5 Tips for Your Tax Return!
Filing tax returns isn’t necessarily anyone’s favorite pastime - but it is the best way to effectively save taxes! The only way to claim your annual expenses is by filing your tax return, and most taxpayers receive an average tax refund of 1,095 euros! In this article, you’ll find out some tips and tricks that will help you when you’re filing your taxes in Germany
Tip 1: Use your lump sums & allowances!
There are multiple lump sums (Pauschalen) and allowances (Freibeträge) to help make tax returns easier on everyone. These help you to save taxes without even having to provide proof – some of these allowances and lump sums can even still be claimed in full when you’ve had costs that don’t meet the maximum amount!
Income-related expenses lump sum: Claim 1,000 euros in expenses without providing proof!
Each year, the tax office automatically grants you a 1,000-euro lump sum for income-related expenses (Werbungskostenpauschale) – even if your actual expenses weren’t that high! As of 2022, this lump sum will be raised to 1,200 euros.
The basic tax-free allowance is always tax exempt
There is no tax due on income up to 9,744 euros (2021) or 10,374 (2022) as it is covered by the basic tax-free allowance (Grundfreibetrag).
Commuter expenses: Deducting your travel costs
The commuter allowance (Entfernungspauschale) allows you to deduct 30 cents per kilometer of one-way travel to your workplace – regardless of the means of transport. As of 2021, this was raised to 35 cents and will raise again to 38 cents in 2022. With the new mobility premium (Mobilitätsprämie) long-distance commuters can also benefit from an increased commuter allowance – even if they don’t have to pay taxes!
Home office lump sum
You can get up to 600 euros per year working from home through the home office lump sum (Home-Office Pauschale) – even in 2022!
Income from voluntary work
Since 2021, those who work on a voluntary basis or as an exercise leader (Übungsleiter) can earn an additional 840 euros or 3,000 respectively tax-free per year.
Moving expenses lump sum
If you move for professional reasons, you can take advantage of the moving expenses lump sum (Umzugskostenpauschale) of 886 euros. You can claim an extra 590 euros for each additional household member.
Lump sum for special expenses
When filing your taxes, the tax office grants you a lump sum of 36 euros for special expenses (Sonderausgaben). However, you can definitely claim more special expenses by writing off pension plans, insurances, church tax, donations, and more!
Tip 2: Find out whether you’re required to file a tax return!
Not everyone knows whether they’re required to file a tax return, which can often lead to rude awakenings – even years after the fact, you could receive a letter from the tax office requesting a tax return and by then, lateness penalty fees may have already been long overdue. Save yourself from this misfortune by doing a quick check each year whether you’re required to file or not. You can do this quickly and easily using wundertax’s quick check in the free-to-try tax tool. Generally, tax return deadlines fall on July 31st of the following year, but there is a deadline extension for 2021 tax returns: These must be submitted to your local tax office by October 31st, 2022.
Tip 3: Deduct your utility costs
Even renters can claim some of the costs from their annual utility bill (Nebenkostenabrechnung) on their tax return. Certain expenses that your landlord has delegated to you can be claimed as household-related services or tradespeople costs.
Household-related services include:
- Hallway cleaning
- Garden maintenance
- Snow removal services
- Janitorial services
- Window cleaning
- Pest control
Tradespeople costs include:
- Chimney cleaning
- Work done on roofs, facades, floors, garages, and walls
- Heating meter replacements
- Asbestos removal
- Scaffolding
- Pipe/gutter cleaning
- Repair/maintenance of elevators, heaters, and smoke detectors as well as gas and water installations
You can get 20% of your utility costs back by claiming them on your tax return, they are then deducted directly from your tax liability. Note: Other household services and tradespeople costs can also be claimed. You can deduct up to 4,000 euros per year for household-related services and 1,200 per year for tradespeople costs. Tip: You’ll need to provide proof with an official invoice listing all the costs and the invoice cannot be paid in cash.
Tip 4: Save taxes with a joint tax return
Every year, married couples can decide whether they’d like to file a joint tax return together or individual tax returns separately. Joint tax returns have many advantages – first and foremost, “Ehegattensplitting,” or the act of splitting income tax between two partners. In this case, the income of both spouses are added together and divided by 2 leading to lower tax rates and the ability to claim more expenses as all lump sums, exemptions, and allowances are doubled.
Tip 5: File your tax return online
Tax offices (Finanzämter) generally prefer tax returns to be submitted online, this is also more advantageous for you as you’ll receive your refund much faster with an online tax return than if you filed it on paper. Tax software, such as the one we provide at wundertax, can save you lots of time and money by informing you about all your possible deductible costs and guiding you step by step through filing your tax return. After the speedy online process, an average tax refund of 1,095 euros awaits! There’s nothing to fear about filing your tax return!