I should know this ... but ... kotitalousvähennys

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network_engineer
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Joined: Wed Nov 26, 2003 10:21 am

I should know this ... but ... kotitalousvähennys

Post by network_engineer » Thu Dec 29, 2022 6:33 pm

Hi all,

Does anybody know/ recall, the details on the credit for house maintenance, i.e. kotitalousvähennys.

Is the credit towards the taxable income OR does it reduce the tax amount?

What's the difference/ what do I mean?

Example: Assume you pay 1000e (labour) for a house renovation project. Of that you can reduce 60%. So, 600e. Let's assume your yearly salary is 10.000e. And your income tax is 3000e. Net income = 7.000e.

So, does it reduce:
  • 600e from your yearly taxable income, meaning the new taxable income is now 9.400?
OR
  • Does it reduce the tax amount paid, i.e. tax amount of 3000e - 600e = 2.400e?



I should know this ... but ... kotitalousvähennys

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FinlandGirl
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Joined: Sat Nov 09, 2019 10:43 am

Re: I should know this ... but ... kotitalousvähennys

Post by FinlandGirl » Thu Dec 29, 2022 6:41 pm

network_engineer wrote:
Thu Dec 29, 2022 6:33 pm
Hi all,

Does anybody know/ recall, the details on the credit for house maintenance, i.e. kotitalousvähennys.

Is the credit towards the taxable income OR does it reduce the tax amount?

What's the difference/ what do I mean?

Example: Assume you pay 1000e (labour) for a house renovation project. Of that you can reduce 60%. So, 600e. Let's assume your yearly salary is 10.000e. And your income tax is 3000e. Net income = 7.000e.

So, does it reduce:
  • 600e from your yearly taxable income, meaning the new taxable income is now 9.400?
OR
  • Does it reduce the tax amount paid, i.e. tax amount of 3000e - 600e = 2.400e?
The second option.
Vero wrote: Which taxes does the credit for household expenses affect?

The credit is deducted primarily from your taxes on earned income and capital income. Most other deductions reduce the amount of earned income that is taxed, not the amount of tax itself. This means that the tax credit for household expenses has a bigger effect on your taxes.

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network_engineer
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Re: I should know this ... but ... kotitalousvähennys

Post by network_engineer » Fri Dec 30, 2022 10:11 am

FinlandGirl wrote:
Thu Dec 29, 2022 6:41 pm
The second option.
Vero wrote: Which taxes does the credit for household expenses affect?

The credit is deducted primarily from your taxes on earned income and capital income. Most other deductions reduce the amount of earned income that is taxed, not the amount of tax itself. This means that the tax credit for household expenses has a bigger effect on your taxes.
Thanks!

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agroot
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Re: I should know this ... but ... kotitalousvähennys

Post by agroot » Fri Dec 30, 2022 9:30 pm

Does anyone know how vero checks for that? Submitted mine weeks ago but there is no place to upload invoices or contracts.

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network_engineer
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Re: I should know this ... but ... kotitalousvähennys

Post by network_engineer » Fri Dec 30, 2022 9:40 pm

I did not have the time to dig up the information, however, as I understand you must be able to produce evidence of the work, including original receipts, payments etc. up to a period of ten years.

I scan every single receipt and keep them on three different services! :evil:

betelgeuse
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Re: I should know this ... but ... kotitalousvähennys

Post by betelgeuse » Fri Dec 30, 2022 10:54 pm

agroot wrote:
Fri Dec 30, 2022 9:30 pm
Does anyone know how vero checks for that? Submitted mine weeks ago but there is no place to upload invoices or contracts.
They don’t unless your deductions get selected for an audit.

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agroot
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Re: I should know this ... but ... kotitalousvähennys

Post by agroot » Sat Dec 31, 2022 11:43 am

betelgeuse wrote:
Fri Dec 30, 2022 10:54 pm
They don’t unless your deductions get selected for an audit.
I was rather surprised they granted a new tax card before seeing any evidence :D

riku2
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Re: I should know this ... but ... kotitalousvähennys

Post by riku2 » Sat Dec 31, 2022 12:05 pm

agroot wrote:
Sat Dec 31, 2022 11:43 am
I was rather surprised they granted a new tax card before seeing any evidence :D
A "tax card" is an estimate of tax you should pay in the current year based on income/expenses. You don't need to give any evidence to get a revised tax card. If the tax card has the wrong amount you will just pay more/less tax when the exact tax amount is worked out the following year.
If you plan to stop working in June then you could ask for a new tax card to reduce your tax earlier in the year - but there is no need to give proof you will actually stop work in june.
I think the only chance of fraud with tax cards is that you plan to leave the country, so get a tax card with low rate and underpay your tax and by the time they send you the tax bill for the tax you should have paid you have already left the country and will never set foot in the country again.

what you put in the "tax return" is a different matter though. It's a statement of your expenses and income (a lot of it automatically collected from employers and banks).

As with insurance a lot of the tax authority's work is based on algorithms. They know the profile of the average person and what they might claim. If you claim for something unusual then they will actually look at the figures and perhaps ask for some paperwork but otherwise no person looks at your claim or asks for receipts. It's cheaper to do it this way than ask everyone for paperwork and do manual checking. Some people will get away with invalid claims but that loss is accepted for the benefit of less work administering the system.


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