Anyone who is self-employed knows that they cannot avoid filing a tax return. Self-employed persons, freelancers and tradespeople are generally obliged to file a tax return.
However, some employees in Germany are also obliged to answer questions to the tax office. If you are obliged to submit an income tax return (Einkommensteuererklärung), you must do so by 31 July of the following year, otherwise you may be fined.
Who is compulsorily tax assessed as an employee in Germany? We explain it to you!
Who is obliged to file a tax return?
Employees pay income tax (Einkommensteuer), which is deducted directly from their wages. Sometimes, however, the tax levied may differ from the "actual" wage tax due. In such cases, there is a compulsory tax assessment (Pflichtveranlagung), i.e. a tax return must be submitted.
You cannot avoid filing an income tax return (Einkommensteuererklärung) if:
- you have applied for a wage tax reduction (Lohnsteuerermäßigung) (however, no obligation to file a tax return applies if the total wage earned in 2020 does not exceed 11,900 euros/ 2021: 12,250 euros)
- wage replacement benefits (Lohnersatzleistungen) such as short-term work benefits (Kurzarbeitergeld) or unemployment benefit I (Arbeitslosengeld I) were received, which are subject to the progression proviso (Progressionsvorbehalt) and amount to more than 410 euros in the calendar year
- in the case of unmarried or divorced parents, the education allowance (Ausbildungsfreibetrag), the disability lump sum (Behinderten-Pauschbetrag) or the bereaved lump sum (Hinterbliebenen-Pauschbetrag) for children is not split 50/50
- several incomes were received in parallel from several employers (i.e. you have entered tax class 6 at least once)
- a severance payment (Abfindung) was taxed with the fifths method
- you have received holiday pay from the wage compensation fund of the construction industry (Lohnausgleichskasse der Bauwirtschaft)
- you and your spouse have chosen tax class 4 with the factor procedure or the tax class combination 3/5
- your marriage was dissolved by death or divorced during the assessment period and you or your ex-partner remarry in the same year
- the minimum pension lump sum (Mindestvorsorgepauschale) is higher than the actual pension expenses
- your additional income (Nebeneinkommen) without wage tax deduction (Lohnsteuerabzug) exceeds 410 euros (e.g. rental income or investment income (Kapitaleinkünfte) on which no final withholding tax (Abgeltungssteuer) has been paid) in a calendar year
Submit your tax return online
Tax returns must be submitted in a specific form. This means that officially prescribed forms must be used. However, if you are not a professional in taxation, you will quickly realise that filling out the forms can be stressful and complicated - and the tax forms do not give you any hints on how to save taxes.
Wundertax offers you the optimal solution. While you enter your data into the easy-to-understand templates, you can see at any time how much your tax refund will be thanks to our tax calculator.
Further advantages are:
- specific interview questions instead of complicated tax forms
- information is automatically inserted into the form
- best suited for those who have little time
- no previous knowledge necessary
- Consideration of all costs and lump sums that are work-related
These are the most important deductible items
Relocation expenses for job-related relocations
If you move for work-related reasons, you can deduct the costs incurred as income-related expenses (Werbungskosten) in your tax return. For some of these costs you can use the lump sum for "other moving expenses" (Umzugskostenpauschale für sonstige Umzugskosten). This includes, among other things, costs for flat advertisements, postal redirection orders or cosmetic repairs and renovation work in the previous flat. Since 1 June 2020, the lump sum has been 860 euros for the entitled person and 573 euros for each additional person (civil partner and children).
Relocation expenses for private relocations
Expenses for private removals cannot be deducted as income-related expenses, but if you hire craftsmen or a removal company for the removal, you can deduct the costs as expenditure for household-services. In total, up to 1,200 euros per year for craftsmen's services and up to 4,000 euros per year for service provider costs can be deducted directly from your tax liability.
Expenditure for household-services
Not only costs for household help or dog sitters can be claimed against tax, but also bills for gardening and care services.
Tax tip: The personnel costs in your landlord's annual utility bill are also tax-deductible as expenditure for household-services! These include, for example, gardeners, chimney sweeps and cleaning the hallways.
Telephone and internet costs
If you also use your private phone and internet for work-related purposes, you can deduct 20 percent of the invoice amount - up to a maximum of 20 euros per month - as income-related expenses.
Your journey to work is tax-deductible - regardless of which means of transport you use. The commuting allowance takes into account each full kilometre of one-way travel at a rate of 30 cents. You can only claim one distance per working day (outward or return).
In 2021, the lump sum will increase to 35 cents per full kilometre from the 21st kilometre of the one-way route.
Application costs, e.g. for specialist literature, portfolios, application photos, etc. can be deducted from tax. 2.50 euros can be deducted per electronic application, 8.50 euros on average for letters of application sent by post.
Professional associations and trade unions
If you are a member of a trade union or professional association, you can deduct the full amount of your dues as income-related expenses in your tax return.
Home office and home office lump sum
Those who have a tax-recognised home office can deduct the expenses for it up to 1,250 euros per year (limited deduction) or in full (unlimited deduction).
Those who do not have a tax-recognised home office and nevertheless work in a home office - especially in times of Corona - should definitely use the home office lump sum for 2020 and 2021 and thus deduct 5 euros per home office day (up to 600 euros per year) from their taxes.
You can deduct your contributions to statutory and private pension insurance as special expenses. The total of deductible contributions increases by 2% annually and is already 92% in 2021.
Lump sums for honorary office and exercise leaders
If you are socially engaged on a part-time basis and receive an expense allowance for this, you can keep up to 840 euros or up to 3,000 euros per year tax-free with the honorary office lump sum or the exercise leader lump sum - depending on the activity.
Parents who have children under the age of 14 can deduct two-thirds of the childcare costs from their taxes as special expenses. There is no age limit for disabled children. Annually, you can deduct up to 4,000 euros of childcare costs per child from your taxes.
Allowances and lump sums for 2021
There are allowances that automatically exempt parts of your income from tax - to secure your subsistence level (tax-free basic allowance) and that of your children (child allowance). Both increase in 2021:
Basic allowance: 9,744 euros Child allowance: 4,194 euros per child and parent
Child benefits also serve to ensure the subsistence level of your children. In 2021 child benefits increase:
- 1st and 2nd child: 219 euros
- 3rd child: 225 euros
- from 4th child: 250 euros
Note: When you file your tax return, the tax office automatically offsets the child benefit you received against the child allowance and chooses the alternative that is more favourable for you. The rule is: Either child benefit OR child allowance.