Maximize Your Savings: 25 Essential Tax-Saving Tips for Every Taxpayer

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Updated: September 14, 2023
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Maximize Your Savings: 25 Essential Tax-Saving Tips for Every Taxpayer


The following quote is attributed to the banker and founder of the Rothschild family, Meyer A. Rothschild (1744–1812): “Ignorance of the tax laws does not exempt you from paying taxes. But knowledge often. "


Looking at laws and implementing regulations could often help - if only they were written understandably!


The Academic Working Group has made it its task since the 1970s to translate tax gibberish into understandable language and specific tips. And with great success. You, too, can benefit from our knowledge! 


The following text shows × 5 tax-saving tips for employees, parents, landlords, part-time self-employed, and taxpayers. 


5 Tax-Saving Tips For Everyone


Household Help And Craftsman Services


Almost everyone at some point uses a company's services for work in the private household or even provides employed help - for example, for everyday housework, renovating the apartment, cleaning the yard, or looking after someone in need of care. 


Even if none of these aids is used, tenants or owners of an apartment pay ancillary costs or house money - including costs for household-related help, e.g., caretaker, stairwell cleaning, or winter service. 


Anyone living in a senior citizen's home also pays for household-related activities through remuneration. The expenses for household-related services can be deducted from the tax at a rate of 20% but a maximum of $4,000. 


It is what taxpayers do in the Annex household-related services (up to and including the tax return for 2020: in the cover sheet on page 3), the required information. These proofs are required:


  • An invoice in which the privileged labor, travel, and machine costs are shown separately from the non-privileged material

  • Proof that the payment has been made to an account of the recipient. It can be, for example, a transfer slip in connection with the associated account statement. A stamped transfer slip alone is not sufficient.




Donations and membership fees are tax-deductible if they

  • voluntarily and without consideration

  • for tax-privileged purposes

  • to tax-privileged organizations and

  • Be proven with a donation receipt.


Donations are only deductible to a limited extent as special expenses: the tax office takes into account up to 20% of the total income. 


Donation amounts that have not been considered can be carried forward to the next year and then deducted together with the donations from this year within the framework of the maximum amount (so-called donation lecture). 


In addition to the normal donation deduction, the following are preferred for tax purposes:


  • Donations to foundations and

  • Donations to political parties and electoral associations.


Medical Expenses


Medical expenses are deductible in full but only have an effect if they - together with other extraordinary burdens of a general nature - exceed the so-called reasonable burden.


Costs may be incurred for medical services, medication, hospital stays, aids, home accommodations, etc. Payments such as prescription fees and the "flat rate cost reduction" for civil servants, as well as travel costs and, if applicable, accommodation costs and additional meals, are also included.


In general, the following applies: The tax-privileged illness costs include expenses for measures which, according to the knowledge and experience of medicine and the principles of a conscientious doctor, serve to cure a certain illness or make an illness more bearable or alleviate its consequences.


Conversely, this means general health care or measures to increase well-being do not count towards the deductible costs of illness (wellness). It may well be a measure - for example, a message - that is medically necessary under certain circumstances, and the costs are therefore deductible. As a result, you need proof that the costs are medically necessary.


Therefore, you should always obtain the necessary evidence - before the measure. The requirements for the evidence are very different: Often, the prescription of the attending physician is sufficient. Sometimes, it has to be a medical certificate.




Contributions for the following insurance can be shown as special expenses:

  • Contributions to health, long-term care, accident, and liability insurance, to the statutory pension insurance, and the Federal Labor Office;

  • Contributions to the following insurance in the event of survival or death:


    • Risk insurance that only provides benefits in the event of death,

    • Pension insurance without lump-sum option,

    • Pension insurance with the right to choose from lump-sum against current contribution payments if the right to choose from lump-sum cannot be exercised within twelve years of the conclusion of the contract

    • Endowment insurance against regular contributions with a savings component if the contract has been concluded for at least twelve years.

  • Contributions to additional voluntary long-term care insurance.


The insurance premiums are not always fully deductible. The calculation of the deductible portion is complex: Depending on the type of pension expenses, different maximum amounts apply, and certain insurance contributions are only considered proportionally. 


There are also two different methods for calculating the deductible pension expenses. You should, therefore, always enter the total pension expenses in the field provided in the Pension. 


Expenses are annexed so that the highest deductible amount can be determined. The tax office then automatically uses the cheapest method.




In certain cases, and to a certain extent, our support services are deductible:

First case: It is normal maintenance for a dependent. It includes costs for accommodation, clothing, food, etc. Expenses for the recipient's professional training, for example, tuition fees, specialist literature, correspondence courses, or the semester ticket, are also eligible.


The legislator has specifically defined this case in Section 33a (1) of the Income Tax Act: Normal maintenance may be claimed as extraordinary expenses of a special kind; the maximum deductible is the maximum maintenance amount of $9,408 per year (2020: $9,168). 


Added are the contributions to the basic health and compulsory long-term care insurance (basic coverage) paid for by the recipient. Prerequisite: the recipient is needy.

Second case: The taxpayer pays special maintenance for a dependent or someone close to him. It includes costs that arise in a special situation, for example, illness. The proven costs belong to the extraordinary burdens of a general nature, as far as the recipient is needy (§ 33 EStG). 


However, the tax officer only considers the sum of the extraordinary burdens of a general nature if they exceed the reasonable burden.

Third case: normal and special livelihoods are paid. Then, the costs must be shared because of the different tax treatment. Special features must be considered in the case of illness, disability, or care-related home accommodation of a relative.


TurboTax is a mobile device-compatible tax preparation software that provides step-by-step guidance to maximize tax refunds on federal and state income tax returns.


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Childcare Costs


Childcare costs are considered special expenses up to two-thirds, but a maximum of $4,000 per child. It is irrelevant whether the childcare is work-related or not. Childcare costs may be claimed for biological, adopted, and foster children but not for stepchildren and grandchildren. 


Exception for stepchildren: If the taxpayer is married to a new spouse and is assessed for income tax with this partner, the childcare costs may also have been borne by the stepparent.


AU Pair


If the au pair contract stipulates the proportion of the time that childcare takes and what remuneration is due, the proportionate costs may be claimed as childcare costs. Without a precise contractual agreement, the share of childcare can be estimated at 50%. Costs not attributable to childcare reduce the tax burden as part of household-related services.




The prerequisites for deducting babysitting costs are very strict and should only be adhered to if the same babysitter is used regularly. The first hurdle: The babysitter may not be paid in cash; parents must transfer the money to the babysitter's account. 


In addition, despite the likely low number of hours, the parents are employers of the babysitter. Accident insurance for the babysitter with a community accident insurance association or an accident insurance company is also required. 


The contributions will be automatically collected if a mini-job is registered with the mini-job center using the household check procedure.


School Fees


If a child of a taxpayer for whom this person is entitled to child benefits or the allowances for children attends a subsidized private school, 30% of the school fee can be claimed as special expenses (max. $5,000 per child). 


The right to half a tax exemption for children is sufficient. Beneficiary schools are, above all.

  • private primary schools, secondary schools, secondary schools or special schools, private high schools or integrated comprehensive schools;

  • Waldorf schools;

  • Montessori schools;

  • private vocational institutions such as vocational schools, vocational schools, technical colleges, technical high schools, vocational high schools, technical schools, technical academies, schools of health and social services;


Leave Order For Children.


For a child who earns income from capital assets (e.g., because they have their own savings book or a share deposit), parents can easily avoid the withholding tax deduction by issuing an exemption order for the child from the bank. 


Interest and capital gains can then be paid to the child tax-free up to the amount of the saver's lump sum ($801). Even without an exemption order, parents can get the money for their child back from the tax office. 


To do this, they must submit an income tax return for the child after the year has expired. But you can save yourself this effort: with a non-assessment certificate, interest is paid without withholding tax deducting (exception: over-the-counter transactions). 


The certificate is valid for three years; the application form »NV 1A« is available from the tax office.



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Computer Glasses


Computer glasses are only tax-deductible as part of the advertising expenses if the visual discomfort can be traced back to work on the screen as an occupational disease.


You cannot deduct the cost of glasses that only compensate for poor eyesight as advertising expenses. The same applies to screenwork glasses. Even if you only wear the corresponding glasses to work and keep them there in your place, you cannot deduct the costs as advertising expenses. Contact lenses are also generally not deductible.


But If your non-tax-deductible glasses are damaged during your professional activity, the repair costs are at least deductible as business expenses.




The costs of a professional move are advertising costs. The following are deductible:

  • Costs for the transport of the removal goods,

  • Traveling expenses,

  • double rent payments,

  • Brokerage fees,

  • Costs for additional lessons for children,

  • Other moving costs (e.g., tips for movers, renovation costs).


Double Housekeeping


Additional expenses arising from a professional reason for double housekeeping are deductible as income-related expenses. It includes:

  • Ride costs,

  • Meal costs,

  • Expenses for the second home,

  • Moving costs.

Telephone And Internet Costs


If the private telephone and Internet connection or the private mobile phone are used to make and receive business phone calls, send e-mails, and research online, then advertising costs arise. These can be claimed in the tax return in two ways:


  • A flat rate of 20% per month of internet and telephone costs: This deduction option is limited to a maximum monthly amount of $20. In addition, it can only be used by certain professional groups (teachers, home/teleworkers, field workers).

  • Determination of the deductible percentage by individual proof: This deduction option is not limited in amount and can be carried out by all taxpayers.




Insurance premiums are income-related expenses if an insurance policy covers occupational risks. It is the case, for example, with accident, liability, and legal expenses insurance. If no income-related expenses can be deducted, the contributions can be claimed as part of the special expenses.


Five Tax-Saving Tips For Landlords


Work Equipment


The costs for telecommunications, specialist literature, office furniture, etc., are deductible as advertising expenses, provided they relate to the rental apartments' management. 


A computer used for administration is written off - if necessary, pro-rata. PC programs for administering rental apartments are full advertising costs - even if the computer is only partially recognized.


Financing Costs


Fundraising costs are advertising costs and are immediately deductible. Prerequisite: The borrowed capital received will be used directly for the rented house or apartment. Funding/fundraising costs include:

  • the closing fee for a building society loan agreement,


  • the damnum,

  • Expenses for specialist literature that deals with financing options for houses and property,

  • all travel costs in connection with the financing,

  • the costs for the creation of a computer-aided financing plan by the bank or an advisory agency,

  • the costs for photocopies, for example, for the production of the lending documents,

  • all fees from banks or (building) savings banks for lending,

  • the fees of the land registry for the registration of the building loan,

  • the brokerage fees for arranging a building loan,

  • the notary fees for registering a mortgage or land charge,

  • the postage costs, for example, for correspondence with the bank,

  • all debt interest,

  • all telephone costs in connection with the financing, in particular for calls to banks, etc.,

  • The bank charges the early repayment penalty for early loan repayment in the event of a rescheduling, provided that the property will continue to be rented after the rescheduling.


Property Management


If you employ a caretaker for house cleaning, garden maintenance, snow removal, or carrying out minor repairs, or if you pay a property manager to settle ancillary costs, conclude rental agreements, and generally look after your rented property (s), then these costs are immediately tax-deductible as business expenses.

Often, a relative or a tenant takes on the job of caretaker/caretaker. The caretaker is mostly not self-employed. In individual cases, the property manager can also work independently.


In the case of non-self-employed work, the wages are only recognized as income-related expenses if you conclude an employment contract and ensure that the wages are properly taxed (via tax card) or if the job is marginal.


If you are your caretaker/caretaker, you may not claim your work, but the expenses associated with this activity are business expenses. It includes building materials, office supplies, travel expenses, telephone costs, and tools.




Anyone who takes over the co-ownership share of the other spouse in a property in return for divorce (by paying a purchase price or by assuming the liabilities) can deduct the debt interest to be paid for the acquired co-ownership share as business expenses.




Contributions for insurance in connection with your rented house and property are income-related expenses. The contributions are deductible.

  • for building insurance (against fire, lightning, earthquake, landslide, explosion, broken glass, hail, avalanches, tap water, storm, flood),

  • for oil tank insurance,

  • for rent loss insurance,

  • for property legal protection insurance,

  • for building liability insurance,

  • for construction and builder liability insurance and

  • For household contents insurance (only when renting (partially) furnished apartments).



Five Tips On Tax Savings For Part-Time Self-Employed


Contributions To Chambers, Associations, And Clubs


Payments to federations and associations are deductible as business expenses if the institutions pursue goals that almost exclusively serve the business. It includes:

  • Contributions to professional chambers, insofar as these do not serve for retirement provision

  • Contributions to an IHK, Chamber of Crafts or Guild,

  • Contributions to a trade association, tourist association, or tourist office,

  • Contributions to a professional association, such as the Association of the Metal Industry, Tax Advisors Association, or Hartmann Bund.


Entertainment Expenses


70% of the cost of entertainment for business reasons can be deducted as business expenses. The entertainment costs include ancillary costs such as cloakroom fees, tips, or room rentals. The catering can occur almost anywhere - just not at the hostess's home. Because then the operational area can no longer be separated from the private.




Insurance contributions are business expenses if the insurance covers business risks. These include, for example.

  • Liability insurance,

  • Fire insurance,

  • Theft insurance,

  • Bad debt insurance,

  • Legal protection insurance,

  • Machine insurance,

  • Vehicle insurance for company cars.




Ongoing domain fees are business expenses. If you buy a web address (= domain) from a third party, you purchase an intangible asset that is usually not subject to wear and tear and, therefore, must not be written off.


The costs of creating a website must be written off - the literature assumes a two to three-year amortization period.


Newspapers and Magazines


Specialist journals with a content-related relationship to independent (secondary) activity are deductible as business expenses. General education daily newspapers and weekly magazines are not deductible. 


Newspapers and magazines purchased for the waiting room always lead to business expenses - even if they have no content-related reference to self-employed (secondary) activity.