Preparing to optimise the amount of taxes you need to pay

Optimise the amount of taxes

«How do I cut down the amount of taxes I have to pay?»

If you want to reduce your tax burden this year, you should take heed of these last-minute tips from our expert.

Daniel Discianni

Question: The year will soon be coming to an end. What can I do now to optimise the amount of taxes I have to pay for 2023?

Answer: There are a number of ways in which you can reduce your tax burden before the end of the year. One of the most important levers is in the area of pension provision: if you are gainfully employed, you can deduct the payments made into Pillar 3a from your taxable income. We recommend paying in the maximum amount for the current tax period in order to take full advantage of the tax benefit. In 2023, the maximum amount able to be paid in for gainfully employed persons with an employer pension fund will be CHF 7056. It is best to pay this amount, or less if necessary, into your Pillar 3a account by mid-December. At Migros Bank, for example, such a transfer is still possible online up to and including 28 December.

Purchases of additional pension benefits can also be deducted from taxable income. The amount you are allowed to pay in depends on the size of your pension gap. The maximum possible purchase is shown on the pension fund statement that you receive each year. If there are significant gaps, you should spread purchases over several tax periods in order to benefit from the largest possible tax deduction. Have the purchase checked by a financial specialist in advance.

Are you about to retire? If this is the case, we recommend withdrawing your pension assets from your pillar 3a account, the pension fund or vested benefits in stages over the current and subsequent tax periods. This way, you can reduce your tax burden.

In addition to donations to charitable organizations, you can also deduct healthcare costs from your tax return. However, this only applies to costs that are not covered by your health insurance. In addition, most cantons stipulate a minimum amount of five percent of your adjusted net income here, i.e. net income minus deductions. If you have already incurred higher costs, buying a new pair of glasses before the turn of the year may be worthwhile for tax purposes, for example.

If you own your own home, you can potentially optimise the maintenance costs: compare the actual costs incurred with the maintenance charge of the notional rental value. You can then deduct the higher amount.

The expert

Daniel Discianni is a client advisor at Migros Bank and a tax expert.

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