Strategies to Reduce Your Income Tax Return this Year

Preparing for your Income Tax Return can be a challenge, but with the right strategies, you can minimize the amount you owe to the tax authorities. Here are ten tax tips that can help you reduce your tax bill:

Make contributions to pension plans:

Making contributions to pension plans can provide significant tax benefits, allowing you to deduct a percentage of the total amount contributed.

Take advantage of real estate capital gains and capital gains:

Real estate capital gains and capital gains are subject to certain limits for withholding or advance payments. In the case of real estate capital gains and capital gains, the combined limit is €1,600 per year.

Additionally, imputed real estate income, treasury bond yields, subsidies for the acquisition of official protection housing or priced housing, along with other capital gains derived from public assistance, have a combined limit of €1,000 per year. It is important to note that the young rental bonus, although an aid, constitutes a capital gain and must be declared in the income tax return for the amounts obtained during 2023.

Invest in newly created companies:

If you invest in startups or recent companies, you can deduct up to 30% of the amounts invested in your income tax return.

Offset gains with capital losses:

If you have incurred capital losses, you can offset them with capital gains in the following four years.

Avoid withdrawing from your pension plan:

If you are considering withdrawing money from your pension plan, make sure to do so in a year with low income to avoid jumping to a higher tax bracket.

Review regional deductions:

In addition to state deductions, each Autonomous Community offers its own deductions that can help you reduce your tax bill.

Make donations:

Donations to foundations and NGOs can be deducted from your income tax return, providing you with tax benefits.

Contribute to political parties:

Contributions to political parties can be deducted up to a maximum of €600 per year.

Take advantage of bonuses for people over 65 years old:

Individuals over 65 years old are exempt from tax on the capital gain obtained from the sale of assets if they reinvest the money in an annuity.

Deduct expenses for home renovations:

Improvement works in the energy efficiency of the home can provide deductions in the income tax return, as long as they meet certain requirements.

Points to consider

Failure to file the income tax return may have various consequences according to tax regulations. Offenses are divided into minor, serious, and very serious, with common offenses including avoiding tax payments, omitting tax revenues or not filing the return within the stipulated period.

Sanctions vary depending on the seriousness of the offense and may include fines ranging from €200 to 150% of the amount to be paid, in addition to surcharges for late payments ranging from 5% to 20% of the amount to be paid. It is crucial to comply with tax obligations to avoid penalties and regularize tax status.

Conclusions

With the strategies outlined above, you can optimize your tax situation and reduce the amount you owe in your Income Tax Return. If you have any questions, Entre Trámites can help you. They are specialists in the presentation of this and other procedures. You can choose the plan that best suits your needs between different options.