How to Submit Tax Returns Retroactively

AT A GLANCE

• Taxpayers not required to submit a tax return can still do so voluntarily.
• By filing a tax return, you request an assessment of your income tax.
• Voluntary tax returns can be submitted retroactively for up to 4 years.
• Filing a tax return also allows you to request a loss carryforward (Verlustvortrag).
• You can apply for a loss carryforward up to 7 years retroactively.

These are the deadlines for your tax return

If you are required to submit a tax return, there is a deadline to follow. You must submit your mandatory tax return to the tax office (Finanzamt) by July 31st of the following year. If you do your tax return with the help of a tax consultant, you have a little more time.

You can also voluntarily submit your tax return. This is called ‘application for assessment’ (Antragsveranlagung, § 46 Paragraph 2 no. 8, Income Tax Act). If you want to submit your voluntary tax return retroactively, a so-called determination period (Festsetzungsfrist) applies instead of the usual submission deadline.

Determination period (Festsetzungsfrist) for voluntary tax returns

You can file a voluntary tax return up to 4 years following a given tax year. The latest possible submission date is always December 31st, 4 years after the respective tax year. For the 2020 tax year, you can still submit your tax return until 31. December 2024. If you haven’t submitted a tax return by then, the tax office will no longer accept it. This is because the determination period for assessing your income tax has expired.

Four years after a given tax year, the statue of limitation (Festsetzungsverjährung) comes into effect. That means, you can no longer request a tax assessment (Veranlagung). Additionally, the tax authority cannot request a tax return from you anymore and they can no longer make corrections to a tax assessment notice (Steuerbescheid), if there is one ( Section 169 AO). Exception: if you were required to file a return, the tax office can still request your tax return up to 7 years after the tax year in question.

Learn more about voluntary tax returns and why they are always worth your time!

Am I required to file a tax return?

In principle, you can only submit your tax return retroactively if you are not required to file. Otherwise, the Income Tax Act (Einkommensteuergesetz) speaks of mandatory tax assessment (Pflichtveranlagung). Self-employed individuals are always required to file their tax return. But employees may also be required to submit their tax return to the tax office if, for example

• they receive more than 410 euros in wage replacement benefits (Lohnersatzleistungen) in a calendar year (e.g. unemployment benefits, parental allowance, maternity benefits, sick pay, short-term work benefits, etc.), or
• in addition to their salary, they earn more than 410 euros in untaxed secondary income in a calendar year, or
• they have tax class 4 with a factor, or tax classes 3 and 5, or tax class 6.

Learn more about mandatory tax assessment: who has to file a tax return?

You can file a loss carryforward (Verlustvortrag) up to 7 years retroactively

You can even apply for a loss determination (Verlustfeststellung) up to 7 years after a given tax year. This is particularly interesting for students and graduates, as their expenses for a second degree (Zweitausbildung) (for example, for a master’s degree, legal clerkship, or bachelor’s degree with prior vocational training) can be claimed as income-related expenses (Werbungskosten) for tax purposes.

The tax office assesses your educational costs as losses and offsets them against your income as soon as you earn taxable income - until the loss is fully offset. This means that losses can have a significant tax-reducing effect.

In order to request a loss determination, you need to submit a tax return and mark the checkbox at the top of the cover sheet ( Main Form ESt 1 A) for Erklärung zur Feststellung des verbleibenden Verlustvortrags (“declaration of the remaining loss carryforward”). If you want to claim a loss carryforward, the deadline for this is December 31st, 7 years after the relevant tax year.

Please note: The Federal Constitutional Court (Bundesverfassungsgericht) confirmed in its ruling of December 19th, 2019, that only the expenses for a second degree are tax-deductible as income related expenses (Werbungskosten). The costs of initial education (Erstausbildung) can only be deducted as special expenses (up to 6,000 euros per year). Special expenses can only be claimed for the tax year in which they occurred. A loss carryforward is therefore not possible.

What is a loss in terms of taxes?

If during the course of a tax year you have higher expenses than income in a particular type of income, a loss arises. Perhaps you’ve launched your own business or you invested money in further education while you had only minimal or even no income? Then you can inform the tax office of the loss as part of your tax return and use it for tax purposes.

You can choose whether the assessed loss should be offset against your income from the (maximum of two) preceding years - this is called loss carryback (Verlustrücktrag) - or whether the loss should be offset against income from subsequent years (loss carryforward).

Please note: To offset an assessed loss, it will be deducted from your total amount of income (Gesamtbetrag der Einkünfte), even before other expenses will be deducted, like special expenses or extraordinary expenses (außergewöhnliche Belastungen).

These are the deadlines for tax return & loss carryforward

In order to submit your backdated tax return correctly, you have to follow these deadlines: