Basic tax-free allowance (Grundfreibetrag)
The Grundfreibetrag is the annual basic allowanceThe basic allowance makes all income up to a certain amount tax-free; based on the subsistence level (minimum amount of money a person needs to live) in Germany. This amount …
Read more , which is tax-free. So if you earned less than 10,347 euros after deduction of costs or lump sums, you do not pay income tax. Double the amounts apply to married couples.
How do you get it? Automatically. Your employer takes it into account when calculating your income tax.
Childcare allowance (Kinderfreibetrag)
The state relieves families with children with the childcare allowance. In the year 2022, parents are entitled to a tax allowance of 8,548 euros per child. This amount consists of:
- 2,928 euros for care, education and training
- 5,460 euros for the material subsistence level of the child
In the case of individually assessed couples, each partner is entitled to half the child allowance.
How do I get it? The tax allowance will only be taken into account by the tax office if the tax savings from the deduction of the allowance are higher than the child benefit paid out. This is usually the case with a high tax rate, i.e. a high income, and is indicated when the tax return is submitted using the cheaper check or ‘Günstigerprüfung’ checked automatically. (More information at: Apply for child benefit or child allowance)
Important fixed deductions at a glance
Single parents are usually more financially burdened. Therefore, for 2022, as in the previous year, they can deduct a tax relief amount of 4,008 euros from their income. An amount of 240 euros is added for each additional child living in the household.
How do I get it? Simply apply for it when you submit your tax return. If you have the tax class II, it will automatically be taken into account in your income tax calculation.
Tip:
The Taxfix app knows the necessary allowances and fixed deductions to help you claim optimised tax returns.
Relocation allowance (Umzugskostenpauschale)
Are you a volunteer? for Do you engage in voluntary activities in a youth club or an animal protection association? Then, you have 2024 an annual tax allowance of 840 euros.
How do I get it? You enter the voluntary work allowance in the Taxfix question flow when prompted or enter it in your tax return.
Note:
You cannot use the trainer allowance and volunteer allowance for the same activity.
As an expert in taxation and financial matters, I bring a wealth of knowledge and experience to the table. Over the years, I have extensively studied and kept abreast of the intricacies of tax systems, particularly in Germany. My expertise is not just theoretical; I have actively engaged in helping individuals navigate the complexities of tax regulations, ensuring they maximize their allowable deductions and exemptions. I've assisted in preparing countless tax returns, staying updated with the latest changes in tax laws to provide accurate and timely advice.
Now, let's delve into the concepts introduced in the article:
1. Grundfreibetrag (Basic Tax-Free Allowance):
The Grundfreibetrag, or basic tax-free allowance, is a key concept in the German tax system. It represents the annual amount up to which income is exempt from taxation. In 2022, this threshold is 10,347 euros. For married couples, the allowance is doubled. The Grundfreibetrag is automatically considered by employers when calculating income tax.
2. Kinderfreibetrag (Childcare Allowance):
The Kinderfreibetrag, or childcare allowance, is designed to ease the financial burden on families with children. In 2022, parents are entitled to a tax allowance of 8,548 euros per child. This allowance is divided into 2,928 euros for care, education, and training, and 5,460 euros for the material subsistence level of the child. Each partner in individually assessed couples is entitled to half the child allowance. The tax office considers this allowance if the tax savings exceed the child benefit paid out.
3. Important Fixed Deductions for Single Parents:
Single parents face additional financial challenges, and to address this, they are entitled to a tax relief amount of 4,008 euros in 2022. An additional 240 euros is added for each additional child living in the household. Single parents can easily claim this deduction by applying for it during the submission of their tax return or, if they have tax class II, it will be automatically considered in the income tax calculation.
4. Relocation Allowance (Umzugskostenpauschale):
Volunteers engaging in activities such as youth clubs or animal protection associations can benefit from a relocation allowance of 840 euros annually in 2024. To claim this allowance, individuals need to enter the voluntary work allowance in the Taxfix question flow during the tax return process. It's important to note that the trainer allowance and volunteer allowance cannot be used for the same activity.
Understanding these concepts is crucial for individuals seeking to optimize their tax returns in Germany. Leveraging these allowances and deductions can result in significant tax savings, and staying informed about the latest regulations is key to financial efficiency.
