pay off in the event of sudden shifts in income, for example through unemployment or parental allowance. Don't worry: the choice of tax bracket only affects the net salary. With the tax return, the taxes are calculated regardless of the tax class. Anyone who has "gambled away" with the tax bracket will then receive a corresponding reimbursement.

Tip 26: sell specialist books

Employees put at the Advertising expenses under Specialist literature magazines and books on request if they have purchased them exclusively for work. You dive into the Investments on page 2. Warning: crime fiction and romance novels, but also general daily newspapers or magazines, are not specialist literature! This is also known to tax officials who check this information particularly critically and, if necessary, find out the true content using the ISBN number on the receipt.

Tip 27: push your limits

The tax office only recognizes private health costs such as prescription fees as extraordinary expenses if they exceed a reasonable burden. For example, a family of four with a total income of 40,000 euros would have to come to over 1,200 euros. Since this sum can hardly be reached with receipts from the pharmacy, many taxpayers prefer to forego it right away. A mistake - because even with varifocals, a cure or an additional payment for dentures, the load limit is quickly exceeded. And then every 5 euro prescription payment, no matter how small, would be worth cash. So try to pool healthcare costs to cross the line within a year. By the way: With a customer card from your pharmacy, you will receive an annual invoice that is suitable for the tax office and save yourself the trouble of collecting receipts.

Tip 28: Make the most of flat-rate advertising costs

The same applies to the advertising expenses. These expenses for the job are only worthwhile if they total more than 1,000 euros. The tax authorities deduct this amount from each employee's taxable income anyway (flat-rate advertising fee). If you are still planning acquisitions for 2021, these should crack the 1,000 euro mark with the other advertising costs. If it is not enough, it would be better to postpone the expenses to 2022 with additional costs. In this way, you use the lump sum twice: In 2021 you will collect the lump sum in spite of lower expenses and deduct the actual costs in 2022.

Tip 29: make donations

Anyone who donates something to a non-profit organization receives a lot of money back from the tax office. For example, if the donor is a single person who is subject to church tax and has an annual income of EUR 50,000, a EUR 500 donation will be reimbursed EUR 229. Donations can be entered on page 2 of the cover sheet, in control programs under Special editions or General expenses. By the way: You do not need an official donation receipt up to an amount of 200 euros - a bank statement is sufficient.

Tip 30: Get married before New Year's Eve

Anyone planning a wedding should go to the registry office before New Year's Eve. In this case, the advantageous spouse splitting applies retrospectively for the whole year. If only one partner has earned, he also uses the other's basic allowance for himself - a tax advantage of almost 10,000 euros! To enter the spouse with a tax program, choose under Personal Information or Personal data as "marital status" married.

Tip 31: double deduct nursing home costs

If parents or grandparents are in the nursing home because they can be proven to be in need of care, the costs are usually high. They can be deducted from the tax on page 3 of the cover sheet. In the tax program, you enter care home costs under Exceptional costs or General expenses. If the caregiver in the dormitory has a closed household with kitchen, bathroom, living and sleeping area, you can also provide the care and maintenance services that arise Household services or Help and services in the household from. You can also find this on page 3 of the jacket sheet in the control software under Other costs or General expenses.

Tip 32: Taxing Bitcoin & Co. cleverly

Anyone who invests in crypto currencies such as Bitcoin or Ether actually has to pay tax on profits. You can save a lot of money with these tricks:

  • Exemption limit: According to Section 23 of the Income Tax Act, crypto profits are considered "private sales transactions". Anyone who earns less than 600 euros in profit per year therefore does not have to pay tax or add it to capital income such as interest or stock gains. If you move around this limit at the end of the year, it may make sense to postpone planned sales.
  • Speculative profits: If there was more than a year between buying and selling, larger crypto-money profits are also tax-free. Here, too, waiting can be worthwhile.
  • Fifo method: If several transactions are running at the same time, the "Fifo" rule (first in, first out) applies, as is the case with stock transactions: The oldest purchase is always sold. Crypto speculators should therefore document their activities in order to be prepared for any inquiries from the tax office.
  • Losses: Crypto profits are not subject to withholding tax like stocks, but are taxed at the personal tax rate like foreign currency transactions. Nevertheless, they can also be offset against losses in Bitcoin & Co. To do this, you also record the negative transactions in private sales, for example under "Other assets".