Dear TT community,
I am hoping someone with a similar past experience or expert knowledge could help me with following tax questions:
Background: my family (wife, children) will relocate to our home country (inside EEA) after the school year is over but I will remain working in Germany until the end of the year (and then join them at year's end). At the moment, I am the sole income earner for the family. For income tax purposes, I am registered under tax class III and I file a joint tax return in Germany every year. In the future, my wife will start to work in the country we are moving to. My family will deregister from our address in Germany before moving away. The school year from children will be completed by the end of June, so there is the option to deregister and move away before they have spent over 183 days in Germany in 2021 or there is the option to delay the deregistration until some time in July, which would mean that they would reside in Germany for more than 183 days in 2021.
Question 1) For tax purposes in Germany (I am only asking about the German side of it), when would be more practical / financially advisable for them to deregister: before the 183 days of residency are over? Or after that?
The reason I ask this, is because I do not know if there is an advantage if we were both considered tax residents in Germany for 2021; or if it would be simpler that she is not considered a tax resident here and then next year, she would only need to file an individual tax return in the country we are moving to and I would file an individual tax return in Germany for 2021.
Question 2a) Do I need to change my tax class for 2021 (as she will move away and work in another country) or is the tax class assigned on a yearly basis?
Question 2b) Assuming I need to change tax classes, is it very complicated to file a German income tax return when part of the year was taxed under class III and the rest of the year was taxed under a different tax class?
Thank you for your advice!