Financial & Legal information

Taxation and tax allowances

Schriftgröße/Font size:

©  GG Berlin - pixelio.de© GG Berlin - pixelio.deEven if it takes some work, it is worthwhile for single parents to file a tax return.

In this way, some costs can be deducted from taxes, thereby relieving the family budget.

Tax class II: tax relief for single parents

The amount of tax-free allowance for single parents is € 4,260 per year. From the second child onwards the amount increases by € 240 per additional child.

The tax-free allowance is already included in the tariff of tax bracket II, meaning that  single parents already pay less taxes in the current year. Single parents receive the tax-free allowance or the tax class II only if they live with at least one child for whom they receive child benefit and without another adult person in one household.

The child must be registered as having either their main or secondary residence at the single parent’s address. If you have a child who is 18 or over, if he or she is still in education or training, is still entitled to Kindergeld and still lives with you, you also retain your entitlement to the tax-free allowance.

The increased amount for more than one child must be requested separately from the tax office. This is related to the fact that the number of child allowances, as wage tax deduction is taken into account, does not always match the number of children which is relevant for the single parent's allowance.

Please check whether the tax office has expelled the tax-free allowance in the tax assessment.

Childcare costs when you are at work

For single parents, the cost of childcare for children under the age of 14 when you are at work is tax-deductible. The tax office allows you to deduct two thirds of actual costs for daycare facilities, childminders or au pairs up to a maximum of €4,000 per child per year. You must provide documentation of these costs. Cash payment is not accepted by the tax office.

The taxed childcare costs are deducted from the total amount of income by the tax office as part of the annual tax return and are expelled in the tax assessment.

Child tax allowance (Kinderfreibetrag) and childcare tax allowance (Betreuungsfreibetrag)

The tax allowances for children consist of an allowance for the child‘s material minimum subsistence level  (€ 5,620 per year) as well as an allowance for childcare and education (Freibetrag für Erziehung und Betreuung oder Ausbildung, € 2,928 per year). Together, the allowances for children amount to € 8,548. For single parents, meaning separated and divorced parents, they are € 4,476 each, which explains the "half" child on the income tax card.

The allowances for children have the same function as the child benefit – they render the child‘s minimum subsistence level tax-exempt and, from a certain amount of income (about € 30,000 a year for single parents / about € 60,000 per year with married people), take over the place of child support. With the income tax declaration, the tax offices check whether the child benefit effectuates a sufficient tax exemption or whether the allowances are credited. Whether the child benefit or the allowance has been credited will be noted on the tax assessment.

Single parents can apply to the tax office for the transfer of half of the other parent‘s child allowance onto their income tax card if the person liable to pay maintenance pays less than 75 percent of his / her maintenance obligation.

This also applies in cases of insufficient capabilities of the maintenance debtor. If, therefore, the parent who does not live with the child pays less than 75 per cent of the maintenance, the tax office must attribute the full allowance to the single parent, which then has a tax-reducing effect on the calculation of the solidarity surcharge and church tax (not possible with maintenance payments under the law on advances of maintenance payments, Unterhaltsvorschussgesetz).

The childcare and education tax allowance is part of the tax allowances for children and is deducted from the income amounting to € 2,928 per year (with single parents: € 1,464 per year per each separately living parent). The allowance is granted in addition to possibly incurred childcare costs, which are also deductible. If the child is a minor and only registered in the household of the single parent, the other half of the allowance can be transferred to the tax card of the single parent with a simple application to the tax office,  which also has a tax-reducing effect on the calculation of the solidarity surcharge and church tax. However, a transfer is not possible if the other parent objects because he / she carries child care costs or cares for the child to a not insignificant extent.

Sources:

VAMV Bundesverband (Single Parents Association)

Familenportal.de