Why Finazamt asks to pay pack after switching tax class to 3 and 5

[imaginemade 0]

Hi people in Toytown,

 

I need your help here for thw topic of Tax class change.

 

After I hv married in 2019, my wife and I change tax class from 4:4 to 3:5.

I earn more; therefore I am tax class 3 and my wife is 5, then we got more money in our pockets every month.

 

Few days ago, we hv got a letter from Finazamt and they asking us to pay aroun 1700 Euro back because we paid less tax in 2019.

 

Question 1.

I do not understand why they are asking us to pay. Is this normal for 3:5 tax classes for a couple both earning?

If so, I do not understand the concept of switching to 3:5...

 

 

Question 2. 

If there is a reason why they asking, does this only apply to the 1st year (2019) after marriage or again for 2020, 2021, etc?

 

 

Please share your thoughts, experience, knowledge... It will be very much helpful.

 

Stay well guys!

 

 

 

[Krieg 14,490]

You will pay the same taxes, it does not matter if you are 4:4 or 5:3.  The difference with 5:3 is that the person with higher income will be PRE-TAXED less and and the person with lower income will be PRE-TAXED highly.   But at the end of the year people with 5:3 are required to file taxes.

 

You should only change to 5:3 if you were getting always a lot of money back from the tax office when filing taxes when you were on 4:4.

 

You now have to file taxes for 2019, 2020 and 2021.   And probably change back to 4:4 if you do not want the hassle.   Because if you have to pay money back for two years in a row on 5:3 they will assign you quarterly tax pre-payments.  Because the tax office is not a place to get free interest loans (but of course they are allowed to keep your back payments for a year at no interest).

[imaginemade 0]

@KriegThanks for the quick help!  

Do you mean that the total amount of tax for both stays same no matter which tax clss option we choose?

But then the concept of switching to 3:5 for the married couple who doesn't hv that much difference of income is not really making sense.

I am actually earing more than 60% of total income of the family and a lot of people (also online) said that is better to switch to 3:5.... very confused. (and sad) 

 

[Krieg 14,490]

38 minutes ago, imaginemade said:

@KriegThanks for the quick help!  

Do you mean that the total amount of tax for both stays same no matter which tax clss option we choose?

 

Yes, you will pay the same if you file taxes in both situations.    Why should you pay different amount of taxes?

 

38 minutes ago, imaginemade said:

But then the concept of switching to 3:5 for the married couple who doesn't hv that much difference of income is not really making sense.

I am actually earing more than 60% of total income of the family and a lot of people (also online) said that is better to switch to 3:5... very confused. (and sad) 

 

 

I told you already, changing to 5:3 makes sense only if you were getting back a reasonable amount of money when you were in 4:4.   You change because you want to keep that money now instead of having to wait for 15-18 months to get it.

 

If lots of people told you it would make sense then they have no idea.  Only looking at your previous tax reports when you were on 4:4 you could get an informed idea.  And since you changed immediately there was no information.   You could have estimated the situation if you stayed in 4:4 but you didn't.

 

The advantage of 4:4 is that you are not required to file taxes, but you still can do it if you want.

 

And the important thing:  you have to file taxes while in 5:3, so you have to file the 3 missing years.

 

What the tax office sent you is an estimation of the taxes you owe them for 2019, but when you do the proper filing you might end up having to pay less.

[arsenal21 392]

With 5 and 3 you can pay less tax, if one partner is earning more than the other, as the 3 gets the tax credit for both and 5 has no tax credit. 

 

I am not a financial advisor, if you want professional advice ask some of the professionals on here.

[kiplette 8,295]

What arsenal said is what I have always understood to be the reason people switch to 3:5.

 

Is there not some kind of online tax calculator you can shove your numbers in both ways and see how it comes out?

[Krieg 14,490]

13 hours ago, arsenal21 said:

With 5 and 3 you can pay less tax, if one partner is earning more than the other, as the 3 gets the tax credit for both and 5 has no tax credit. 

 

I am not a financial advisor, if you want professional advice ask some of the professionals on here.

 

No, no and no.

 

5:3 only changes the month to month calculations.  But the final amount of tax will be calculated when you file taxes.  That amount will be exactly the same amount of taxes you will pay if you file taxes as 4:4.

 

The only advantage of 5:3 is that you will have the money in your pocket every month.  Provided you do not have to pay it back, because then they will assign you tax prepayments and there will be no advantage.

[PandaMunich 15,921]

14 hours ago, arsenal21 said:

With 5 and 3 you can pay less tax, if one partner is earning more than the other, as the 3 gets the tax credit for both and 5 has no tax credit. 

 

Correction: you can pre-pay less tax.

As was said before, the total tax burden will always be the same.

The only question is how much of your total tax burden you:

1. pre-pay throughout the year through the deductions your employer makes from your salary each month (this is governed by the tax class you have) 
2. pay after doing your yearly tax return

 

9 hours ago, kiplette said:

Is there not some kind of online tax calculator you can shove your numbers in both ways and see how it comes out?

 

Yes, there is a calculator that tells you how much additional tax you will have to pay or that you will get back after doing the tax return: https://www.steuerklassen.com/steuerklassenrechner/

 

Enter both your yearly gross salaries:

 

 

Which gets you this result, that the tax class combination "4/4 with a factor of 0.982" would be ideal, since with that, you will only have to pay an extra 5.40€ through your tax return.

 

 

However, please note that if you choose "4/4 with a factor", you will have to do a tax return, which will cost you either time&effort if you do it yourself, or money if you do it through a Lohnsteuerhilfeverein.

The only tax class combo that does not lead to having to do a tax return is "4/4" or in Roman numerals IV/IV), without a factor.

 

17 hours ago, imaginemade said:

Few days ago, we hv got a letter from Finazamt and they asking us to pay aroun 1700 Euro back because we paid less tax in 2019.

 

Have a look at the Bescheid the Munich Finanzamt sent you.

Does it say in the middle of page 1 "Der Bescheid ergeht nach § 164 Abs. 1 AO unter Vorbehalt der Nachprüfung"?

 

If yes, just file the 2019 income tax return and you will pay only whatever the result of your filed tax return is.

 

If no, then you immediately need to send a letter to your Finanzamt, which has to reach the Finanzamt within 1 month + 3 days of the date written on the Bescheid, by registered letter with a pink returns slip (= Einschreiben mit Rückschein):

If you do not do so, the 1,700€ they ask from you become final 1 month and 3 days after the date written on that Bescheid of the Finanzamt.

You will still have to file the 2019 tax return, but with the 1700€ having become final, even if your additional tax through the tax return should be lower than 1,700€, you will still have to pay those 1,700€.

 

Send this letter (which has to be signed by both of you!) to your Finanzamt:

 

*************************************************************************************************

An 

Finanzamt München

<insert address written on Bescheid>

 

 

Betrifft: Einspruch gegen den Einkommensteuer-Bescheid 2019 vom <insert the date written on the Finanzamt Bescheid, i.e. the date they issued it>

Steuernummer: <insert your Steuernummer>

 

 

Sehr geehrte Damen und Herren,

 

hiermit erheben wir Einspruch gegen den Einkommensteuer-Bescheid 2019 vom <insert the date written on the Finanzamt Bescheid, i.e. the date they issued it>.

Die Einkommensteuererklärung 2019 wird nachgereicht.

 

Mit freundlichen Grüßen

 

<husband's signature>                                    <wife's signature>

<husband's name>                                          <wife's name>

[arsenal21 392]

12 hours ago, Krieg said:

 

No, no and no.

 

5:3 only changes the month to month calculations.  But the final amount of tax will be calculated when you file taxes.  That amount will be exactly the same amount of taxes you will pay if you file taxes as 4:4.

 

The only advantage of 5:3 is that you will have the money in your pocket every month.  Provided you do not have to pay it back, because then they will assign you tax prepayments and there will be no advantage.

My apologies, you are right. Did this change at some point in the past?

[Krieg 14,490]

11 hours ago, arsenal21 said:

 Did this change at some point in the past?

 

Nope, it has been always like that.  As far as I know.