Gasoline costs, expenses for public transportation or for work equipment are among the usual items that taxpayers declare in their annual tax return. If the tax office accepts these expenses, significant tax reductions can be obtained. As an employee and also as a self-employed person, you will then receive an attractive tax refund depending on your tax rate and the tax paid. However, many taxpayers forget to include the bank products in their annual return and thus forego the refund of further overpaid taxes. Among the most important items are the expenses for your current account, for your credit card and for loans.
Current account and credit card are the classics
Account management and credit card fees are among the most common costs that you as a bank customer have to pay for using services. Only a few banks still offer a checking account or credit card with no fees at all. In view of the low interest rates on the capital markets, many banks are moving to offer these services only for a fee or to significantly increase small out-of-pocket expenses already charged. As a bank customer, you can recoup some of the costs paid by claiming them on your tax return to reduce taxes.
The costs for your current account count as income-related expenses. The tax office recognizes these fees because as an employee and also as a self-employed person you need an account for the transfer of your salary or income. Even if you have a free checking account, you can usually deduct 16 euros in fees per year from your taxes. The tax authorities do not usually require separate proof of ownership. If you use a credit card for business reasons, you may deduct the full amount of the charges for it, provided you use the card exclusively for business trips or other business occasions. Provided you use your card both professionally and privately, you are allowed to declare the fee proportionally in your tax return. You can determine the correct amount by calculating the share of professional expenses in total sales in the previous year. If you travel frequently for business reasons, it may even be a good idea to use a premium credit card for that purpose and claim the expenses in full for tax purposes. For private expenses, on the other hand, a free credit card may be more appropriate.
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How to include credit costs in your tax return
If you take out a loan for professional reasons, the interest and all other loan costs are also tax-reducing. Especially in the case of self-employed persons, the tax office accepts the recognition of expenses if, for example, office equipment was purchased from it. The interest on a car loan should also be declared for tax purposes if the vehicle is used exclusively for your business activities. If you take out your loan solely for personal reasons, the IRS has higher deductibility requirements. For example, if financing is needed to pay for medical or funeral expenses, alimony, long-term care, or institutional care for parents, the loan costs must be reported on your tax return. The tax authorities accept these extraordinary burdens if they exceed the reasonable burden limit per year.
Interest on construction loans may also have a tax-reducing effect. To do this, you must use the property for rent. The financing expenses are then considered as income-related expenses, they reduce the "income from renting and leasing". Interest for financing the purchase price and for renovations or modernizations must be indicated. If you use the property exclusively privately, the tax authorities usually do not recognize these costs. Provided a property is rented on a pro rata basis, you may also be allowed to partially deduct the loan costs from your taxes.
Cost of banking products lowers tax burden
As a bank customer, it's important for you to know what expenses for your bank's services can be included on your tax return. Check what expenses your provider charges and declare these expenses to the tax office. Here's how to take advantage of tax breaks and recoup some of your out-of-pocket expenses.