This is a good time to claim deductions – the Tax Administration gives answers to popular beliefs and misconceptions about deductions

Recent findings show that many people ask for deductions and credits for cost items that are non-tax-deductible. The data points toward a widespread lack of awareness of what kind of travel expenses can be deducted when submitting the tax return.

One of the most frequently claimed deductions is the tax credit available to individuals who have had to pay certain household expenses. However, recent data indicates that many individual taxpayers claim the credit without a good reason. An example of costs that will not entitle you to the credit is construction-related spending. For the 2023 tax year, the Tax Administration examined and rejected credit claims for a total of €700,000 of construction costs.
- The credit for household expenses can only concern repairs and renovations of a house or apartment when a set of requirements is fulfilled. However, if the individual is a shareholder in a housing-company apartment, only the repairs made in the apartment on the shareholder’s initiative will qualify. If the entire building has had repairs, the housing company will pay for them, and this does not entitle the individual taxpayer to tax credits. When a new house or other building is constructed, the household credit cannot be claimed, notes Anna-Leena Rautajuuri, Head Tax Adviser at the Tax Administration.

Costs paid for building a new garage, outdoor canteen for a summerhouse, or a new sauna fall outside the purpose of use of the credit.

Those individuals who have paid for renovations, certain repairs and upkeep of a house can get the credit. And of course, many forms of caregiving services will qualify for the credit, including nursing service at home. The household credit is also for home cleaning, care of a child, gardening if the taxpayer has paid for these services to another party who provided the service. In addition, payments of service expenses for the benefit of elderly parents will also entitle you to the credit. From the 2024 tax year onwards, expenses for physical and occupational therapy given at home are creditable.

If an individual taxpayer had work done at home last year, the right time to submit a claim for the credit for household expenses is now. You can add the claim to the pre-completed tax return that you received. As for other deductions, you can do the same: add the claim with detailed information on the costs to your pre-completed return and send it back to the Tax Administration.

Whereas the Tax Administration’s main source of data when preparing the pre-completed returns are the third-party organisations that send us information, it continues to be necessary for individual taxpayers to claim their deductions themselves.

Anna-Leena Rautajuuri would like to recommend that all taxpayers check once again whether they are entitled to a “home office” deduction for having a workspace for telework, or to a travel expense deduction for their daily commute.

The due dates for sending the tax return back are 15 April, 22 April and 29 April. Look up your personal due date on the pre-completed return you received.

Trips are deductible based on the least expensive means of transport

Anna-Leena Rautajuuri shares another observation: people seem to have a lot of misconceptions about travel and daily commuting to work.
- Contrary to common belief, the kilometres driven to work will not entitle the taxpayer to deductions merely because the private motor vehicle is more handy for the commute, or because the vehicle is helpful for a work purpose during the workday. Under the tax rules, those reasons are not good enough, Anna-Leena Rautajuuri explains.
- Deducting your car expenses does not become acceptable even if you need to give a ride to your children in the morning to school or to daycare.

Anna-Leena Rautajuuri says that daily commuting or travel is deductible based on the least expensive means of transport only, even if the taxpayer had used the privately owned car every day instead of mass transit, the less costly alternative. The tax rules allow deductions for driving your car to work, if:

• No public transport is available at all.
• The one-way trip on public transport would require that you walk 3 Kms. This would be something like 2 kilometres from your house to the bus stop, and when you get off the bus, you would have another 2 kilometres to walk to your place of work.
• The waiting time (which does not mean the travel time) during your round-trip commute would be at least 2 hours.
• The trips would begin or end between 0:00 midnight and 5:00 in the morning.

There is an own-liability threshold for 2024. In other words, if your actual cost stays below €900 you cannot be given the deduction. If this is the case, we recommend that you claim no deduction for commuting or travel at all. After exclusion of the 900-euro threshold, the maximum limit of €7,000 can be deducted.

FACTS: Typical deductions and credits

• For 2023, there were 758000 individual taxpayers who benefited from the deduction for commuting expenses, and the sum total of this deduction calculated against these taxpayers’ earnings was €1.9 billion.
• Likewise, for 2023, some 500000 individuals were given the tax credit for household expenses, and the sum for the entire year reached €1.4 billion.
• If a taxpayer pays for a house repair job, 40% of the amount charged for work will qualify for credit. However, the maximum credit is limited to €2,250 per year. The company to which the payment is made must be on the Prepayment register. The threshold of €150 must be exceeded before the household credit can be claimed.
• Regarding travel and commuting, it is important to remember that no deductions are available during a period of unemployment, nor during the weeks or months when the individual employee is having days off, a holiday or a vacation.

Please read the following instructions:

Pre-completed tax return

Commuting expenses

The tax credit for household expenses