End year tips

What a year it has been! I think this year will be remembered as the year of Corona for a long time. We are all ready to bid good-bye to 2020, but I am here to remind you of few things to be taken care of before you close-off the year in style (at home unfortunately!!)

  1. Health Insurance: This is the only time of the year when you can switch your health insurance for the following calendar year. Check out this blog explaining how you can choose one!
  1. Tax deductions: If you are one of those rich people 😊 (earn more than 68,507 Euros per year) and you have tax deductible items like mortgage interest deduction, donations etc., this is for you. On such items, the tax deduction is lower in 2021 than in 2020. Meaning, you will get back less from the belastingdienst (Dutch tax authorities). What can you do about this? Bring your payments forward into this year rather than in 2021. Example: If you want to make a donation, make it now rather than in January and you will get a better benefit. Read more about this on the belastingdienst website.
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  1. Buying your first house: We talked about the rich people, now let’s talk about young people (younger than 35 years in 2021). If you are planning to buy your first home and satisfy a few conditions, you don’t have to pay the Overdrachtsbelasting (Transfer tax). Read about it here. What can you do about this? Wait till 2021 to do your official paperwork.
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  1. Saving on wealth tax: In the Netherlands, the assets you have as of 1st January is used to calculate the wealth tax for that year. Every year, the belastingdienst sets a tax-free limit. Assets (capital) below this limit are exempt from the wealth tax. What can you do about this? You could reduce your assets and in turn the wealth tax on them by making smart choices now in December:
    • Paying your bills and taxes: This is quite simple. Pay all your pending bills, taxes, that speeding ticket you got when you were zipping around Amsterdam etc. These are payments which you cannot avoid, so pay them now and reduce your capital rather than wait till January.
    • Extra payments to your house: After all your bills, you still have money left above the tax-free limit. If you have a mortgage on your house, consider making extra payments to the bank. Most banks accept extra payments up to 10% of the mortgage value without a penalty. This has an added benefit that your monthly payments to the bank will come down. Check with your bank on the possibilities.
  1. Take your vacation days: The way this year has been, we could not travel much, and we could take those vacation days. Most employers have policies that say a certain number of your vacation days will expire if not taken. Check your company policies and take those vacation days before they lapse.
  1. 30% ruling: For many of us impacted by the abrupt ending of the 30% ruling, this December may be the last month when this still applies. What can you do about this? Enjoy the feeling while you can and maybe set aside some money until you get used to the new normal. I know this is not really a tip, but I had to include this!

Leave a comment if you have a question. Hit the Like button if you liked the article!

2 comments

  1. Aditya and all bloggers at The Moving Humans: I enjoy reading your well-balanced, factual postings about life in the Netherlands. Sending thoughts to you for strength and perseverance and good health. Let’s all move ahead to 2021 with hope. Happy New Year from Linden, New Jersey.

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