How can I reduce my taxable income?

Resolved tax cases

Taxpayers who have not yet prepared their income tax return should know that there are a series of reductions that considerably reduce the income obtained.  In addition to deductions, exempt income or other considerations, the taxable base, that is to say, the income obtained by the person obliged to declare, can also be reduced.

These tax allies are: joint taxation, contributions to social welfare systems, contributions to persons with disabilities, to protected estates of persons with disabilities, compensatory pensions and contributions to mutual funds of professional sportsmen.

The reduction that comes from the above mentioned will be applied, in the first place, to the general taxable base, without being negative as a consequence of such reduction. The remainder, if any, will reduce the savings tax base, which may not be negative either.

Contributions and contributions to: pension plans, mutual benefit plans, insured pension plans, corporate social welfare plans and premiums paid to private insurance policies that exclusively cover the risk of severe or great dependency may reduce the general taxable base.

How can the income tax base be lowered?

Contributions and contributions to: pension plans, mutual benefit plans, insured pension plans, corporate social welfare plans and premiums paid to private insurance policies that exclusively cover the risk of severe dependency or major dependency may reduce the general taxable base….

What happens when the taxable income is negative?

BINs are the result of the accumulation of losses from previous years that can be offset in the following tax periods without time limit. Therefore, losses from previous years that have not yet been offset are known as negative taxable income.

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What is the personal income tax base?

In simple terms, the tax base of a tax is the money on which the tax is levied. … In the case of the Income Tax Return, the net taxable income is the result of subtracting from the taxable income the reductions and deductions to which the taxpayer is entitled.

Method of deduction to avoid double taxation

One of the main problems for companies is to reduce their corporate income tax. Is it possible to achieve this? Yes. It is possible, but it is necessary to know the deductions and tax benefits to which companies are entitled in 2021.

The Treasury calculates that this exemption reduction alone will affect 0.12% of the 1.5 million registered companies. These are the 1,739 largest firms in the country, which are expected to contribute an additional 1.52 billion.

The purpose of this reduction is that in the year in which profits are obtained, part of them will not be taxed, since it is expected that in the coming years negative tax bases will be obtained which will offset the current positive ones.

In addition, companies with less than 50 employees will be able to deduct from the gross tax liability 50% of the lesser of the following amounts, provided that they enter into an employment contract for an indefinite period of time to support entrepreneurs.

What is the net taxable income?

The taxable income is a tax concept resulting from applying a series of reductions to the taxable income, reductions established by the Law regulating each corresponding tax.

How to evade taxes before the SAT?

One option to avoid problems or tax discrepancies with the SAT is to use electronic transfers for credit card deposits, instead of using cash.

How to avoid paying taxes in Ecuador?

To prevent taxpayers from not paying their taxes, the IRS cross-checks information with other databases. For example, Leon talks about payments to employees who are not registered in the Ecuadorian Institute of Social Security (IESS). These databases can be national or international.

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Limitation of bins compensation

As we have commented, to calculate the IRPF taxable base it is necessary to know first the general taxable base and the savings taxable base in order to be able to add both amounts. Let us see how each of them is calculated:

Let us now take an example to illustrate the calculation of the IRPF taxable base: let us imagine that Miguel has a gross annual salary of 30,000 euros. In 2021, Miguel sells a house for 200,000 euros, when he had acquired it for 150,000 euros. He also sells some investment funds with which he has earned 5,000 euros.

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How many years do I have to offset tax loss carryforwards?

The Administration’s right to check or investigate tax losses pending offset will expire 10 years from the day following the end of the period established for filing the tax return or self-assessment corresponding to the tax period in which the tax loss carryforward occurred.

What are negative bases?

Tax loss carryforwards, as their name indicates, are negative results from previous years that the company is entitled to offset following certain guidelines for their application.

What happens if the corporate income tax is negative?

Payments on account are the advances of form 200 that are made 3 times a year when the result of a fiscal year is to be paid. If when subtracting these amounts a negative figure is obtained, we can ask for the refund, since this amount is not accumulated for another year. If we do not request it, we will lose it.

The company is entitled to a deduction for having made investments related to R&D of €1,200.

On the other hand, if the holder of the pension plan has a net income from work or economic activities of less than €8,000, the regulations allow the spouse to deduct the pension plan from his/her income. Let’s see it with an example. A housewife has no economic compensation for her work but she can make a pension plan. As this person has no real income, her spouse can be the one to deduct the contributions to this plan, with a maximum of 1.000€.

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When these cases occur and a special pension plan is contracted, the contribution limit increases from €8,000 to €24,250. In this case, family members of the disabled person up to the third degree of kinship can also make contributions to their relative’s plan and they can deduct them in the IRPF independently of the contributions made to their own plan and its limits.

To declare this situation, it is necessary to indicate it to the bank so that it identifies in the plan the holder and contributor of the same one. In addition, as several family members can make contributions, it is important to know that they can never be more than €10,000 per contributor and that together they do not exceed the limit of €24,250 in favor of the same person with a disability.