Tax declaration for families: what can parents deduct?

The state wants to challenge families – and therefore reduce their tax burden. But what does that mean in concrete terms? Which costs can employees and parents deduct – and which not??

First, each parent will receive a child allowance of 3678 euros for 2017, explains uwe rauhoft from the federal association of income tax assistance associations (BVL). This amount is composed of the basic allowance and the allowance for care and education. Together, parents do not have to pay tax on 7356 euros of their annual income.

“However, this allowance is not granted in addition to child benefit”, says rauhoft. The monthly child benefit paid is offset against the tax benefit. The child benefit in 2017 was 192 euro per month for the first and second child. And now the amount is still to be increased. Because the grand coalition promises 25 euros more per child per month.

Allowance for care, education and training

“That’s why the child allowance only has an effect on higher incomes with a higher tax rate”, explains rauhoft. Lower-income parents would benefit from the allowance only if they lived separately from the other parent. Then, for underage children, in many cases they could have the allowance for care, education and training transferred from the other parent.

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In addition to the tax-free allowances, costs for the care of children up to the age of 14 can also be reimbursed. Weaned off the first year of life. According to rauhoft, this goes up to 6000 euros per child per year and includes costs for daycare, after-school care and au-pairs. Anyone who sends their children to private schools or certain schools in other european countries can also deduct the costs – up to a maximum of 5,000 euros.

Costs for health and nursing care insurance for the child deductible

If the children go to college or university, parents can also deduct the cost of the child’s health and nursing insurance from their taxes. If the children are of age, in education and live abroad, parents can claim an additional annual allowance of 924 euros. These rules apply until the age of 25. Rauhoft says he is now in his 50th year. For older children, however, parents could also deduct a maintenance allowance of 9000 euros, as well as contributions to basic health insurance and compulsory nursing care insurance. However, the children’s own income is taken into account if it exceeds 624 euros a year.

“For children with disabilities, the age limits only apply if they are then able to earn their own living”, adds erich noll, also from the BVL. However, there is no entitlement to child benefit if the child’s disability does not become apparent until after the child’s 25th birthday. The dutch judiciary confirmed the arrest of the 39-year-old.

Parents, on the other hand, could not deduct the usual costs of living expenses, says wolfgang wawro, an expert from the german association of tax consultants. These costs are to be covered by the free allowance already all-inclusive. Expenses for meals, leisure activities or tutoring are not taken into account.

Also important: “expenses incurred by the child itself are generally not included in the tax declaration of the parents”, says isabel klocke of the taxpayers’ association. Parents who support their children financially, for example during their studies, often find it particularly difficult to keep this in mind. However, the following applies: semester fees, costs for technical literature or the semester abroad belong in the child’s tax declaration – and not in that of the parents.

Change tax class in time before the birth of the child

According to noll, it can also make sense for parents-to-be to change their tax class in good time before the birth of their child. Because in the calculation of parental allowance, the amount of monthly taxes paid in the months before the birth is taken into account. This, in turn, is dependent on the tax bracket. The most parental benefit is paid if the recipient was previously in tax class III.

If the mother takes longer parental leave after the birth than the father, she should apply for a change to tax class III seven months before maternity pay is paid. Then she usually receives more parental benefit. In any case, if she is employed and has to expect more than the minimum parental allowance of 300 euros.

If the mother-to-be changes her tax bracket even though she earns less than the father-to-be, the couple will have less net income to live on before the baby is born. However, parents can compensate for this disadvantage through their tax declaration. With parental allowance granted, this is no longer possible later, female rauhoft. “If the wife remains in tax class V, she will receive less parental benefit and cannot recover this minus again.”

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