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The end of the demanding year 2020 is nearing. But before the year is out, there are a number of things you can do to earn or save a lot of money.
Consumer economists Cecilie Tvetenstrand at Danske Bank and Derya Incedursun at Nordea are reviewing what measures to consider before 2021.
BSU
If you save in BSU (Youth Housing Savings), you can get a significant tax deduction. Here you need to make sure that the amount of your savings is in the account before the deadline.
– Banks operate with different terms for when the money must be registered in the account. It’s usually December 31st. To meet the deadline, you need to contact your bank and ask about the deadline, Incedursun says.
You can save a maximum of 25,000 crowns per year (27,500 as of 2021) and recoup 20 percent in tax deductions.
Consumer economist Cecilie Tvetenstrand at Danske Bank. Photo: Sturlason / Danske Bank
– To get a full tax deduction, you must have an income of more than 75,000 NOK per year. If you save the maximum amount, it gives you 5,000 crowns in saved taxes, says Tvetenstrand.
If you are under 21 and have no taxable income, you should wait to save in BSU until you can take advantage of the tax deduction.
– With BSU, you can save a total of up to 300,000 crowns, but the money can only be used to buy a house or pay off a mortgage created after BSU was created, says Tvetenstrand.
IPS
IPS (Savings for individual pensions) can be a good alternative for those who pay income tax. You can deposit a savings amount of up to NOK 40,000 per year and receive NOK 8,800 in tax benefits for the savings amount.
– Savings are tied up until retirement, at least at age 62. But keep in mind that there is a tax on withdrawals from IPS money. In return, you pay no estate taxes or filing taxes during the savings period. IPS usually has a deadline on the same day as BSU, but here too you should contact your bank and ask, Incedursun says.
Consumer economist Derya Incedursun in Nordea. Photo: Nordea
To get the most out of this product, you should save the tax deduction you receive by investing this money in, for example, funds, advises Tvetenstrand.
– The IPS scheme is particularly attractive to the wealthy, as savings are exempt from wealth tax. One thing to keep in mind is that a change of government can mean changes in IPS. Then the product can be changed or closed to save more, says Tvetenstrand.
Number
On January 1, 2021, a new Succession Law enters into force, where, among other things, the regulations on shortening will be modified. If at any time you have given a monetary gift to one of the children, the family should have a chat. This also applies if you or one of your siblings has received a gift from their parents.
– Current inheritance law does not require you to have made a reservation about a reduction in inheritance when the gift was given. This will change as of the New Year when the new Inheritance Law goes into effect. So you can’t decide later that an already given monetary gift will be reduced, says Incedursun.
Instead, this must be determined and known to the child at the same time the gift is delivered.
– If you have previously given a monetary gift to one of the children that you want to reduce the inheritance, you must decide to do so no later than December 31 of this year.
Read more about shortening: You Must Take This Legacy Talk Before The New Year
Reduce wealth tax
– Do you have a large fortune and are you considering giving an inheritance advance to your children? Now may be a good time, so you will get lower taxable equity for 2020, says Tvetenstrand.
The inheritance and gift tax was eliminated as of January 1, 2014. It may be appropriate to give gifts or inheritance advances to children to reduce the estate tax.
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– You must pay wealth tax if your net worth exceeds the deductible of NOK 1.5 million – NOK 3 million for spouses. The tax rate is 0.85 percent in 2020. Keep in mind that children must be over 17 to receive their own exemption from estate tax; otherwise, they are compared to parents, Incedursun says.
Giving gifts to children now may be even more relevant, as there is uncertainty as to whether the inheritance tax can return.
– But don’t give money away if you don’t know for sure you’ll never need it. If the children are young and have not finished their studies, you should know the wealth limit in Lånekassen, so that the child does not miss the opportunity to receive a scholarship, says Tvetenstrand.
– Loan Fund scholarships are phased out if children have a net worth of more than NOK 428,861 for the current year, Incedursun says.
Deduction
Donations to voluntary organizations are deductible and this year the maximum amount of deductions is NOK 50,000.
– To receive a deduction, the sum must be a minimum of NOK 500 per organization per year. It is important to note that there are not charitable donations for all organizations that qualify for a tax deduction, says Incedursun.
Here you will find the Tax Administration’s list of organizations that are covered by the donation deduction scheme, both in Norway and abroad.
– Do you have stocks or mutual funds at a loss that you are considering selling? If you sell these before the new year, you will receive a deduction for the tax loss on your tax settlement for 2020, reports Tvetenstrand.
If you are a member of a union, you can deduct the membership fee of up to NOK 3,850 in taxes.
Tax-free income
If you have a cabin that you use for leisure purposes, you can rent it for up to NOK 10,000 per year tax free. In addition to this amount, 85 percent is considered taxable income.
– If the cabin is empty at Christmas, rent and earn a few thousand tax-free before the turn of the year, Incedursun suggests.
If you are not self-employed, you can accept assignments from other individuals and earn some tax-free crowns before 2021.
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– You can earn up to 6,000 kronor a year tax-free on work done in private houses or cabins. This can be car wash, babysitting, snow removal, etc., says Tvetenstrand.
If you earn NOK 55,000 or less during 2020, you can get a free card so you don’t have to pay taxes.
– If you haven’t filled out the exemption card, you can still earn more tax-free crowns before the turn of the year, says Incedursun.
Continue with good habits
Do you pay the correct tax? In mid-December, the Tax Administration launched new tax cards where you can check if your information is correct.
– Maybe you bought a house and got a mortgage? You get a tax deduction for interest expense, so the tax can be reduced. Have you sold a home and now have a smaller loan or no loan? Then you should increase the tax. By updating the information, this will change automatically, says Tvetenstrand.
2020 has been a special year and you may have experienced that you have gotten better at spending less money. In that case, Tvetenstrand advises trying to take care of some of the new habits.
– After ten months of a state of emergency, we have established some good habits like planning the grocery shopping and shopping less frequently. Stick to these habits if you’ve managed to establish them, and if not, you should put them on your to-do list for 2021, says Tvetenstrand.
