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How to avoid underpaid tax

Below, we explain why you may have been assessed for underpaid tax and give you some tips to how you can avoid it.

The reason why you end up with underpaid tax is often that the final figures for income and deductions differ from the amounts that were used as a basis for your tax deduction card. 

Always check that:

If you have underpaid tax, you should compare the information in the tax deduction card with the tax return for the year and see whether they match.

Changes that may affect your tax:

One major deduction is interest on loans that you pay during a year, typically for a mortgage. The interest on loans is tax-deductible. The information you find on your tax deduction card about the amount of interest is obtained from the previous tax return. If the interest rate falls significantly, so that you pay less interest than you expected at the start of the year, you'll be entitled to a smaller tax deduction than originally shown on the tax deduction card. As a result, you will have underpaid tax. The same is true if, in the same period, you have paid off a chunk of the loan, and consequently owe less interest.

Tips on how to avoid underpaid tax:

Check the interest rate and debt amount that the Norwegian Tax Administration bases its calculations on. If these appear to be wrong, amend your tax deduction card.

You can get a repayment schedule showing both instalments and interest from your bank.

Are you co-habiting and/or married, and you you have joint debt for which you have opted to allocate the interest between you? When the Norwegian Tax Administration receives information from the bank, it may be that the debt is only reported for one of you, even though you share the debt between you. This means that the deduction for debt to which you are entitled will not be pre-completed in both your tax returns and that one of you will end up with underpaid tax, while the other will have tax in credit.

Tips on how to avoid underpaid tax:

You can sort out the allocation by amending next year's tax return. You can also check the debt information on the proposed tax deduction card (the tax deduction notice) that arrives in December. You can change this during the year by amending the tax deduction card.

When you amend the tax deduction card, your employer will be notified. Your employer must then collect the new tax deduction card electronically.

If there are changes in your life during the year that affect your right to a deduction and you do not notify us of these, you may owe underpaid tax. For example, you may start the year as a single provider, but no longer be one at the end of the year.

It may also be that your child has left pre-school or an after school club and you no longer have these costs.

You may also have worked more from home, had fewer travel days to work or not have as far to travel to work compared with the year before, with the result that the tax deduction notice is based on inaccurate travel information. Calculate travel deduction for travel between home and work.

If the basis for receiving benefits from NAV, for example, changes, you must also notify NAV.

All of this may mean a reduction in your entitlement to deductions, and consequently an underpayment of tax during the year.

Tips on how to avoid underpaid tax:

If your personal circumstances change, you must amend your tax deduction card as soon as possible.

Most people will have between two and six different tax deductions in their tax deduction card. The tax deduction card clearly states who should use the various tax deductions and for what type of income they should be used.

Table-based deductions

You must still always check that no more than one payer makes deductions in accordance with a table for the same work period. You can check this on your payslip or via the payments you receive from NAV.

The most common way of deducting tax is by using a table-based deduction. When deducting tax in this way, both income and deductions are included. However, if you have several employers, only your main employer (the one who pays you the most salary) can use table-based deductions. Other employers must use percentage deductions. If more than one employer uses table-based deductions, you'll have too little tax deducted.

This means that, over the year, you will not pay enough tax and will need to make up the underpaid tax. This also applies if you're an old age pensioner.

If NAV pays your main pension, but you have supplementary pensions from previous employers, table-based deductions can only be used for the NAV payments. Supplementary pensions must be paid using percentage deductions.

Tips on how to avoid underpaid tax:

Ensure that your employers, including NAV, are using the correct section of the tax deduction card. Your main employer can use table-based deductions, while secondary employers must use percentage deductions.

When you switch from being a salaried employee to a pensioner, you need to make sure that expenses you had while working, and which stop when you retire, are not included in your tax return. These may include trade union fees and pension contributions from your employer. These are tax-deductible, but if you have not incurred such expenses since you stopped work, they are not deductions that can be included.

If the Norwegian Tax Administration has based your tax deduction card on allowances you no longer are entitled to, this will lead to underpaid tax.

Tips on how to avoid underpaid tax:

You can change information about these deductible items by amending your tax deduction card.

This only applies if you have percentage-based deductions. Most employees have table-based deductions, which means that changes in income are essentially irrelevant in terms of underpayment or overpayment of tax.

Tips on how to avoid underpaid tax:

In the case of percentage deductions, you need to keep track of changes in income and allowances, and report them by amending your tax deduction card.

If your bank has incorrectly reported your assets and liabilities to the Norwegian Tax Administration, your employer has incorrectly reported your income, the kindergarten has forgotten to submit details of your expenses and so forth, and the basis for tax deduction will be incorrect. In that case, you may be taxed incorrectly and end up with underpaid tax. These details must be checked in your tax return, and any changes must be registered by 30 April.

Tips on how to avoid underpaid tax:

Review the tax return item by item, and check the details against the annual statements from your employer, bank, NAV, etc.

If you receive a corrected statement from one of the bodies that report your details to the Norwegian Tax Administration before the deadline for submitting the tax return, it is important that you enter these corrections.