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Private tax return, documents, information, deductible expenses |
Handling your tax return yourself, or entrusting it to a trustee/accountant?
Completing your tax return independently can be straightforward, provided you have all the necessary documents at hand. With some know-how, you can legally counteract the tax office, which is always seeking revenue, and save money in the process. An important piece of advice: Keep an eye on the submission deadline to avoid last-minute stress.
The decision whether to fill out your tax return yourself or delegate this task to a tax advisor or accountant is up to you. Regardless of your choice, it is essential to gather all important documents and prepare for the tax return. A practical approach is to create a document folder at the beginning of the year, where you diligently store all receipts relevant to the tax return as the year progresses.
Deadline
The deadline for filing your tax return deserves your primary attention. If you haven't completed your tax return by mid-March, it is essential to promptly apply for an extension of the filing deadline. An extension until September 30th is advisable.
In a search engine, you would ask: "Fristerstreckung private Steuererklärung [Stadt/Gemeinde]"
Overview of submission deadlines in different cantons:
| Private Tax return | For self-employed individuals (sole proprietorship) | Website deadline extension | |
|---|---|---|---|
| Canton Zürich: | 31.03.20XX | 30.09.20XX | deadline extension Private Stadt. ZH Andere Gemeinden separate Webseiten der Gemeinden |
| Canton Aargau: | 31.03.20XX | 30.06.20XX | deadline extension Private Kt. AG |
| Canton Luzern: | 31.03.20XX | 30.06.20XX | deadline extension Private Kt. LU
deadline extension self-employed Kt. LU |
What do the tax authorities want to know from you?
Your Income
The tax authorities levy taxes on your income and assets. Therefore, it is necessary to prove your income amount for the tax year. For employees, this can be easily determined through the employer's salary statement.Self-employed individuals must declare the profit of their sole proprietorship. This means that self-employed individuals must first prepare their accounts to determine the profit made. For them, the profit is the entrepreneur's salary.
Income from side jobs, such as occasional help in a restaurant or cleaning work, must also be declared as income. In short, all regular and one-time earnings are taxable
Other sources of Income
Owner-occupied Residential Property
If you own a house or apartment and live in it, you must tax the so-called imputed rental value as income. This value is determined by the municipality and communicated to you in writing. It is possible to deduct lump sum expenses or actual costs for the maintenance of the property from this value.Rented Property
If you generate income from renting out apartments or houses that you own, these rental incomes are considered income. However, you can deduct lump sum costs or actual expenses incurred from these incomes.Income from Realized Gains
If you sell shares at a profit, the surplus compared to the purchase price must be declared as income. However, there are exceptions: If you act as a private investor and are not considered a commercial securities trader, you do not have to pay taxes on such stock gains. The classification by the tax authorities of when someone is considered a commercial securities trader is not clearly defined. This can lead to different practices in tax handling, depending on the canton.Inheritance Tax
Inheritance tax is a levy that is applied under certain circumstances to an inheritance. It is not always imposed, but when it is, the heirs are obliged to pay it. For spouses, life partners in a registered partnership, and their direct descendants - including children and grandchildren - this tax is usually waived. Stepchildren and foster children may also be exempt from inheritance tax in some cantons, provided they are treated the same as biological children.The basis for calculating the inheritance tax is the value of the inherited assets. Personal belongings and household items are not taxed in many cantons.
The rate of tax - and thus the tax to be paid - varies mainly according to two factors:
- The value of the inheritance
- The degree of kinship to the deceased. The closer the kinship, the lower the tax rate. Heirs without a kinship relation to the deceased can expect higher tax burdens accordingly.
For an individual calculation of the inheritance tax, an online portal is available to you:Erbschaftssteuer selber berechnen
f you inherit a property, it is advisable to contact the responsible tax office of the municipality where the property is located for further information.
Inheritance Abroad
If the deceased had their residence abroad, an heir lives abroad, or a property belonging to the estate is located outside Switzerland, this raises the question of which national law should govern the inheritance matters. There is indeed a risk that taxes may have to be paid in multiple states for the same inheritance. "Inheritance Abroad
If the deceased had their residence abroad, an heir lives abroad, or a property belonging to the estate is located outside Switzerland, this raises the question of which national law should govern the inheritance matters. There is indeed a risk that taxes may have to be paid in multiple states for the same inheritance. To avoid such double taxation, Switzerland has entered into agreements with a number of other countries. These agreements are intended to ensure that inheritances are taxed fairly internationally and without unnecessary multiple burdens.For more information on double taxation, please contact the State Secretariat for International Financial Matters (Division of Double Taxation Agreements), to the tax authorities of the countries involved or to a tax expert
Wealth
'Wealth' refers to everything that has a monetary value and belongs to you or from which you can benefit. This includes both items (movable such as real estate and immovable goods), claims (money that others owe you), as well as stakes in companies.In Switzerland, your entire net worth, meaning everything you own after deducting your debts, is subject to wealth tax. This affects your wealth both within Switzerland and abroad. As a taxable person, you are obliged to declare your entire wealth.
"Here you will find examples of what can all be included in your wealth:
- Cash
- Salary accounts, other bank balances (including cryptocurrencies) as well as postal savings, also children's savings accounts
- Assets of minor children
- Securities (cash vouchers, bonds, stocks, LLC and cooperative shares, profit-sharing and participation certificates, options, etc.)
- Shares in domestic and foreign investment funds
- Mortgage claims
- Private loans that you have given to someone
- Premium deposits with insurance companies
- Redeemable capital insurances (e.g., life insurances) and pension insurances (NOT 2nd and 3rd pillar, those are tax-free until payout)
- Real estate
- Owner-occupied and rented residential property
- Holiday home abroad
- Precious metals (gold, silver, etc.)
- Cars, boats as well as caravans and the like
- Horses and livestock
- Collections of all kinds (stamps, coins, artworks, etc.)
- Art and jewelry items
Foreign Assets
Individuals who are liable to tax in Switzerland must declare their entire worldwide assets as well as the resulting income in their tax return. This applies particularly to movable assets. Those who have their main residence in Switzerland are subject to tax in Switzerland on their worldwide income and assets.Besteuerung von beweglichem Vermögen im Ausland
Zu beweglichem Vermögen zählen zum Beispiel Bankkonten, Wertpapiere oder Kredite. Personen, die in der Schweiz steuerpflichtig sind, müssen diese Vermögenswerte und die daraus erzielten Erträge vollständig in ihrer Steuererklärung angeben. Grundsätzlich sind Personen, deren Lebensmittelpunkt – üblicherweise der Wohnort – in der Schweiz liegt, mit ihrem weltweiten Einkommen und Vermögen steuerpflichtig. Der Begriff "Hauptsteuerdomizil" bezieht sich somit auf den Ort, an dem eine Person den Mittelpunkt ihres Lebens hat.Taxation of Movable Assets Abroad
Movable assets include items such as bank accounts, securities, or loans. Individuals who are liable to pay taxes in Switzerland must declare these assets and the income generated from them in their tax return in full. Generally, individuals whose life center—usually their place of residence—is in Switzerland are taxed on their worldwide income and assets. The term "main tax domicile" thus refers to the location where a person has their life's center.There are two different methods used in the taxation of properties in secondary tax domiciles. These tax procedures can be complex, which is why it is possible that taxpayers were not aware until now that they also have to declare their foreign properties in Switzerland
Taxation of Real Estate Assets at Secondary Locations: Method 1 The first method for taxing real estate in secondary tax domiciles is the so-called object-related taxation. In this method, the property in question is taxed at a rate based on the income earned there (for example, imputed rental value) and the value of the property. Additional income or assets of the owner are not considered in this calculation.
This object-related taxation is mainly applied to holiday homes owned by Swiss citizens abroad, as well as in some cantons for properties owned by foreigners in Switzerland. For tax authorities, this method is relatively straightforward to implement.
Taxation of Real Estate Assets at Secondary Locations: Method 2 The second method, which is applied in most cantons for the taxation of real estate in secondary tax domiciles, is called the so-called progression clause. In this method, the property itself as well as its rental income or imputed rental value are not taxed in Switzerland itself. Instead, these values are factored into the calculation of the tax rate applied to the remaining income.
While this may sound harmless, the inclusion in the progression clause can lead to a significant increase in tax burden. One reason for this is that certain tax deductions are allocated proportionally to the foreign property. Additionally, the proportional allocation of interest expenses, along with the potentially increasing tax rate as a result, can further increase the tax burden.
Valuation of Asset Components
The various elements of your assets are valued based on their market value. This corresponds to the price at which you could sell the items at the current moment. The insurance value, which typically is based on the original purchase price and therefore may be higher, does not play a role in determining the asset value.Tax-Exempt Assets
In Switzerland, household goods and personal items are no longer subject to taxation. Household goods include all items that are common in a residence and are actually used for living. This includes, for example, furniture, carpets, pictures, dishes, books, and similar items.Personal items are articles that you use in everyday life, such as clothing, televisions, sports equipment, cameras, and comparable items.
Capital insurances, , which are taken out as part of occupational pensions (2nd pillar) and tied pension provision (3rd pillar), are exempt from wealth tax in all cantons until their payout date.
Deductible Expenses
Now we come to a particularly interesting part: the expenses that you are allowed to deduct from your income and assets. These deductions reduce the tax base of your taxes, ultimately reducing the amount of taxes you must pay.Professional Expenses
For certain costs incurred due to your professional activity, you can claim deductions to reduce your tax burden. Here are some examples:- Public Transportation Costs: Keep receipts for monthly or yearly subscriptions of public transportation to deduct these costs.
- Vehicle Expenses: A deduction per kilometer for using your car or motorcycle is possible, provided that the use of your own vehicle is justified. This is the case if it saves you at least one hour of travel time daily or if no public transportation is available. Medical necessity. Regular use of the car during work. For shift work: no public transportation available at that time.
- Meal Allowance Away from Home: If you do not have the opportunity to go home and eat there, and there is no discounted meal available at the workplace (this is indicated on the payslip), you can claim the full deduction for meal allowances.
- Meals at work under discounted conditions or with lunch checks: In this case, you can only claim half of the usual meal deduction.
Health Insurance Premiums and Medical Expenses
Health Insurance Premiums
Health insurance premiums, both for basic and supplemental insurances, can be deducted on the cantonal tax return up to a certain maximum amount, which varies from canton to canton.For example, in the Canton of Zurich, individuals can deduct up to 2,600 Swiss francs. If no contributions were made to the pension fund or to pillar 3a, this maximum deduction increases to 3,900 Swiss francs. For each child, parents or legal guardians can deduct up to 1,300 Swiss francs.
In the Canton of Aargau, on the other hand, a lump-sum deduction is granted, which is not dependent on the actual health insurance premiums paid.
For direct federal tax, the maximum deduction for individuals is set at 1,800 Swiss francs. For married couples or those in registered partnerships, the maximum joint deduction is 3,600 Swiss francs, and up to 700 Swiss francs can be deducted per child.
Deduction of Medical and Illness Costs
Medical and illness costs can be deducted. (Costs covered by health insurance or accident insurance cannot be deducted.)5% Rule: At the federal level and in almost all cantons, self-paid health costs are only deductible if they exceed 5 percent of the net income. In the Canton of Geneva, the threshold is 0.5 percent, in the cantons of St. Gallen and Valais it is 2 percent, and in the Canton of Glarus it is 3 percent. Only the Canton of Basel-Landschaft allows all self-covered medical expenses to be deducted.
Medical and accident costs are defined as: Costs that contribute to the "maintenance and restoration of physical and mental health."
- Medical treatments and therapies prescribed by qualified individuals
- Naturopathic treatments by a recognized naturopathic practitioner. Depending on the canton, a medical prescription may be necessary
- Massages, stays at health resorts, physiotherapy, occupational therapy, speech therapy, and psychotherapy, as prescribed by a doctor
- Medications prescribed by a doctor
- Hospital stays and home care (home nursing), if prescribed by a doctor
- Care costs of a nursing home or retirement home
- Medically necessary transport, rescue, and recovery costs
- Dental treatment, orthodontic corrections, dental hygiene, dental technicians
- Vaccinations
- Aids such as glasses, contact lenses, hearing aids, medical devices, prostheses
- Costs for diets or special nutrition (e.g., for diabetes, celiac disease), if medically prescribed. At the federal level and in certain cantons, a lump-sum deduction of 2,500 Swiss francs is possible in such cases.
- Costs for hormone treatments, artificial insemination, or in-vitro fertilization are generally recognized as deductible medical expenses. Deductibility applies even if the procedure is performed on the "healthy" spouse.
In addition to their own health expenses, taxpayers can also claim the health costs they have borne for individuals for whom they primarily provide financial support and who require assistance. It is often overlooked that this also includes health costs for adult children who are still in education.
Required documents: For the tax return, it is necessary to provide a summary of your health insurance costs (tax confirmation). Usually, you will receive this document by the end of February from your health insurance company. This provides you with proof of the deductibility of premium payments and health costs in your tax return for the corresponding year.
Health-promoting measures such as gym memberships, weight loss programs, preventive check-ups, if not prescribed by a doctor, are generally not deductible. In addition to their own health expenses, taxpayers can also claim the health costs they have borne for individuals for whom they primarily provide financial support and who require assistance. It is often overlooked that this also includes health costs for adult children who are still in education. Required documents: For the tax return, it is necessary to provide a summary of your health insurance costs (tax confirmation). Usually, you will receive this document by the end of February from your health insurance company. This provides you with proof of the deductibility of premium payments and health costs in your tax return for the corresponding year. Collect all receipts for additional medical expenses that are deductible but not covered by your health insurance. It is crucial to carefully collect all these receipts throughout the year. While it may be somewhat time-consuming, it is worthwhile. Especially for families, it is often the case that a variety of invoices and receipts are submitted. Examining your receipts entails additional effort for the tax office, but it optimizes your tax burden. Receipts are of great importance, as tax-reducing expenses must be proven by the taxpayer.
If you are unsure whether certain costs are deductible, it is recommended to still claim them. In the assessment, you can then see how the tax commissioner has decided on them.
Professional Training and Education Expenses
Occupational training and education expenses, including retraining costs, can be deducted provided that either a first qualification at the secondary level II exists or from the age of 20, provided it is not training costs up to the completion of secondary level II (apprenticeship, high school diploma, vocational high school, or commercial high school). The maximum deduction is usually 12,000 Swiss francs at the federal level and in most cantons.Deductible costs include not only tuition fees but also travel expenses, school supplies, meals outside the place of residence, and accommodation costs. The prerequisite is that these costs were borne by the taxpayer themselves. If the employer reimbursed them, no deduction can be claimed.
Until the end of 2015, only job-related further education costs were deductible. From 2016, the distinction between non-deductible training and deductible further education costs was abolished. Now it is sufficient if the person concerned becomes employed or obtains better job opportunities through the educational measure.
Contributions to the Pension Fund, Deposits into Pillar 3a, and AHV Payments
A contribution to the pension fund is possible if this is permissible according to the regulations and there is a coverage or contribution gap.Pillar 3a can be utilized by employed individuals with AHV (Swiss old-age and survivors insurance) liability up to five years after reaching the regular AHV retirement age (at the age of 69 or 70).
To prove contributions to the pension fund or deposits into Pillar 3a, you need a certificate from your bank, insurance company, or pension fund. Also, do not forget to declare subsequent payments into AHV to close contribution gaps or contributions to AHV as non-employed individuals in your tax return. The latter especially concerns individuals who retire early before reaching the regular AHV retirement age.
Home Office
In principle, the costs of a home office in one's own home or apartment are deductible as professional expenses if there is no suitable office available at the workplace and if working from home constitutes a substantial part (usually 40 percent or more) of the work. The employee must have a dedicated space at their residence that is used exclusively or predominantly as a home office and cannot be used for private purposes. If the employer pays a home office allowance or office rent, this must be declared as income, and the costs for the home office must be claimed as professional expenses in return. However, it should be noted that the costs for the home office are included in the lump-sum deduction for other professional expenses (3 percent of the net salary, minimum of 2,000 Swiss francs, maximum of 4,000 Swiss francs). Cumulation of the lump sum and actual deductions is not possible.Working from Home
If you set up an office in your own home or apartment, you can claim the associated costs as work-related expenses for tax purposes. However, this is subject to certain conditions: a suitable workplace must be lacking at the regular workplace, and working from home should occupy a significant portion of your working time – typically at least 40 percent. Additionally, it is necessary for you to have a home office that is used exclusively or primarily for professional purposes and is not available for private matters. If you receive compensation from your employer for working from home or rent for your office, you must declare these amounts as income. In return, you can deduct the costs for your home office as professional expenses.However, please note that the expenses for your home office are already included in the lump-sum deduction for other professional expenses. This lump-sum deduction is 3 percent of your net salary, but at least 2,000 Swiss francs and a maximum of 4,000 Swiss francs. Combining this lump-sum deduction with deducting actual costs is not allowed.
Tax Deduction for Childcare by Third Parties
This tax deduction is particularly important for working parents as it helps to better balance work and family life. The exact regulations for this vary depending on the canton.Costs for Maintenance and Investments in Energy Efficiency and Environmental Protection for Private Properties
Costs for Maintenance and Investments in Energy Efficiency and Environmental Protection for Private Properties
For private properties, you can deduct costs for maintaining the property, such as repairs, renovations, or the replacement of facilities, from your taxes. However, these expenses must maintain the value of the property and not increase it. Costs covered by insurance are also not deductible.Expenses that increase the value of your property, such as purchasing new buildings, extensions, or significant renovations, cannot be deducted from income tax. However, if you improve your property or replace older facilities with new, more efficient ones, a reasonable portion of these costs must be considered value-enhancing. These may be deductible for tax purposes upon the eventual sale of the property.
Many tax authorities offer online information sheets that can help distinguish between maintenance and value-enhancing expenses. For major renovations that both maintain and increase value, it's advisable to request a detailed breakdown from your architect listing both types of expenses. A photo documentation of the renovation can also be helpful.
In many cantons, you can annually choose between a lump sum and the actual costs for property maintenance. This flexibility offers opportunities for tax optimization. It's worthwhile to review which option is more favorable for you each year.
Note that for properties primarily used for business purposes, lump sum deductions are generally not possible. This applies if the income from business use constitutes more than half of the total property income.
Investments aimed at energy savings and environmental protection are treated as maintenance costs and can be additionally deducted, provided they are tax-deductible. Costs for dismantling as part of a new construction can also be claimed for tax purposes in the two following years if they were not fully deducted in the year of origin.
Tax Deduction for Energy-Efficient Investments that Increase Property Value
Investments that save energy while simultaneously increasing the value of your property can be deducted from your taxable income in most cantons (except for Lucerne). This applies, for example, to the installation of new solar or photovoltaic systems. Such measures can be claimed for tax purposes similar to regular maintenance costs. Any public subsidies you receive for these investments must be taken into account.Side Job, Additional Income
Even if you earn money on the side, there are expenses incurred to generate this additional income. Similar to job-related expenses with your main job, you can deduct these costs from your taxes with the tax office for both the federal government and in most cantons, either as actual expenses or as a lump sum. Using the lump sum is usually the simpler option. For the federal government, this lump sum is at least 800 Swiss francs per year or a maximum of 20 percent of your additional income, up to a maximum amount of 2,400 Swiss francs – depending on what is more favorable for you. If your additional income is less than 800 Swiss francs, you can only claim costs up to this amount. In practice, this means that income up to 800 Swiss francs per year remains tax-free, but it still needs to be declared in the tax return.Debts and the Interest on Them
Many people primarily think of mortgages in this context. However, there are also individuals who have taken out small loans or are paying off their credit card debts in monthly installments. For private loans, such as those within the family, it is advisable to create a statement of interest and repayments each year by December 31st. This allows both debtors and creditors to substantiate their claims with the same evidence.Leasing fees for items such as cars cannot be deducted from taxes. From a tax perspective, it is more advantageous to take out a loan for the purchase of a private vehicle rather than entering into a lease agreement.
Often overlooked are tax debts and the default interest on them. If you are behind on your tax payments, it is wise to request a current tax statement from your tax office. This allows you to document your tax debts. Don't forget to include both overdue and not yet determined tax debts in your tax return.
Donations to Charitable Organizations
Money donations to organizations that are tax-exempt in Switzerland and pursue charitable or public objectives can be deducted from your taxable income. An organization is considered charitable under tax law if it demonstrably and according to its statutes works for the common good by selflessly assisting others. At the federal level, you can claim donations starting from 100 Swiss francs and up to 20 percent of your total net income for tax purposes. Regulations may vary depending on the canton.Maintenance Costs for Divorced or Separated Spouses and Children (Alimony)
If you pay alimony, it is important to be able to claim it for tax purposes. It is best to create a statement for each year that can be attached to the tax return by all parties involved. It is not uncommon for the two former spouses to have different views on the amount of alimony. A statement can help achieve a mutual understanding, especially when the maintenance contributions are partially made in kind (e.g., providing a house, covering the costs of music lessons for the children, or property maintenance costs, etc.).Child support starting from the month following the 18th birthday is not deductible. Similarly, alimony is not deductible if a lump-sum payment was agreed upon instead of periodic maintenance payments, even if the sum of the capital payment is paid in installments.
Tax Deduction for Unused Living Space in Condominiums and Houses
Many property owners are unaware that they can apply for a so-called underutilization deduction. This deduction allows for reducing the assessed value of one's own apartment or house for tax purposes if large parts of the property are not being used. A corresponding application must be submitted in writing each year along with the tax return.This tax deduction exists in ten cantons as well as at the federal level under certain conditions. It aims to financially support individuals whose living situation changes suddenly – for example, when children move out, the partner needs to move to a nursing home, or passes away, leaving parts of the property partially vacant. It is important that the vacant rooms are not used for other purposes, such as storage rooms or guest rooms, but remain truly empty.
Costs for Managing Your Assets
Deductible costs for managing your assets include, in particular, fees for account management, custody fees, and certain other costs directly related to the management of your assets. Different cantons handle negative interest rates differently. If you incur negative interest rates, it is advisable to declare them in your tax return and check whether your tax office allows them to be deducted. In some cantons, there is the option to claim a lump sum for asset management costs. Here, it is advisable to compare whether the actual costs or the lump sum is more advantageous for you. For example, the canton of Zurich allows a lump sum for the safekeeping and management of securities – excluding bank deposits and loans – of three per mille of the taxable value, but no more than 6,000 Swiss francs. However, you also have the option to prove your actual costs.Summary
In our article, we have briefly explained the most important tax deductions. However, when it comes to tax returns, the subtle differences often matter. For example, it can be challenging to correctly deduct costs for property maintenance.Everyone has the right to utilize all allowable deductions in their tax return. The preparation of the tax return involves systematically reviewing all relevant facts of the past year.
For successful tax optimization, it is important to set the course for the future early on. Creativity is particularly important in tax planning, such as coordinating your contributions to the pillar 3a pension scheme and the pension fund or planning renovation work. Preparing for retirement and strategically planning capital withdrawals from the pillar 3a, the pension fund, and vested benefits – taking into account your partner – are also crucial. A holistic tax planning approach helps you maximize your tax-saving potential.