December 4, 2020

Tax reduction for household-related employment relationships, services and craftsmen’s services

 

The tax reduction amount of 20% of the expenses for household-related employment relationships (maximum € 510), services (maximum € 4,000) and craftsmen’s services (maximum € 1,200) can be set as a tax exemption with the wage tax deduction.

How can expenses that I report to the employer reduce the wage tax deduction?

If you are not insured in statutory health insurance and social long-term care insurance but have taken out private insurance, you can report this to your employer. You provide him with proof of your private basic health insurance and compulsory long-term care insurance contributions. This also includes the contributions for the co-insured spouse and for co-insured children entitled to child benefit. The contributions of the privately self-insured spouse are also included if they do not earn any profit or work income.

The contributions only reduce the wage tax deduction to the extent that they exceed the minimum flat-rate pension amount of twelve percent of wages (a maximum of EUR 1,900, in tax class III a maximum of EUR 3,000). Use the tax return calculator is important there.

How are single parents tax promoted?

A so-called relief amount for single parents is provided for single parents.

The relief amount is given to single people whose household includes at least one child who is to be taken into account for tax purposes and for whom they are entitled to the exemptions for children or child benefit.

Single taxpayers are those who

Do not qualify for the splitting procedure or who are widowed and who

Do not form a household community with any other adult unless they are entitled to child benefit or an allowance for children. A household community with another person is usually assumed if the other person is registered with the main or secondary residence in the taxpayer’s home.

For single parents with one child, the relief amount is € 1,908 per year. If there is more than one child to be considered for tax purposes in the household, the relief amount increases by € 240 for the second and each additional child. For each calendar month in which the prerequisites for the relief amount were not met, it is reduced by one twelfth.

 

The tax relief amount for single parents with one child is usually taken into account in tax class II when deducting income tax. Increases for a second and each additional child can be taken into account as an additional tax exemption upon request.

I have had an allowance taken into account as a wage tax deduction feature. Do I have to file an income tax return?

Yes. Every employee who has an allowance as a wage tax deduction feature must submit an income tax return.

Exception: Only a lump sum was noted for disabled people, or the wages earned in the year will not exceed € 11,900 from 2020 or € 22,600 for spouses or partners assessed together. Then no tax return has to be submitted. A voluntary submission of the tax return is of course also possible.