How to reduce tax without risk? Our advices

 How to reduce tax without risk? Our advices

How to reduce tax without risk? Our advices

Tax exemption, by definition, means paying less tax. For this, the legislation offers many different techniques, more or less risky, to obtain allowances, reductions, exemptions or even tax credits.

Investors with a cautious profile, those with family responsibilities, or those who refuse the risk of financial loss must therefore find risk-free tax exemption solutions to lower their taxes. What are they ?

Why reduce tax without taking any risk?

Although the answer to this question is obvious, it deserves attention because it is not often asked. Who says risky tax exemption, implies risky investment.

Thus, it is quite possible with certain tax measures to invest in real estate or in entrepreneurship to benefit from an attractive tax exemption. For example, in return for an investment of 10,000 euros, the taxpayer realizes a tax saving of 1,000 euros.

It is an attractive offer, you will have effectively reduced your tax by 1,000 euros very easily. But what about your 10,000 euros? If you lose them, your tax exemption operation will have made you… Less rich…

In this file, we therefore give you all our “zero risk” advice to reduce the amount of your tax without reducing the amount of your assets. Follow the leader…

Tip number 1: fill in tax-exempt savings books

The booklets are more popular than ever in the hearts of the French at the end of 2020 due to the health and economic crisis. The amount of passbook collections has literally exploded because of the security they offer.

Indeed, savings are available there, the investment is risk-free, the rates are regulated, the interest is completely tax-exempt, the capital and the interest are recoverable at any time free of charge, etc.

These are all advantages that make tax-free savings accounts a success that continues unabated over time, despite historically low interest rates and difficulty keeping up with inflation rates. Three fully tax-exempt and easy-to-access booklets are available in France:

  • The Livret A booklet, within the limit of one booklet per natural person, offers a ceiling of 22,950 euros excluding interest and interest of 0.5% since February 1, 2020
  • The LDDS (Sustainable and Solidarity Development Booklet), reserved for individuals within the limit of two booklets maximum per tax household, offers a ceiling of 12,000 euros and rates identical to the booklet A
  • The LEP (Livret d’Epargne Populaire), reserved for adult individuals not attached to their parents’ tax household, subject to income conditions, offers a ceiling of 7,700 euros and interest of 1%

These three so-called precautionary savings investments are risk-free. They will not make you pay less tax, but will save you from paying any on the interest they generate.

Tip number 2: open a PER in euro funds

To reduce tax without taking any risk, the PER (Retirement Savings Plan) is the ideal product. Comparable to life insurance in its operation, it has definitively replaced the PERP, the PERCO and the Madelin contract.

The PER offers a major advantage to all taxpayers subject to income tax: part of the payments made is deducted from your taxable income, within the limit of a ceiling which depends on your professional situation (employee or TNS Worker No employee).

Thus, 1,000 euros paid into a PER offer you a tax reduction of 110 to 450 euros depending on your TMI (marginal tax bracket). The real savings effort is therefore reduced by this advantageous tax deduction.

You can choose to open a PER in euro funds only, with a rate of return known in advance (around 2.5% currently). Thus, you do not take any risk of loss concerning supports in units of account.

Tip number 3: have your children looked after

This is advice that may seem surprising, and yet having your children looked after can make you benefit from a tax credit. This means that you will be able to deduct childcare costs from your income tax, and even receive a sum of money if you are not taxable.

The tax credit for childcare expenses is reserved for parents of children under the age of 6 and gives rise to a credit of 50% of the expenses actually incurred within the limit of 2,300 euros per year and per dependent child. .

Tip number 4: send your children to school

When you do your tax return, do not forget the tax reduction granted for children attending school as part of their secondary or higher education.

The amount of the tax reduction is per child and per tax year:

  • It is 61 euros for a child in college
  • 153 euros for a child in high school
  • 183 euros for a child in higher education

 Tip number 4: offer yourself home services

Paying less tax while enjoying a better quality of life and creating jobs is a luxury within the reach of many taxpayers. Note that many home services can give rise to a tax credit.

The activities falling within this framework are numerous: childcare, tutoring, assistance to the elderly or disabled, home maintenance, housework and gardening, small crafts, computer and administrative assistance, etc.

Expenditure incurred in the personal services sector is retained within the limit of a ceiling set at 12,000 euros per year. The latter may be increased by 1,500 euros per dependent without, however, exceeding 15,000 euros.

The tax credit thus granted is 50% of the amounts spent and declared. Thus, a taxpayer paying 2,000 euros in income tax and employing a household help for 2,000 euros per year and a gardener for 3,000 euros per year benefit from a tax credit of 2,500 euros. He will therefore not pay income tax and the tax authorities will pay him 500 euros.

 Tip number 5: donate

Whether you want to help a humanitarian association, pay money for research for the benefit of the Telethon, support a political organization or participate in the restoration of Notre Dame de Paris, you can benefit from a tax reduction of up to 75% of your donation.

There are many tax incentives to encourage you to do what is important to you and to promote projects supported by associations or organizations of general interest. Do not hesitate to inquire to find out the percentage and the ceilings of the tax reduction to which you can claim before making a donation.

 Tip number 6: if you still have taxes to pay, get help

If you have made the rounds of the safest investments, benefited from reductions and tax credits and wish to continue to tax-exempt, we advise you to carry out a heritage assessment.

This will allow you to take stock of your assets and your short, medium and long-term objectives in order to reduce tax through the least risky investments and adapted to your investor profile.