Tax Advisor Explains: How You Can Still Save on Taxes This Fall and Winter

The last days of summer are numbered, and fall and winter are on their way. With the cold season upon us, the end of the year is not far off. Before the 2021 tax year ends, you, as a taxpayer, should take advantage of the fourth quarter to save on taxes. The final stretch of the tax year is always a good time to take a look at potential tax savings. To help you achieve the best possible savings this year, we’ve put together some tips for you to use this fall and winter.

A Look Back at the 2021 Tax Year

Every taxpayer knows that the tax authorities rarely go out of their way to help reduce your tax burden. You shouldn’t expect the IRS to provide tips on how to save on taxes. It’s always up to you to include all relevant information in your tax return and thereby reduce your tax liability. You should therefore use the colder months to take a look back at the 2021 tax year. As a general rule, all tax-relevant income and expenses should be examined closely. You should essentially ask yourself: What income did I have, and what expenses can I report in my tax return? For taxpayers who are well-versed in tax matters, this is usually possible without major issues. Everyone else can seek the help of an experienced tax advisor. German tax law contains many opaque regulations that the “average” taxpayer can easily overlook. This leads to errors and often to missed tax savings. Therefore, take advantage of the fall and winter to speak with a tax advisor and clarify all questions for the year 2021. In the following paragraphs, however, we would like to take a look at how you can actively save on taxes during the fall and winter.

Has the reasonable personal contribution been exceeded?

You may have heard of extraordinary expenses before. The term “extraordinary expenses” covers various types of expenses that are tax-deductible. As the name suggests, these are “extraordinary” expenses. Extraordinary expenses include, for example, medical costs, spa treatment costs, and nursing care costs. In the fall and winter, you should take a close look at whether you have had any extraordinary expenses so far or if any expenses are coming up. Why? The “problem” with extraordinary expenses is that there is a reasonable personal contribution threshold. This is an individual amount that depends on factors such as income. The reasonable out-of-pocket limit must be exceeded for the tax office to include the costs reported as extraordinary expenses as a tax deduction. If the threshold amount is not exceeded, the extraordinary expenses will not affect your tax burden.

Now, extraordinary expenses cannot be planned, which means that you often have no control over when and in what amount the costs arise. However, costs for a spa treatment or similar can, to some extent, be “planned” in a certain way. So, before the tax year ends, you should consider whether it’s worth accumulating certain expense categories this year or if they might be more tax-advantageous next year. In this context, the deductible must always be taken into account. If, for example, this amount has not yet been exceeded, it makes sense to incur further expenses this year, thereby enabling a tax deduction for the total costs.

In some cases, extraordinary expenses and the reasonable out-of-pocket expense can lead to confusion for taxpayers. Therefore, it is advisable to consult a tax advisor if you are not fully informed. This will help you avoid mistakes that could end up being costly.

What about income-related expenses?

Working taxpayers should also take a closer look at income-related expenses. It is only worth reporting these for tax purposes if the income-related expense allowance of 1,000 euros has been exceeded. First, take a look at what income-related expenses you’ve incurred this year. Do these expenses exceed the flat-rate amount? If you’ve already exceeded the income-related expense allowance or are just below it, there’s an opportunity to save on taxes. Similar to the previous paragraph, you should consider whether any costs are likely to arise in the near future that can still be claimed as tax-deductible expenses for this tax year. For example, do you still need a new work laptop for your home office? This is a good way to claim the costs as income-related expenses in this tax year. Of course, this only makes sense if the additional expenses will cause you to exceed the flat-rate limit.

If you’re still unsure which expenses you can claim as income-related expenses, a tax advisor can help. During a detailed consultation, the relevant costs can be identified. The potential savings for this year can also be thoroughly planned with an expert in this context.

Save on taxes with fall garden maintenance

As autumn arrives, we find ourselves spending more time indoors in warm spaces. The garden is used less and less. Nevertheless, the garden still needs to be maintained in the fall. If you, as a taxpayer, own a garden but do not wish to maintain it yourself, there is potential for tax savings in the fall. Fall garden maintenance performed by a service provider can be claimed as a deduction on your tax return. This rule applies throughout the year to services provided by a gardener. For taxpayers who don’t feel like maintaining their garden during the wet fall months, this offers a great opportunity to save on taxes in the fall. The only thing to keep in mind is that you must receive an invoice for the services and pay the costs via bank transfer. Cash payments are not tax-deductible.

Deducting Winter Snow Removal Services from Your Taxes

Although we’re seeing less and less snow in many regions of Germany, it can still happen every winter. Heavy snowfall also means you have to shovel snow. Taxpayers who don’t feel like doing this or don’t have the time can hire a winter service provider. The advantage: Snow removal counts as a household-related service and is therefore tax-deductible. With professional winter services, you not only gain convenience but also the potential for tax savings in the winter.

Tax consulting ensures tax savings

What is the biggest tax mistake you can make this fall/winter? Not hiring a qualified tax advisor. We see time and again that taxpayers believe filing a tax return isn’t worth the effort or that certain expenses aren’t deductible at all. If the tax return is filed on one’s own or not filed at all, significant savings opportunities are often lost. Many clients who come to us for the first time have missed out on significant savings in previous years and are surprised at how many tax-reducing items an expert can still include in their return. The greatest potential for savings often lies in hiring a qualified tax advisor.

With our offices in Düsseldorf and Oberhausen, we support our clients in all tax matters and are your first point of contact for any questions. Of course, we also handle your tax return. You can rely on the expertise and years of experience of our staff. Contact us to schedule an initial consultation. We look forward to meeting you.