Tips and tricks for your 2020 tax return

It’s that time of the year again where birds make their nests, daffodils spring up…and your Dutch income tax return is due. If you are planning to use the Belastingdienst’s online software to file your 2020 tax return, Blue Umbrella has a few tips for you.

Because of technical problems in the first week of filing, there’s an automatic extension to the deadline (until 8 May 2021) and according to the latest news from the Dutch tax office, 40% of the expected returns have already been sent in.

People who send in their records before April 8 will have the added advantage of having their tax calculation back by July 1 (and if these dates are not achievable for you, don’t forget to request an extension until the beginning of September, via your online portal, the Belastingdienst telephone line or your tax adviser).

Even if you have a regular job, with tax already deducted by your employer, it might be in your interest to file a tax return because there will be various deductions you can make. You are also obliged in most circumstances to declare your savings and assets.

Attention

If you file your taxes online, you will first see all of the information they have about you in the system in your vooraf ingevulde aangifte. It is worth paying extra attention to the details they already have, because they may be wrong, especially if you have made an objection to the WOZ value of your house.

Each year, your local district will send you an assessment of your house value (WOZ-waarde), which is based on sales of houses it judges to be similar in your area. It might be to your advantage to have a high value if you are intending to sell your house or wanting to raise the mortgage, however, a higher level means more income and city taxes.

In your pre-filled tax form, however, the tax office will not have taken into account any objection you might have made if you believed that your WOZ value was too high, so you need to check this.

Benefits

It’s also worth checking the status of any coronavirus-related benefits that your household has received. The TOZO, which has supported freelancers whose income has been affected, was initially unrelated to the income of your fiscal partner or savings, but the third subsidy round (from October 1, 2020, to July 1, 2021) did take this into account. This means that if your fiscal partner applied for the benefit, it may be registered on your tax form too.

There are various things that are in your interest to add to your income tax return. You can declare any donations that you made to Dutch-registered charities (with the ANBI status), and these can be deducted from your income.

One perk of the Dutch system is tax relief on some of the interest for any mortgage payments that you made in 2020 concerning your own home. This is to some extent balanced out by a notional tax on the value of your home, the eigenwoningforfait, which is why it is important that your house is correctly valued by the state. If you bought a house last year, various other costs are deductible from your income, as well as the costs of any tax advice.

Deductions

You shouldn’t forget that you might be able to declare mortgage costs, advisory costs, taxation costs and also study costs.

You’ll need to tell the Dutch tax office about your savings and investments, but if you or your fiscal partner has the 30% ruling, any of these assets that are held abroad will not be eligible for Dutch tax. This doesn’t include, for instance, a second property in the Netherlands.

One reason not to do your tax online through the website of the Belastingdienst is if you want to allocate some of your assets to your fiscal partner, increasing the threshold for savings before you start paying tax, for instance. You might want to allocate study costs to the higher tax paying partner too, for example, or mortgage costs. In this situation, it’s good to have an adviser who uses their own software and can file these requests for you.

So, don’t leave it to the last minute this year - get a tax adviser or join the four million people who have already done it themselves and are free to enjoy the spring!

Need help with your taxes? Blue Umbrella offers fixed fee tax filing services and small business support.