The German tax system is quite complicated in itself. Then, when you’re trying to save taxes as an employee, things quickly get even more difficult. Fortunately, however, there are some tax tips that can help you reduce your personal tax burden. In this article, we’ll give you 10 valuable tips for doing just that.
Please note that these tips are general in nature and may vary in effectiveness depending on your individual situation. If you are unsure if and how to apply it, you should consult a tax advisor.
So, what are the tax tips for employees? Here are some examples:
1. Take advantage of employee lump sum
The employee deduction is currently 1.000 euros per year. If you cannot prove higher professional expenses, you can simply deduct this amount from your taxable income.
2. Deduct travel expenses
If you have to commute to work, you can claim the expenses you incur for it as a business expense. Either a flat rate of 30 cents per mile or actual expenses incurred. Note, however, that the daily commute is not considered a business trip and is therefore not tax deductible.
Read on to learn more useful tax tips for employees.
Tips for filing your tax return early
Filing your tax return can often be stressful, especially if you have to file at the last minute. However, filing early can help save your nerves and possibly even save on taxes. Here are 10 tips for workers to pay less tax and file your return early:
- Try to start preparing as soon as possible. The earlier you start, the more time you have to go through the process and potentially identify tax benefits.
- Organize your documents. Keep your tax documents and receipts in one place so you can access them quickly and find the information you need.
- Use online tools and apps to simplify the process. There are many online tools and apps that can help you do your taxes more efficiently. Find the right fit for you and your situation.
- Find out about tax benefits and deductions. As an employee, you may be entitled to various tax benefits and deductions. Educate yourself on how to get the most out of your tax return.
- Make sure you have submitted all the required forms. Carefully check that you have completed and submitted all necessary forms. If you forget something, you may have to resubmit your statement, which takes time and effort.
- Use the services of a tax advisor. If you’re unsure of the best way to handle your tax return, consider consulting a tax advisor. They can help you simplify the process and possibly find more tax benefits than you could on your own.
- Stay up to date on current tax changes. Tax laws and regulations change frequently. Make sure you are up to date on any relevant changes so you don’t miss out on potential tax benefits.
- Avoid mistakes and irregularities. Familiarize yourself with the most common mistakes and irregularities in tax returns to avoid them and avoid possible setbacks.
- Apply for an extension, if necessary. If you can’t meet the filing deadline, request an extension to take time to carefully work through your tax return.
- Make sure your declaration is complete and truthful. Ultimately, it is important that your tax return is complete and truthful. Review it carefully before you submit it to avoid any potential problems.
Separate personal and professional expenses
To pay less taxes, it is important to clearly separate personal and professional expenses. This can be done by creating separate accounts or using separate credit cards. For example, if you have a business meal, you should separate that from your personal meal and record that in a business account.
Another way to separate personal and professional expenses is to set a clear dividing line between your office and your home. If you work from home, try to use a separate room as your office and leave everything related to your work in that room only. This gives you a clear point of separation between work and leisure time.
Separating personal and professional expenses not only helps lower your tax bill, but also makes your records and bookkeeping much simpler. Clear segregation gives you the ability to quickly and easily categorize your expenses and determine your tax bracket in a simple and understandable way.
Structure your expenses
It is important to structure your spending to minimize tax payments. One way to do this is to note all expenses related to your work and list them separately. For example, if you have travel expenses for work, you should keep a list of all expenses and make sure they are properly recorded and documented.
You can also write off expenses related to your work, such as work clothes, computers or office supplies. Make sure you keep all the necessary documents and can produce them when needed.
By structuring and documenting your expenses, you’ll have a clear view of your finances. Also, it is easier to check where you can reduce expenses and thus optimize your income and tax payments.
How to claim travel expenses
One of the ways employees can pay less in taxes is by claiming travel expenses. Travel expenses can be a significant burden, especially if you have to travel a long distance or make regular business trips.
In order to claim travel expenses, you must be able to prove that these expenses are work-related. To do this, keep detailed records of the miles driven and the amount of the corresponding costs. This can be done either by handwriting or by using apps or tools.
- The two most common ways to calculate driving costs are:
- Mileage allowance
- Actual costs
It’s important to note that you can’t claim both mileage allowance and actual expenses. You should therefore consider in advance which method is the more favorable one.
Ultimately, claiming travel expenses on your tax return can help you save on taxes and increase your net income for the year. However, it’s important to keep the proper supporting documents and be able to produce them upon request.
Deduct employment expenses
As an employee, you may feel that you have to pay more taxes every year. Fortunately, however, there are some steps you can take to reduce your tax burden. One of these options is to deduct certain employment expenses from your taxes.
Acquisition expenses refer to expenses you incur in the course of your work. This can include things like travel expenses, work clothes and continuing education courses. If you can prove these expenses, you can deduct them from your taxable income, which will result in you paying less tax.
To successfully deduct business expenses, you need to keep careful records. Keep receipts and vouchers and make a detailed list of all your expenses related to your work. A good way to do this is to use spreadsheets or worksheets.
- Tax tip: Be careful and follow the rules for earned expenses to avoid potential penalties.
- Tax tip: Keep your receipts and vouchers to make sure you have accurate records for your tax return.
Deducting employment expenses can be difficult, so it’s a good idea to seek professional advice from a tax expert who can help you take advantage of the various options available to you. With the right steps, you can significantly reduce your tax burden and keep more of your hard-earned money.
Tax tips for employees: how to deduct charitable contributions for tax purposes
Donations can not only do good, but also be tax deductible. Employees can reduce their tax burden by donating to charitable organizations.
An important point to remember is that the donation must go to a tax-deductible organization that is recognized as a non-profit under German tax law. A list of recognized organizations can be viewed at the IRS or accessed online.
When receiving a donation receipt, it is important to include the name and address of the person making the donation, as well as the name and address of the organization. Also, be sure to include the amount of the donation. Without a proper donation receipt, the donation is not tax deductible.
To maximize tax savings, it is advisable to spread larger amounts among several organizations and make regular donations. However, employees should make sure that they do not donate more than 20% of their total income in total, as above a certain amount donations are no longer fully deductible.
With these tax tips, every employee can make tax-deductible donations and do good at the same time. So it pays to explore your options and find out about the various nonprofit organizations in your area.