Tax advantages through advance payment of health insurance contributions: This is how the tax trick works for the self-employed

Tax advantages through advance payment of health insurance contributions: This is how the tax trick works for the self-employed

According to a report by www.finanzen.de, PKV members and voluntarily insured people can take advantage of tax advantages by paying their insurance contributions in advance. This option has existed since the Health Insurance Citizens' Relief Act was changed in 2020. The basic contributions for private health and nursing care insurance can be paid up to three years in advance and claimed as special expenses in the income tax return. This tax trick is particularly suitable for high-earning self-employed people who pay all of their own health insurance contributions.

This advance payment of contributions results in various tax saving effects. First of all, the basic amounts for health and nursing care insurance can be deducted from taxes. In addition, other insurance contributions can be stated as “other pension contributions”, although maximum limits apply. Self-employed people can claim a maximum of 2,800 euros, while employees and civil servants are only allowed to deduct up to 1,900 euros.

Another potential advantage arises from the fact that the advance payment means that no PKV contributions have to be paid next year, which offers more scope to deduct contributions for additional pension insurance and additional insurance from tax.

Experts particularly recommend this tax trick to high-earning self-employed people and single private patients, for whom the investment is worthwhile, for example, in a year in which a high marginal tax rate is expected, for example because of a special payment or a severance payment. The deadline for a payment this year is according to Lohnsteuerhilfe Bayern e. V. December 21, 2023 so that the tax advantage takes effect.

Overall, the tax advantage when using this trick can amount to several thousand euros, depending on your personal tax rate. It is therefore advisable to contact your tax advisor and insurer in good time in order to clarify your individual advance payment options and to take advantage of the maximum tax advantage.