To put it as simply as possible, tax deductions reduce the income you pay tax on, and therefore deductions have a big impact on how much you pay in tax. The advantage of having tax deductions is that you get more money in your hands. The consequence, on the other hand, is the opposite - if you don't keep track of your deductions, you could risk a tax cut.
Some deductions are automatic. Other deductions you have to enter on your annual tax return. Below we will go through some of the different types of deductions available.
All of them are entitled to a personal allowance. This deduction, also known as the basic deduction, is the total amount that you do not have to pay tax on each year. The amount varies slightly from year to year. In 2022, the personal allowance was DKK 46,000 for people aged 18 or over.
In this case, it can be an advantage to be married. In this case, you can use your spouse's personal allowance or vice versa. However, this only applies if you or your spouse has not used the deduction before the end of the year.
As this deduction is the same for everyone, it is automatically reported to the Tax Agency.
The employment deduction is also a deduction that applies to many people. However, this deduction only applies if you are in employment. This means that you have a salary or profit from a business that is subject to am-contribution. In 2022, the employment deduction is 10.65% and can be a maximum of DKK 41,600.
In addition, there will be a job deduction on top of the employment deduction. The job deduction in 2022 is 4.5% of income over DKK 202,700. However, there is a ceiling of DKK 2700. per year. This is already in the name, but you can only benefit from the job deduction if you are in work.
In the same way as personal deductions, both employment deductions and job deductions are automatically reported.
However, should you experience significant changes in your job situation, such as having to claim unemployment benefits, it is your responsibility to change your tax assessment as soon as possible. This is because in the above situation you are no longer entitled to employment deductions or job deductions. If you are not aware of this, you will most likely find yourself having to pay money back in tax. This is because you have benefited from a deduction you were not entitled to.
You cannot claim the employment deduction/job deduction if you are exclusively on one of the following benefits:
However, you can claim a deduction if you are in a flexi-job, as you receive a salary subject to am-contribution. The same applies if, for example, you have a student job alongside your SU.
As mentioned earlier, not all deductions are automatically reported to the Tax Agency. Many deductions you have to report yourself and it is not always easy. Especially when there are so many overlooked deductions that most people are not aware of.
Many people are probably familiar with the driving deduction or have heard of the craftsmen's deduction. But did you know that you can get a deduction for e.g. payday loans? These are often expensive and the deduction can therefore suddenly be of great importance. The same applies if you have borrowed money privately from family or friends. If you pay interest in connection with the repayment, you can also get an interest deduction.
For a larger list of deductions you need to report yourself, see this article.
In TaxHelper, we help you find the deductions you're entitled to. You answer a few simple questions that take just 15 minutes to complete.
Then we report the deductions, and you get an extra DKK 2,704 back in tax. At the same time, you only pay if you get a tax saving.
TaxHelper's tax guide helps you find your deductions so you get all the deductions you're entitled to
Are you an SU student and struggling to understand the tax rules? We have compiled the most important information.