Hello together,

as promised, my contribution. Thank you very much for your suggestions. From this I have tried to tinker a bit. The idea with the societies I can represent in another contribution gladly times.

Unfortunately, the year is now almost over and there are not many possibilities how to reduce the tax burden shortly before the end of the year. So first of all a more general part (must teach my learning content properly):

First of all: taxes are a necessary evil of our society. They make the state what it is and it supports us where it can (education, roads, etc.). That taxes are also wasted is not up for debate. We all know that, even if the Black Book is not a good indication of it, since it is put out by a lobbying association, with the goal of "abolishing taxes and free-living capitalism". So please don't debate under this post.

What are advertising expenses?

Income-related expenses are all expenses incurred to acquire, maintain or secure income.

If we understand this as a principle, we all know unfortunately what does not belong to income-related expenses. Namely everything that is fun (private lifestyle). Unfortunately, the concept of income-related expenses is blessed with a fluid transition to the private lifestyle. Here there are then borderline cases, which are then only derived from case law (more on this later).

Thus, everything can actually be income-related expenses if it is used to generate income and there is no private use. (exceptions reserved)

So why can't we use the income-related expenses for our beloved capital income?

Quite simply because we have a preferential tax rate for capital income. If we were now still allowed to deduct the income-related expenses, we would certainly all just become day traders 😉. As an alternative, the saver's allowance can be deducted. This is also not exceeded by the majority of tax obligations and is just increased from 2023 to 1,000 EUR.

What can we do now - shortly before the end of the year - to reduce our tax burden? (descending in simplicity for users)

Buy computer/tablet/laptop

Christmas is coming, most of us have to give something as a gift. So why not gift a PC/laptop and associated peripherals. Currently, these can be fully depreciated immediately in the year of purchase regardless of your amount (usually spread over 3 years for purchase prices over 800 EUR). At the same time, in the absence of professional proof, a minimum usage of 50% is to be assumed. It is important to note that we need an invoice and this relief on depreciation is only valid for 2022.

Donations

Christmas is a time for giving, not receiving. So what better way to support an association/organization than by donating money or goods. What is the right way to donate? The easiest way would be a bank transfer. Here you need for the donation proof nothing except your transfer. Only from 250 EUR you need a donation receipt of the respective organization. But this is not mandatory for all donations, because for certain mass donations you don't need to provide a receipt for less than 1.000 EUR (e.g. certain Ukraine donations or last year it was the Ahrtal). For donations in kind you always need a donation receipt, which makes them unattractive in many cases.

Small donations like in the bell bag in the church or on the street for WWF are also deductible without problems and without proof, you only have to indicate to whom the donation went and when (and of course how much). However, these are cash donations. These are not objectionable under 100 EUR (in most federal states).

What happens tax-wise with the donations? You can deduct the full donation directly from your income. So an income tax saving in the amount of your tax rate (up to 45%). Here is also a model how you can create your personal tax rate, I can also write something if there is interest.

Donations to political organizations are not so favored. However, in addition to donations, membership fees for political parties or independent voter associations can be deducted. However, here only a maximum of 1,680 per person per year and 50% of it as donations are deducted (For this direct credit on the income tax). The exceeding amount (>1,680 EUR per person) can be deducted again as special expenses. Tax savings therefore only up to 45% or 50% as a donation.

Voluntarily pay into the pension insurance

Doesn't sound so cool at first, but expenses for the basic pension (statutory/pension scheme/Rürup) can be deducted up to 24,100 EUR. In addition, you would get more pension points this year than next year with an additional payment into the pension insurance.

Marry

Getting married has a certain tax advantage that you should not neglect. Marriage has a tax advantage in Germany. However, actually only the old role model. Marriage is favorable for those where one person earns a lot and the other earns little or nothing. The reason for this is the splitting tariff for the joint assessment of spouses. Simplified you can imagine it like this:

The income of the spouses together (100) is divided by 2 (so 50) and this tax amount (let's say 20) is simply multiplied by 2 (so 20x2=40). This tax is more favorable if one person earns almost nothing and the other earns quite a lot, because if one spouse earns 100 and the other 0, the basic rate would be applied in a normal single assessment. This is due to the increasing tax rate higher than if you are assessed together.

Important Notice: Getting married this year to be assessed together is one way to perhaps save on taxes, but you should always factor in divorce costs when doing something like this. Marriage is a covenant of lovers and should not be done for tax reasons alone. Divorce can ruin you financially or set you back.

Savings allowance

Use the saver's lump sum to realize profits tax-free. You should not neglect the effect that this has every year. In the current time it is more difficult with the profits, but there are always old profits. Because if you later times rearrange in your portfolio, you realize due to the first in first out principle the highest profits first. If, however, you have skimmed these off at the end of each year through the saver's lump sum and simply reinvest them, you will not have any new high profits later on.

Extraordinary burden

If you did not have high medical expenses or other high costs this year, which were imposed only on you as an individual and not on the majority of taxpayers (victim of a catastrophe or you paid for your uncle's funeral even though you did not inherit anything), postpone costs such as new glasses, surgery or a doctor-prescribed cure to the next year, so that you might come above your reasonable burden because of the accumulation. Because only if you had more costs than is reasonable according to your marital status and income, you can deduct these costs, as far as the reasonable burden is exceeded.

Note: Normal people can neglect medical expenses and generally extraordinary burdens, because the reasonable burden is too high in 99% of the cases.

File a tax return

The advertising rates for the apps are mostly that - advertising. The majority of natural taxpayers (i.e. real people) do not need to file a tax return. These usually do not have high advertising costs, as they live within 15 km of your work or simply have not produced any costs that can somehow be associated with work. However, there are people where it is always worthwhile. Say, if you had higher income expenses or if your marginal tax rate is below 25% for your capital gains. Also, families with children should always submit a tax return, because from a median salary the child allowance is more favorable than the child benefit and thus always comes out a refund for it.

What are the general examples of income-related expenses?

Basically everything for which you can explain to the tax office, I need this for work and I use this only or mainly (90%) for the job. It depends very much on the private circumstances, which is why I despise checklists, especially from APP providers. Anything can be a business expense if you can explain it to a tax official and it seems logical.

But basic examples can be:

• Expenses for work equipment (e.g. computers, pens, paper, etc.)
• Expenses for a home office
• Contributions to professional associations/trade unions
• Further training costs (a distinction must be made here between initial and secondary training)
• Travel expenses/out-of-town activities that are not reimbursed by the employer
• Application costs (flat rate of 8.50 EUR for application folders and 2.50 EUR for online applications or actual costs and, of course, also travel expenses or advertisements that you have paid yourself)
• Professional clothing (here counts purchase and cleaning (see picture))
• Occupational diseases (your occupation has a typical occupational disease, then the restoration of health can be income-related expenses)
• Missing money (if you have caused missing money at the cash desk (proof of repayment), these are income-related expenses)
• Professional liability /BU
• Interest from a loan granted by the employer, if it is related to the generation of income (e.g. loan for further education)
• Expenses for cell phone, but not more than 20% of the invoice amount and not more than 20 EUR per month. Here, however, it must also be understandable that you "use your connection also professionally". E.g. as a car mechanic it is just unusual.
• Moving costs, if you move closer to work, can be income-related expenses.

Which income-related expenses are red rags?

There are many income-related expenses that simply won't go. The best example is always the suit. There is already countless case law on this. So if there is no big logo for the company on your suit (or other everyday clothing), you can forget about it right away.

Example 2 would probably be something like your private vacation or your house. These are things you often hear/read about providers promising to reduce your tax burden to 0%. This will only be possible in very specific cases and most of the time you don't want to have your private property taxed at all.

The last example I can think of is newspapers. These are also only in very special cases Werbungskosten or operating expenses. Even if you are a manager and subscribe to Managermagazin, this will not be an income-related expense, since it has been established by court rulings that literature only means high-quality specialist literature.

Actually everything can become problematic, which one uses also effectively privately. Be honest and ask yourself, if your neighbor told you that he only uses it professionally, would you believe it? Of course not. The dose makes the poison. That is why the profession of a tax consultant is so strenuous and difficult. Even in the future, this profession will not be replaceable by AI or mechanization. In the end, 2 people have to get along and say it all makes sense. (If you are interested, I would be happy to describe why I see it that way in a separate article and give a little insight into my current work).

I hope the article has been interesting and could create a small overview. I will be happy to answer any questions that arise from this.

Of course, this does not represent tax advice. Tax advice must be considered as a case-by-case basis for each individual. It is therefore only a debate contribution. Tax evasion is a criminal offense and not a trivial offense.