Do You Know All the Deductions?: Use This Trick to Save Taxes!

Article from the “Observator”

This article was first published in the “Observer”. You can find more exciting articles at www.beobachter.ch.

This article was first published in the “Observer”. You can find more exciting articles at www.beobachter.ch.

A major budget item in most households is healthcare costs. You can get at least part of it back through the tax authorities.

When it comes to healthcare costs, it is important to distinguish between two types, because from a tax perspective they are two different things. First of all, the premiums for health insurance. And secondly, the actual costs if you are ill or have an accident.

Bonuses: Everyone can deduct

You can deduct the costs of the premiums from your taxes. Even if you are in perfect health and have never been to the doctor. That’s the good news. The bad news is that most people can deduct much less than they actually pay in premiums.

Single people can deduct a maximum of 1,800 francs per year for federal tax – the premium is not that low for anyone. If you have not paid into the pension fund or into pillar 3a (this applies, for example, to pensioners), the maximum deduction is 50 percent higher, namely 2,700 francs. An additional 700 francs is added for each child. However, each canton can set its own amounts and rules for state taxes. In Freiburg it is 4,810 francs for singles plus 1,140 francs per child.

This is not sufficient for other insurance policies

Because for many people the deduction is smaller than the premiums actually paid, there are always political attempts to significantly increase the deductible amount. In Zurich, for example, the population approved such a referendum by the SVP at the end of 2022, but the deduction will only increase from 2,600 to 2,900 francs (for singles).

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That is still not enough, especially because the same deduction option actually also includes other premiums, such as supplementary insurance or contributions to daily allowance, life and pension insurance. Even those who have one cannot claim the costs if the maximum deductible premiums have already been exhausted by their health insurance.

• Good to know: Anyone who receives an individual premium discount from the canton can only deduct the part of the premium that he/she has actually paid himself/herself.
• Tip: In many places the deduction is called “insurance premiums and interest on savings capital”. There is usually an extra sheet on which you must fill in the amount of premiums actually paid. You will usually receive an overview of the premiums paid from the health insurer. You attach this list to your tax return.

Medical expenses: Few people can deduct everything

Another issue is the costs that actually arise as a result of illness or accident: deductible and health insurer’s deductible, medications that you pay for yourself, treatments and possibly renovating your own house to make it accessible after an illness for the disabled. serious accident. All this can add up quickly. And here too, unfortunately, few people can deduct all these costs from their taxes.

Only costs that you actually have to pay yourself are eligible for tax deduction. Everything that the health insurer, another insurer, the additional benefits, the helplessness benefit, the person who caused the accident or someone else reimburses, is not deductible.

And one more important limitation: you can withdraw only what is prescribed by a doctor. So not the self-organized wellness trip – regardless of whether it benefits your health.

Unfortunately, a fitness subscription does not count

Another limitation: it must be a therapy for an existing disease or condition. Preventive (preventive) measures do not count, nor do purely preventive examinations (unless prescribed by a doctor). The Tax Authorities are therefore canceling the deduction for fitness subscriptions, but not the deduction for rehabilitation physiotherapy. There are two important exceptions to this: firstly, vaccinations (if prescribed by a doctor) and secondly, dental hygiene (no order is necessary here). The costs for this are deductible.

• Good to know: All dental costs are also deductible, but they cannot be purely cosmetic procedures, such as teeth whitening. That is why you must provide detailed invoices so that the tax authorities can check them. The costs for a dentist in Bulgaria are also tax deductible here, but only the dental costs, excluding travel and accommodation costs.
  Glasses and hearing aids (if paid for yourself) are also deductible, as are the costs of medically assisted reproduction: All measures approved in Switzerland (hormone treatment, artificial insemination, in vitro fertilization) can be deducted – even if the procedure takes place at a “ healthy” partner. The costs of medical examinations to find out why a couple remains childless are also deductible.
• Tip 1: To check whether the requirements for the deduction are met, the tax authorities can request the medical prescription and the detailed statements. This goes too far for many people because, for data protection reasons, they do not want the tax authorities to know exactly what is bothering them. Both are justified. You may therefore black out the exact diagnosis on the documents to be submitted, but you must show the tax authorities for which specific medical measure you are claiming tax deductions.
• Tip 2: Ask for a doctor’s prescription in advance. Under no circumstances will the tax authorities accept medical certificates issued later.

The net income rule

So there are a lot of restrictions, but unfortunately that’s not all: you can only deduct the part that exceeds 5 percent of your net income. What counts as net income (also called net income in some cantons) varies depending on the canton. As a rule, this is the total of all income minus all other deductions, but before deductions for charitable donations and party contributions.

The residents of the following cantons, where the threshold is lower, are better off:

• Glarus, St. Gallen and Valais: 2 percent
• Geneva: 0.5 percent
• Basel-Landschaft: no threshold at all, the entire amount is deductible

Here is an example: A taxpayer with a net salary of 75,000 francs has a net income of 60,000 francs with all deductions. He has medical expenses of 5,000 francs. If he lives in Zurich, he can only deduct 2,000 francs from this, because the threshold for him is 3,000 francs (5 percent of 60,000). In St. Gallen he can deduct 3,800 francs (threshold 2 percent of 60,000 = 1,200), in Liestal the full 5,000 francs.

• Good to know: A special case is medically prescribed essential diets, such as those that celiac patients must adhere to. Theoretically, you can deduct the proven additional costs for this diet as medical costs, but you can also opt for a lump sum amount of 2,500 francs. As a rule, it is sufficient that you attach a medical certificate the first time, from then on the fixed deduction must be accepted. This no longer applies to diabetics since 2022: their fixed rate has expired, but they can still claim demonstrable additional costs.
• Tip: Collect all receipts throughout the year that qualify for the tax deduction; Don’t forget the dental bills. Please note: The date on which the health insurer paid the invoice or the invoice or payment date is fiscally relevant, not the date of the treatment. Therefore, try to schedule scheduled (dental) doctor appointments and treatments in the first half of the year, so that they are certainly invoiced before the end of December.

You must provide for your own livelihood

But what if you are not only sick, but permanently disabled? The costs that you then have to bear yourself can be exorbitantly high. A nursing home can easily cost five figures per month. Such so-called “disability-related costs” are not tax deductible at 5 percent. This increases the deductible amount and significantly reduces the tax bill.

The condition is that a “physical, mental or psychological impairment that is expected to be permanent” makes it difficult or impossible for a person to carry out daily activities, maintain social contacts, travel, attend training and further education or perform paid work. , as it is called in civil service language. This deduction therefore primarily applies to recipients of a disability pension and/or helplessness benefit and to residents of a retirement home or nursing home, provided that they receive at least 60 minutes of care per day (care level 4).

• Good to know: The tax authorities deduct a certain amount from the costs you pay for an elderly or nursing home as ‘living costs’. These would also be made if you lived within your own four walls. This often concerns a fixed rate of 2,000 francs per month.
• Tip: People who are cared for at home by Spitex can also claim the disability deduction, provided their care lasts 60 minutes or more per day.