Tax office says I must pay back Kindergeld - Germany

We're a non-EU family who claimed for two years

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drgaddy
My family has been in Germany since 2004. I am a non-EU citizen, while my hubby is a US citizen, and we are covered by the SOFA agreement. I started working in 2005 and and applied for kindergeld (in Nurnberg), which was granted and received until June 2007. When I started working, it was suggested by my personnel office to fill out limited tax paperwork, which I had until 2007, when I switched to normal lohnsteuerkarte, because Finanzamt stated that is what I need to have. Since my husband's contract is often renewed, I need to send in paperwork for kindergeld on each renewal. That is what I did in June 2007, showing change in tax etc. Two months later, I received the letter from them saying that I owe them money from January 2006 and that they are sending all my paperwork to Regensburg and they will let me know whether I am entitled to kindergeld. Just today, I was told that I am not entitled to kindergeld by Regensburg office, since I do not have residence and work visa (which I do not need since I am covered by the SOFA agreement) and am not an EU citizen, and that my SOFA stamp is not enough! They also said they will forward my paperwork to office in Nurnberg for them to determine whether I can get kindergeld . What is going on??? Any suggestions? Anyone in similar situation that can offer advice?

Thanks!
MrNosey
I think you really need to consult with a lawyer (Rechtsanwalt) who specialises in family law. Your case looks far from straightforward.
Texmandie
STOP!!!

Give the Kindergeld back and do not fight this. I know too many guys who have lost their TESA status because their wives collected Kindergeld. Unless he is looking to go onto the German system and get an actual German job, you are probably better off without that 150 EUR/mo or so (the cost savings in gas tax alone!) German taxes on American contractor wages (and insane working hours) are painful, as a few of my co-workers can attest. Even worse, many contractor positions are contingent upon retaining TESA status.

Once someone is declared OR (Ordinarily Resident), it is nearly impossible for them to go back to SOFA status, short of becoming active-duty military or an activated reservist, or perhaps living in the States for a few years. Even then, if you OR YOUR SPOUSE have ever collected any sort of benefit from the German government, you will probably be denied TESA (and thus a place on the SOFA).

The SOFA's a mighty comfy place and at least half the Toytowners would be willing to do crazy things to get onto it - only reason to risk getting thrown off it is if you both want nothing more to do with the defense contracting business (and it sounds like hubby is not unhappy with his job).

I'm sure the idea of having to pay German taxes on your own wages without getting a benefit you felt entitled to as a German taxpayer rankles, but probably not quite as much as having to pay German taxes on your husband's wages would... or not being able to stay in his position at all!
Nicole
Because she isn't an EU resident her Husband seems to have had some luck in renewing his TESA status. I do know they come down harder on spouses from the EU who claim. I stopped claiming three months before my Husband retired knowing he was going for a TESA position. I also know spouses both American and German who still receive Kindergeld and are 'supposedly' open about it on the TESA forms.

It wasn't worth the 300 Euros for me to chance it.

I'm sure the idea of having to pay German taxes on your own wages without getting a benefit you felt entitled to as a German taxpayer rankles, but probably not quite as much as having to pay German taxes on your husband's wages would... or not being able to stay in his position at all!
I've seen some people get stuffed for tens of thousands of Euros by the German taxman because they didn't totally comply with the TESA regs. Just because they haven't done anything yet doesn't mean they won't in the future. One guy in the Stars and Stripes was fined over 250,000 Euros although he won on appeal. There are many cases like yours. There is a good possibility that your Husbands TESA will not be renewed when this comes to light.
drgaddy
My hubby is a DoD employee, and I am an LN employee clasiffied as Steuer classe 1 which is the highest tax rate in Germany because they consider me single with kids, due to the fact that my husband has the status he has. I am having trouble understanding why we would be slapped with paying back the kindergeld or not getting it. Would someone please explain. Thanks.
Nicole
You're actually not entitled to the Kindergeld. You do not have a work permit but the grey area of SOFA covers you with permission to work here. If you had a work permit you'd pay tax at the regular rate but the grey area puts you in the highest bracket but does not give you permission to claim. EU military wives can claim it because they are entitled to under EU laws regardless of their husbands status). All the non EU wives I've know in exactly your position (Husband works for DOD wife has job and pays German tax) have never been able to claim kindergeld. I'd get a lawyer, this sounds expensive, not to mention extremely problematic for a TESA renewal.
drgaddy
We have actually contacted a lawyer on post and he claims that there are 2 different laws governing Kindergeld and that one of them (I forgot the name, but it starts with Bundes) entitles me to it, regardless of the fact that I do not have a work permit but SOFA coverage, which is the requirement for receiving kindergeld under the Income Tax law. I do not know whether that holds truth, but I still do not understand why wouldn't I qualify.
drgaddy
Also, I am in process of filing my taxes and the German Steuerberater was also surprised to learn of the problems I had with the Kindergeld. He said that if they do not pay me, I can still claim the kids with "kinderfreibetrag" on my taxes.

Additionally, if I understand the German Residence law correctly, if you are covered by SOFA or any other international agreement you do not need any permits - either residence or work.

I forgot to add, when I was requesting Lohnsteuerkarte, the Rathouse personnel told me that I have two choices regarding the Steuerklasse I want to be in - either klasse 3 where I declare my hubby's income as well at the end of the year, or Steuerklasse 1 if I do not want to include him. Therefore, I don't think if was SOFA that placed me in that tax class.
Nicole
Sounds extremely complicated and probably out of the knowledge constraints of most of us here. It sounds like you have a lawyer working on it, best left to the professionals rather than a bunch of amateurs!!
drgaddy
I must disagree! I have been following this forum for a long time and there are some great advices here from you guys. I am just having trouble understanding what is the problem. Everyone here said - do not fight it - it is not worth it - but no one actually said what laws are working against me, you know what I mean...Sorry to come across as stuborned, but I would really like to be able to understand.
Texmandie
When you said that his contract was often renewed, the alarm bells went off and I thought he must be a defense contractor under TESA (like myself). Every time our contracts change - employer, location, job title - our TESA status is reviewed, which is a nerve-wracking time even for people like me who have none of the "usual" OR factors.

However, if your husband is GS or a DoDDS teacher (check comes directly from the US Gov't, not eligible for Foreign Earned Income Exclusion, possibly gets housing allowance which is not subject to US income tax), you might be safe to try, though possibly still not legally entitled to collect. I was more concerned that you could be putting his TESA status at risk, but if he is directly employed by the DoD and NOT by an intermediary company (Raytheon, General Dynamics, DSCI, L-3, etc.), you're safer to try, though you might end up spending money on a lawyer for nothing.

Ask both your personnel offices about this before spending money on a lawyer. There is a legal office on each of the posts around here staffed by an English-speaking German lawyer who rotates among them who might also be able to point you in the right direction.

If he has any interest in going into a TESA position later, though (even several years later), your collecting Kindergeld (or trying very hard to) has a good chance of closing off that possibilty. You probably want to weigh how much longer you plan to stay over here, his chances of running up against the Five Year Rule, and the likelihood of his ever wanting to work over here as a contractor. Also note that if he ever gets declared OR, he cannot work as a GS employee over here. I don't think you'd trigger that directly on this tour, but who knows what the German gov't might say if he ever tries to return after time working in the States.

Personally, I hope you do manage to collect it if you end up really wanting to, as you're a Class I German taxpayer (my boyfriend's one, too and... OUCH). However, I also want you to be aware of why you might NOT want to win this fight.
drgaddy
I have a meeting scheduled for this Wednesday with the lawyer on post and we'll see what happens. However, as I said earlier, he indicated that I should be able to get the benefit so I am really lost now!
Texmandie
I must disagree! I have been following this forum for a long time and there are some great advices here from you guys. I am just having trouble understanding what is the problem. Everyone here said - do not fight it - it is not worth it - but no one actually said what laws are working against me, you know what I mean...Sorry to come across as stuborned, but I would really like to be able to understand.
The problem is that SOFA is a very weird status. We're privileged foreigners, but we are most certainly NOT immigrants. We do not require residence permits, but we are only allowed here due to our connections to the US Forces. Your SOFA stamp/card is your "visa". I could live here 10 years under TESA status, and the minute I do something that gets me thrown out of it, I'm at the back of the queue with all the other fresh (legal) arrivals to Germany (legally, anyway - there are discussions in other forums about "desirable" immigrants). In return for not having to have residence permits, not having to pay gas tax or even VAT (when we use the PX and Commissary or feel like dealing with the forms at German stores), we're agreeing not to take any sort of benefits. You are having to pay income tax because you work a job that could have otherwise gone to an actual German local (in theory).

I think what we're doing here is giving you reasons why this is a fight you might actually WANT to lose. It doesn't make sense on the surface (hey, that 1800 EUR/yr back sure would be nice with all that stupid tax you're stuck paying), but I've seen too many folks end up having to fork out waaaay more than they ever managed to collect in Kindergeld or even leave Germany on VERY short notice due to huge back taxes, when they could have avoided all the trouble by not getting that 150 EUR/mo the first place. Stubbornness can be useful in dealing with the Germans, but knowing how to pick your battles is, too.
drgaddy
Sounds extremely complicated and probably out of the knowledge constraints of most of us here. It sounds like you have a lawyer working on it, best left to the professionals rather than a bunch of amateurs!!
This is what I said I was disagreeing with (trying to say that you guys have precious experience in these matters), not the advice I received. Sorry for misunderstanding!!!
Nicole
Let us know how you get on, I'm quite interested to hear what the lawyer has to say.
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