Tax return & tax deductions: match made in heaven – tips for checking a light entrepreneur’s tax return
It is again that time of the year when pre-filled tax returns and reviewing them are just around the corner. As a light entrepreneur, to get all the possible benefits from tax deductions and make it easy for you to check your tax return, you should prepare beforehand and report information through MyTax well in advance.
Tax returns will arrive to MyTax in random order now during March-April. If you are correcting a tax return, the deadline is either May 4th, May 11th, or May 18th, 2021. You can see the date from your own tax return and MyTax. You can make corrections in MyTax or on paper. And best of all, if there is nothing to correct in your tax return, you do not have to do anything!
Online tax return – anticipate and notify in advance
In MyTax, you can report some information for the 2020 tax return in advance, which is recommended (you will thank yourself later for not leaving everything until the last minute). If you have any of the following expenses and you haven’t reported them within a year, you can already submit them to MyTax:
- Travel expenses (between home and work)
- Deductions for second home for work
- Expenses for the production of income
- Rental income
- Capital gains and losses from other property than trading with securities
- Reduction of reduced ability to pay taxes
A light entrepreneur should report at least these work-related expenses
1 Eezy’s service fee, employer’s health insurance payment and accident insurance payment
You can deduct Eezy’s service fee and your employer’s health insurance payment in your own taxation because they are considered income-generating expenses. Note, however, that you can only deduct your employer’s health insurance payment if you have the YEL insurance, in which case the health insurance payment is deducted from your salary.
The accident insurance payment has been included in our service fee since June 4th, 2020, before that it was a separate payment. You can therefore deduct the separate accident insurance payment from January 1st to June 3rd, 2020, if you have been an Eezy light entrepreneur during that time.
2 Taxable travel expenses
Taxable travel expense should be reported annually as income deductions in your personal tax return. If you do not declare taxable travel expenses in your tax return, the Tax Administration will treat these taxable expenses as earned income, and you can expect some residual tax.
Tip! If you know in advance that you will receive a lot of taxable travel expenses during the year, you should raise your own tax rate at the beginning of the year.
3 YEL-insurance payments
You can deduct the YEL insurance payments in either your own or your spouse’s taxation. You can declare the YEL payments with a tax return via MyTax (section: Statutory pension contributions for non-wage income) or alternatively on paper (Form 8.2A, section 8.2 Statutory pension insurance contributions for non-wage income).
4 Other expenses for the production of income
If the expenses of the work have not been reimbursed to you through Eezy already during salary payment, you can and should declare them with a personal tax return as production of income deductions. These are:
- Home office deduction
- Professional literature, research tools and scientific literature
- Expenses on the purchase, maintenance, and repair of tools
- Expenses for the purchase of a computer and its peripherals
- Telecommunication connection expenses
- Representation expenses
You can declare these expenses from the production of income in Mytax or on Form 50A in section 8.4
Download a handy summary of the Eezy light entrepreneur’s online service
From our online service, you can conveniently get an annual summary of service fees withheld from your salary, employer’s health insurance payments, accident insurance payments and taxable travel expenses paid to you. On the last row of the summary, you will find the totals and they are usually sufficient for the tax return. However, keep the summary in case the Tax Administration requests a more detailed explanation.
So, log on to our online service and download the summaries under ‘Salaries’ – ‘Tax Return Summary’.
Best of all – tax-free expenses do not need to be reported
If you have been paid work-related expenses through Eezy as tax-free expenses, they will no longer be reported as deductions on your tax return. You can find more detailed instructions on expenses for the production of income and the right to deduct them on the Tax Administration’s website: Expenses for the production of income from earned income. If you have work-related expenses from the past year but have not been reimbursed through Eezy, you may want to report the expenses on your personal tax return.
Here are some more links to the Tax Administration’s instructions:
- The pre-completed tax return – making corrections
- Here’s how to complete information on paper
- Tax Administration’s online info: Private customer’s tax return in MyTax (in Finnish)
And then just wait for the pre-completed tax return! You can already download the summary from the online service and save these instructions so the reviewing of the tax return and any possible corrections will feel as smooth as the cream cheese on your bagel.
Participate on Thursday, April 15th, 2021 in our webinar Light entrepreneur’s tax deductions, which gives you a good boost to the early steps of your light entrepreneurship. Check out the webinar and sign up! (in Finnish)
Author: Otto Michelsen
The author is Eezy Light Entrepreneurs Lawyer and Business Development Manager, who helps of course Eezy Light Entrepreneurs’ in dispute situations, but is especially happy to guide and help you draft a good contract.