Tax, Tax return | Experts: Therefore, it is bad news to get back on the tax

Are you one of the many who rejoice that you get money back on the tax? There is definitely no reason for that.


In the period 16 March to 7 April, the tax authorities send out the tax return, where you will find out if you will get money back from the tax or have to pay with residual tax.

It is common for around 80 per cent of taxpayers, 2.7 million, to have paid too much in taxes and have tax money to their credit. But it is not a good investment, they could have spent that money on something far more profitable.

– What you pay in too much tax throughout the year, could have been placed in other forms of savings, says consumer economist Derya Incedursun in Nordea to Nettavisen Økonomi.

Also read: Experts against tax card trap: You need to change this now

Over 10,000 kroner

Typically, Norwegians get 11,000-12,000 kroner back on the tax. Let’s say you would rather have set aside 1,000 kroner a month in a savings agreement in an index fund for the next ten years, rather than paying too much tax. The stock market gives by far the highest expected return over time.

With an expected annual return of 7 per cent, you would have been left with NOK 170,000 before tax at the end of the period. If you do this for 20 years, the savings amount increases to almost 500,000 kroner.

– This presupposes that you are disciplined and aware of what you put aside, says Incedursun.

– Many people think getting money back on the tax is good, but the only advantage is that this is money you can not spend until they arrive. It is an advantage for those who are not so good with their personal finances, she continues.

No interest rate slam

In these times of record low interest rates, you get a 0 – zero – interest return on money you have to your credit. The consolation for those who receive residual tax is that you also do not pay interest if you pay by the deadline.

– No, you do not get an interest rate bang. But many of those who get back on the tax, see this as free money, but it is far from it. It is so much easier to just spend this money in no time, and you may want to pay in a little less tax throughout the year, says Nordea’s consumer economist.

Finance expert Hallgeir Kvadsheim believes, like Incedursun, that there is no point in getting money back on the tax from an interest rate standpoint.

– No, it is not. But many prefer to be overdrawn and pay extra throughout the year. They see it as a good form of savings, which probably remains from many years ago. At that time, the tax authorities gave a good interest rate on what was paid in extra, and the interest return was tax-free.

– Now there is no interest and therefore no tax anyway. But a little ragged, I notice that many are terrified of getting residual tax, says Kvadsheim.

Read also: Kills the tenacious myth of debt: – It’s just nonsense

Reasonable

But for some it may be wise not to owe money to the merchant. Some taxpayers and households do not have the finances to cope with unforeseen expenses.

– People therefore choose to be drawn extra. It may make sense if you know yourself here, but most of us get money back on the tax.

– Is there an excessive fear of arrears?

– Again, it probably depends on the fact that you previously received a good interest rate from the clerk. This is not only because the interest rate level was higher, but also because the interest rate supplement was calculated differently. Many used the chemist as a savings bank, Kvadsheim answers.

Also read: The tax return: 4 out of 10 do not know all the deductions they are entitled to

Forget

He advises everyone to go through the tax return that is being sent out these days. The expert points out that there are far more of those who receive residual tax who carefully go through what is sent out.

– Those who have money to spare on the tax, often forget to check, and that is a shame. It can be a coincidence from one year to another if you get your money back or have to pay extra. You should always check the tax return, Kvadsheim encourages.

And this is especially true for the corona year 2020. Many had to have a home office for much of last year and thus had far less travel business. But that applies far from everyone. Travel expenses in excess of NOK 23,100 are reimbursed for 2020 at NOK 1.56 per kilometer up to 50,000 kilometers.

Omitted

– For 2020, the travel deduction is omitted in the tax return, and normally this deduction is stated automatically. After all, there are many who do not have a home office, such as nurses and those who work in the construction industry. For last year, employees here with a long journey are entitled to as high travel deductions as normal.

– There are a number of nurses who had to work double shifts, and they should have higher deductions. And then we have commuter deductions for weekly commuters to, for example, northern Norway or abroad. These can have tens of thousands of kroner that they can deduct, says Kvadsheim.

He says he gets many questions about whether costs related to home office are deductible. As a general rule, the answer is “no”. For example, many employees benefit from a subsidized canteen on a daily basis. But the lunch you now lubricate yourself at home, you have to pay in full.

Kryptogevinster

In the past year, the market for cryptocurrencies, led by Bitcoin, has completely taken off, and more people have benefited from cryptocurrency realizations.

These gains must be recorded and taxed at 22 per cent in ordinary capital tax, even if there are transfers between the various cryptocurrencies.

– There is a misunderstanding out there that if you switch from one cryptocurrency to another, you do not need to list this on the tax return.

– You do not have the feeling of having become richer, but these transfers are taxable. Those who are caught with their trousers down, risk a fairly strict penalty tax, warns Kvadsheim.

Read also: So much has the value of the interest deduction decreased

Interest rate increases

Norges Bank has announced interest rate increases in the future, and this will affect the tax. You will be deducted from NOK 2,200 per NOK 10,000 you have in annual interest expenses. For a loan of NOK 2 million where the interest rate rises from 1.75 per cent to 3 per cent, interest expenses basically rise by NOK 25,000.

But that’s before tax. The state covers NOK 5,500 of the increased interest expenses.

– This is one of the things you should be aware of, because there have been historically low interest rates, says Incedursun.

Korttidsutleie

There is also other information that is not included in the tax return, such as short-term rental of the home or car.

– Rental income up to NOK 10,000 from short-term rentals is tax-free as long as you rent out less than 30 days, otherwise it is taxable.

– In general, you should check all the taxable benefits, such as free car. And where there have been layoffs and temporary arrangements, it is entirely possible that the employer has messed up, says Incedursun.

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