How to determine your tax class - Germany

If I'm married and my wife does not work, does that mean I belong to tax class 3?

If I understand correctly, having a child would not change one's tax class, is that right?

If you are married and the only one working its tax class 3, yes.

When children come into it they are also on your tax card, i.e Steuerklasse 3 - 2, which translates as married with 2 children.

The year that you get married the Finanzamt will work out the difference back to the beginning of that year. Hence when you get wed normally you get a good lump sum back in that year you got married.

German tax calculator

How do I determine tax class?

Married couple on a long term stay in Germany. We both are non-eu. Husband is here on an overseas assignment and gets paid in his overseas account and pays tax in the native country. Both have work permits and now the wife has a job offer. She needs to write down her tax class in the contract. What would be the tax class for her?

Thanks in advance.

See: Taxation in Germany - Wikipedia

Hi,

I'm attempting to sort out my German Tax form for good this weekend. I have tried to download the Elster Formular which doesn't seem to open once you have downloaded it - which is always good! So it looks like I'm doing this by hand!

Anyway, onto the question! I see on the form 'Anlage N' that you need to put a tax class in from 1-6. I'm filling in this form for my earnings in the UK from Jan to Feb 2006 and obviously had no single digit tax class/number.

Does anyone now what class to put in? Are there boundaries of earnings?

Many thanks in advance!

FN

what is your marital status?

class I = single
class II = single parent
class III = married and and spouse has no income or lower income
class IV = married and similar income to spouse
class V = opposite of class III, ie this is the class your lower earning spouse has if you have III
class VI= for a second job.

single

thanks a lot!

So what tax class should I be? I am recently married and I thought of changing my class from I to V. As I thought I fit in with class.

V = opposite of class III, ie this is the class your lower earning spouse has if you have III

The Buergeramt wouldn't change the class on my card without changing my husband's card at the same time. He has been issued one and is set to tax class I. Even though at the time I told the friendly beamter that he was self-employed. I have to go back again and I'm having doubts now about the tax classes.

So how does my husband being self employed affect what tax class I should be in? If I pick a wrong tax class, it should be even out at the end of year for the both us that never of us is out of pocket. I'm think if I use tax class IV now it would be better for me.

The tax calculators say IV/IV we are no worse off than III/VI as a total. Is this enough to make a decision on and I'm not penalised in some other way.

Well, after going to the buergeramt this morning, I have been told they can't change my tax class to IV without changing my husband's at the same time. But he is self-employed and I wanted to give his tax card back. That's not possible as they have to change his tax class first (to IV) and then I give it back. Which don't make sense and I have no idea of the tax implications. I thought it would all be calculated at the end of the year to balance out.

So our tax advisor has gotten back to us and says I should go to tax class III because my husband has no income from an employer. Which means I get more in my take home pay than I was on tax class I.

My husband and I picked class III and V because one earns more than the other. Now I'm doing our first German tax return and am filling in our details in "Steuer Spar Erklärung 2008" software and it tells me that we own €1,610 in tax. I checked our gross and net pay in an online gross-to-net calculator and they are both +/- about €10 of our actual net pay - so no problems there. I then wondered if maybe my tax software is calculating our liability as if we're both class IV and sure enough the difference is exactly €1,610. This is despite me putting our tax classes into the software correctly.

So to my question:

Is the ability to chose tax classes III/V just a way of deferring payment of a part of your tax liability until you do your tax return at which point, as a married couple, you are both automatically taxed as class IV regardless of what classes you choose?

Or is is just that - despite trawling through my Steuertipps book and the on-line help facility in my software - I have somewhere missed clicking the button that say I want to stick to the tax classes we chose?

Any comments appreciated!

True regardless of what tax classes you have - but authorities will generally make sure that you should not be paying too little tax each month - they take care they don't go short!

The final tax levied on your total income (as a married couple) is totally independent of which tax classes you actually had. This has been stated often in this forum.

Selecting the tax class is sort of guessing up front how much tax you will need to pay...

Does Germany have a tax-deadline like they have in the US? Thus far, I'm still educating myself on filing my first income tax return here.

[q]Does Germany have a tax-deadline like they have in the US?[/q]

Yes, it does, but I'm not quite sure when it is if you fill the return out yourself. However, it's pretty early, maybe the end of April. If you get an accountant (Steuerberater) to do your returns (which is usually sensible, given the complexity of the German tax system), then he has until the end of the year.

My girlfriend and I will soon be having a baby. (she will, I won't! but you get what I mean). At the moment we are both class 1 but what would happen when we have the baby and would we be better off getting married from the point of view of tax?

you're opening a very complicated can of worms there with your inquiry. To be quite frankly and bearing in mind how complex the German tax system is: you should definetly discuss this with a tax advisor before doing anything (or not).

While there can be some tax advantages when marrying, you could also face other costs that have to be factored in: for instance, if one of you is privately health insured and the other with public health insurance, the baby might have to get private health insurance too if the two of you get married whereas if the mother is with public health insurance unmarried she can get the baby at no extra costs covered with her pubic health insurance. Of course, if you have either both public or private health insurance, it does not matter.

But this is only one of the many loopholes and therefore you need to discuss this all with someone qualified, a professional.

And since I am expecting my first child as well very soon (only 5 weeks more to go!): good luck and enjoy the adventure!

Cheerio