Child tax credit breakdown

47 posts in this topic

Do not go getting fancy or busting out any big words. I want the idiots version please. :)

 

Is my elterngeld from 2011 taxable? My husband is claiming it bumps us into the next income bracket and results in a higher tax.

 

and can you explain kindergeld vs child tax credit. If I understand it we get a set amount per child as a tax write off, but our kindergeld is deducted from that amount is that correct?

 

And last but not least if teenie was born end of dec 2010, can we claim him on the full year 2010 taxes as you would in the states, at least that year I only had one months elterngeld/kindergheld so the tax benefit might hold some worth there?

 

I just am trying to understand how it works :)

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Is my elterngeld from 2011 taxable? My husband is claiming it bumps us into the next income bracket and results in a higher tax.

 

Your husband is right, this is called progression and you can calculate the effect for yourself with this official online progression calculator.

 

 

and can you explain kindergeld vs child tax credit. If I understand it we get a set amount per child as a tax write off, but our kindergeld is deducted from that amount is that correct?

 

No, you get either Kindergeld or the Kinderfreibetrag (= tax break).

 

When processing your your tax return the Finanzamt calculates the two cases:

Case 1: calculate income tax

Case 2: calculate income tax if taxable income is reduced bei Kinderfreibtrag (i.e. how much tax is due on that lower income).

Then they calculate how much income tax you would have "saved" if the apply the Kinderfreibtrag, i.e.:

income_tax_case_1 - income_tax_case_2

 

If the above amount is more than all the Kindergeld you received in that calendar year, then they will reimburse you the difference:

income_tax_case_1 - income_tax_case_2 - (sum of all Kindergeld received by you in that calendar year)

 

 

And last but not least if teenie was born end of dec 2010, can we claim him on the full year 2010 taxes as you would in the states, at least that year I only had one months elterngeld/kindergheld so the tax benefit might hold some worth there?

 

When processing your tax return, they automatically check if the Kinderfreibetrag would have been more advantageous to you and reimburse you more income tax accordingly.

So, you don't have to do anything, just file a tax return.

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Elterngeld is not taxable but your husband is right, it can make you jump to the next bracket, meaning that while the Elterngeld itself does not pay taxes, the taxes from his income might be higher.

 

Kinderfreibetrag is an amount of your income that is tax free, you can get either Kindergeld or Kinderfreibetrag but not both. Of course when you file taxes you choose the one that is better for you, every tax software will calculate this for you automatically. This calculation might be tricky specially if you are close to the border to a bracket, for example if you have two kids sometimes the best option is taking Kindergeld for one and Kinderfreibetrag for the other one.

 

Not sure about the kid being born in December, as far as I know you can't change tax classes in December, so I guess you stayed with the old one and you got the new class in your new tax card for 2012. Not sure if you can change the class when you file taxes, but I would say no. And I definitely do not think you can claim the whole Kinderfreibetrag year.

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Great thanks Panda bear :)

 

Dh is claiming it is worthless to file taxes as he anticipates only geting 50 euro back, but I am scared shitless if we do not file we would get a nasty bill from the finanzamnt. We have lots of write off this year from our move, so I would rather file and get those in and get nothing back then get a nice surprise in the mail :lol:

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Thanks Kreig.

 

So when the kinderfreibetrag is better for you does the finazamt repay the familienkasse automatically?

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Dh is claiming it is worthless to file taxes as he anticipates only geting 50 euro back, but I am scared shitless if we do not file we would get a nasty bill from the finanzamnt. We have lots of write off this year from our move, so I would rather file and get those in and get nothing back then get a nice surprise in the mail

 

We did not file taxes for a couple of years for the same reason (we were on tax classes 4+4). No big deal. But now we changed our tax classes to 5+3 so I think we are required to file taxes but I am not sure. (PandaMunich?)

 

 

So when the kinderfreibetrag is better for you does the finazamt repay the familienkasse automatically?

 

If the Freibetrag is better for you then they give you the difference with your tax returns.

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The last time we went to a stuerberater she siad itw as not worth it to file, after refund we stillw ould have owed on the steuerberater fees.

 

But we have not doen the past 2 years, so not sure how different it will be now with a child. In 2010 I had a mini job, but since then my only income was the 1 year elterngeld.

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So when the kinderfreibetrag is better for you does the finazamt repay the familienkasse automatically?

 

I think it quite touching that you don't want the Familienkasse to be out of pocket, but since they are both state institutions, it would be like taking money out of your left trousers pocket and putting it in your right pocket :)

 

 

Dh is claiming it is worthless to file taxes as he anticipates only geting 50 euro back, but I am scared shitless if we do not file we would get a nasty bill from the finanzamnt. We have lots of write off this year from our move, so I would rather file and get those in and get nothing back then get a nice surprise in the mail

 

You have to file since you received Elterngeld, no maybe about it.

 

Anyway, with the moving costs you had you will get income tax back for sure, so don't worry.

By the way, you can choose to claim the moving allowance (= Umzugpauschale) instead of the real costs, but that only makes sense if you did the move on the cheap. See post post 379 in Filing a tax return for details.

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But now we changed our tax classes to 5+3 so I think we are required to file taxes but I am not sure. (PandaMunich?)

 

Yes, correct. You have to file.

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Good to know thank you so much pandabear. I will tell him that and get his butt moving then.

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after refund we stillw ould have owed on the steuerberater fees.

 

That's why I do our taxes with the cheapo Tchibo tax software (10 EUR). :ph34r:

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I did not think filing a tax return was an individual choice based on how much you think you may or may not stand to gain. I thought it was an obligation.

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our move included a moving company and makler and it was a profession based move, so they said even the makler was deductable so probably better to claim actual expenses.

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I did not think filing a tax return was an individual choice based on how much you think you may or may not stand to gain. I thought it was an obligation.

 

No not everyone is required to file.

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No not everyone is required to file.

 

Correct.

You don't have to (but in most cases would still profit from) file a tax return if you only have income from being an employee (as long as you weren't in tax class V or VI, or in tax class IV with a factor), or from capital income that has already been taxed with the Abgeltungsteuer.

 

If you only had income from being an employee than your employer has already held back the income tax (+ 5.5% Soli on the income tax) you owe on your salary throughout the year.

If you had German capital income then the bank already held back the 25% Abgeltungsteuer (+ 5.5% Soli on the Abgeltungsteuer) you owe. If your personal tax rate is below 25% you can do a tax return and get some of that Abgeltungsteuer back.

 

Edited to reflect kato's clarification.

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Krieg, the way I understand it for the back year 2010 we can no longer file without a tax specialist.

 

We could do our own this year, but we have so many deductions I would worry about screwing them up. The last time we went to a tax lady she told us we could claim a bunch of stuff the program did not include like certain insurances.

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You don't have to file a tax return if you only have income from being an emplyoee

 

... unless you and your spouse are in tax class III/V or (since 2010) use the factorized IV/IV split.

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I will tell him that and get his butt moving then.

 

Show him this, Elterngeld is half-way down the page as one of the reasons when even employees have to file a tax return.

 

 

Wichtig: In folgenden Fällen aber müssen Arbeitnehmer eine Steuererklärung abgeben (§46 Abs. 2 EStG),

 

 

  • wenn das Finanzamt ihnen auf der Lohnsteuerkarte einen Freibetrag eingetragen hat,
  • wenn ihre weiteren Einkünfte, von denen keine Lohnsteuer abgezogen wurde - etwa Renten, Mieten etc. -, mehr als 410 Euro betragen,
  • wenn Arbeitnehmer bei mehreren Arbeitgebern gleichzeitig Arbeitslohn bezogen haben (Ausnahme Minijob: Er muss nicht bei der Einkommensteuererklärung angegeben werden),
  • wenn steuerfreie Lohnersatzleistungen wie z. B. Arbeitslosengeld I, Krankengeld, Kurzarbeitergeld oder Elterngeld bezogen haben,
  • wenn beide Ehegatten Arbeitslohn bezogen haben und einer von ihnen nach der Steuerklasse V oder VI besteuert wurde.

 

 

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Will do pandamunich. Thanks so much for all the great info guys.

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