Tax Prepayments???

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Yesterday my accountant asked me if he could set up prepayments with the Finanzamt and if not that I should do my taxes myself. I didn't understand such correspondence since there was no discussion of this months ago when I hired him and he had told me my taxes would be paid once a year. In other words, if now suddenly I would be asked to pre-pay, why was I not given a warning since paying ahead for taxes on money I don't have would be burden? I don't quite understand this. At that, my accountant has not been so great as he has lost my invoices many times. Then when I tried to help him & his assistant by streamlining everything and uploading my monthly invoices onto a server or through a WeTransfer protocol where they could download files in case they lose one, I was told that they don't know how to download files. Seriously. I have also been unimpressed with the difficulty of finding a decent accountant as finding one where I live is not easy.  So, a friend suggested that I just do my own taxes or use an app. 

Here are my questions:

1. Could anyone here explain why I never was told about pre-payments until yesterday? (And yes, I did ask about how often I would have to pay taxes and was told another story last year.)  And does nobody pay taxes after each quarter or annually?

2. And how can the Finanzamt expect freelancers whose work is not steady to come up with money when we make very little income many months?  It seems that they want to guesstimate my income this year when I had to remind my accountant that my income is very unsteady, especially with no childcare.

3. Are any of these apps worth it? I am a writer who has a clear billing system, I don't charge VAT as my clients are not in the EU and I have expenses each month. 

Thanks!

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21 minutes ago, zwiebel said:

1. Could anyone here explain why I never was told about pre-payments until yesterday? (And yes, I did ask about how often I would have to pay taxes and was told another story last year.)  And does nobody pay taxes after each quarter or annually?

 

Part A ) No idea. Your tax adviser might have thought people just know this is how it's done.

Part B ) No. This is how Germany does it.

 

23 minutes ago, zwiebel said:

2. And how can the Finanzamt expect freelancers whose work is not steady to come up with money when we make very little income many months?  It seems that they want to guesstimate my income this year when I had to remind my accountant that my income is very unsteady, especially with no childcare.

 

They expect that you know what you made last year and that now you can estimate your income. This is something people normally understand how to do when they own their own business. The expectation is not unusual.

 

24 minutes ago, zwiebel said:

3. Are any of these apps worth it? I am a writer who has a clear billing system, I don't charge VAT as my clients are not in the EU and I have expenses each month. 

 

What apps?

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I did ask him about when taxes are paid and he never mentioned pre-payments at all. He said it would be done at the end of the year. Hence my confusion. I have also spoken to many freelancers who don't have pre-payments so this doesn't seem to be at all the way things are done in Germany.  My accountant intimated in his email to me that if I do my taxes on my own I wouldn't have to do pre-payments. Again, I find this confusing but why is this?

 

My income is not steady and so no, I can make more money some months and very little others. 

I am speaking of apps that people are using to do their taxes. 

 

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10 minutes ago, zwiebel said:

I did ask him about when taxes are paid and he never mentioned pre-payments at all. He said it would be done at the end of the year. Hence my confusion. I have also spoken to many freelancers who don't have pre-payments so this doesn't seem to be at all the way things are done in Germany.  My accountant intimated in his email to me that if I do my taxes on my own I wouldn't have to do pre-payments. Again, I find this confusing but why is this?

 

My income is not steady and so no, I can make more money some months and very little others. 

I am speaking of apps that people are using to do their taxes. 

 

 

As soon as I broke the VAT threshold (€17,500/yr), the finanzamt insisted on quarterly prepayments based on previous year's income. Maybe your freelance friends just don't earn very much money. I don't know. Every freelancer I know pays quarterly based on the previous year's income. They expect you to save money to pay your tax bill and the amounts are fixed by the Finanzamt on the statement they send you. This is not a surprise expense.

 

We use WISO software every year, but it is not compatible with Quicken and it is all in German. I don't know if that helps you at all. 

 

 

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Yes the app reccommendation helps!  Thanks.  So, the pre-payments are not actually « pre » then? They are after each quarter?  It is just last year I made very little money and had a surprise increase in income for three months this year which is doubtful to happen again (eg now no income for the summer). So for me to pay as if all my months would be like the spring would be a financial hardship for me. Is there any way to pay based on what I actually make?  For instance, I am earning zero this summer.  I couldn't possibly afford to pay anything when I have no income.

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How are you supporting your kids? About how much have you earned in one year from this freelance work while you've been in Germany?

 

That might give me better insight into the Steuerberater's thinking. Regardless, the Finanzamt tells you how and how much to pay based on your tax return for last year OVERALL.

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Obviously, I earn enough to support my family.  I don't earn enough to prepay income I haven't earned. Does that make sense?  The issue is that the accountant hasn't mentioned what you are saying about last year's income which was in the low twenties, so it seems odd that he would say to pre-pay based on a fluke of a few months of high earnings. That is the issue.  If I am to pay based on last year's earnings, that is not a problem. If I am to pay now based on three months of this year, however, that would be inaccurate since he is guessing that a fluke is the "norm" when it is not. He should know this based on my earnings from last year.  Also, how can we be expected to pay money when we are not earning some months? I have put aside enough to pay for what I earned last year. This year might be about €5,000 more, but my accountant is thinking I will earn more simply because for three months I earned most of my year's income. Now, it is dead and it will be this way for several months.

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6 hours ago, zwiebel said:

My accountant intimated in his email to me that if I do my taxes on my own I wouldn't have to do pre-payments.

 

Nope, you must have misunderstood him.

 

What you have to pre-pay in income tax is set down by law (no difference if you submit the tax return yourself and have a Steuerberater), and is based on your last year's income, which is why the pre-payment schedule for this year is included in your last Steuer-Bescheid.

Details in here:

 

What could have happened is that your Steuerberater got worried that you might have 4 excellent quarters and might forget to save the money you would then owe in extra income tax on that raised income, and therefore tried to convince you to voluntarily raise your pre-payments.

After all, you can't spend money that you have already given into the Finanzamt's keeping ;)

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Yes, if I have 4 excellent quarters, I would be thrilled. The major problem is, at the moment, no Kita. So, I currently work with no childcare which cuts my earning power quite a bit. I got very lucky in April and May and had, suddenly, quite a bit of income attainable only due to my ability to eat and sleep very little given the no childcare situation (hence I worked at night). But that income was an anomaly. My accountant is basing his ideas on two very good months and I can't imagine why he would not just send me a reminder that at my current earnings I ought to be saving x% or something to this spirit. And no, I didn't get a letter from the Finanzamt at all. I imagine his email was purely based on a couple of good months in the first half of this year.  I have written him but he takes forever to reply and I was curious about this email.

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On 7/13/2019, 8:36:22, zwiebel said:

If I am to pay based on last year's earnings, that is not a problem.

That´s the case. So relax. You must have misunderstood your accountant.

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No, I did not misunderstand him. He asked me if he could tell the tax office to increase my payments. All this is coming from him bizarrely.  He basically wants to increase my payments or that I should do my taxes myself. His office is not great--from the assistant who loses invoices to the fact that his assistant claims not to know how to download files (I had to start keeping my monthly mailings to them of invoices and statements in a folder because she lost items frequently and I don't have the time to look for specific documents every time this happens). I get the sense that they are not equipped to deal with freelancers.  I mean, an increase in incoming money as a freelancer for two months does not mean my salary has magically increased. It amounts to people coincidentally paying me in the same time frame plus a bit of increased work. This summer I will be making very little.  

What does the Finanzamt do if you have a very good year and then the following year make much much less? Do they force people to become homeless coming up with money they don't make? It all seems very reckless since freelancing can be very irregular, especially in my line of work.

 

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4 hours ago, evildudette said:

Get a new Steuerberater.

Yes, I want to find a new one. It is just not that easy. Many say that they are not taking new clients. I would rather have a new one instead of doing it myself.  Is there a website where there are reviews of Steuerberater by region?  Thanks so much!

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10 hours ago, zwiebel said:

Yes, I want to find a new one. It is just not that easy. Many say that they are not taking new clients. I would rather have a new one instead of doing it myself.  Is there a website where there are reviews of Steuerberater by region?  Thanks so much!

 

Have you considered them :  https://expattax.de/  . I found them here in toytowngermany. They have been doing my Taxes since I came to Germany (a little over 9 years ago) , I never had the slightest issue , their communication is great and they speak english. Never met them in person, all is done through mail, phone, and exchange of scanned documents.

Disclaimer (to be on the safe side :D ) : Not paid or told to write something, just a satisfied customer

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4 hours ago, Alexnf said:

 

Have you considered them :  https://expattax.de/  . I found them here in toytowngermany. They have been doing my Taxes since I came to Germany (a little over 9 years ago) , I never had the slightest issue , their communication is great and they speak english. Never met them in person, all is done through mail, phone, and exchange of scanned documents.

Disclaimer (to be on the safe side :D ) : Not paid or told to write something, just a satisfied customer


Thanks for the recommendation!

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