German news. Tax return tricks. Filing an income tax return can be helpful in many cases. In some cases, you’ll get your money back. With these 5 tricks, you can get even more money back.
Child care and travel expenses
The first trick involves childcare. Parents can reimburse other family members, such as grandparents, for childcare travel costs of 30 cents per kilometre. They can deduct the costs from their tax returns. However to do this, “a care contract must be drawn up so that there is a serious, mutually justified and binding obligation,” explains the German expert. The parents must then submit an appropriate invoice, which must contain the following information in addition to the travel expenses:
- The list of trips made with the date attached
- Details of the people caring for the child
- Bill recipient details (parents with address)
Additionally, the following requirements must be met:
- No bills can be paid in cash
- The child must be part of the taxpayer’s household
- The child must not have reached the age of 14
Parents can then deduct two-thirds of the care expenses, a maximum of €4,000 per child per calendar year, from taxes such as special expenses.
Matrimonial property for married couples
According to tax expert Fabian Walter, another tax trick that might be of particular interest to married couples. The matrimonial property regime is a tax-optimized means of transferring assets between spouses and is ideal in cases where one spouse earned significantly more during the marriage than the other spouse, who took care of the household, e.g. Here there is a tax reduction of up to 500,000 euros transfer between spouses. “In this way, the richer spouse can transfer half of the earnings made during the marriage to the other spouse – and very importantly, tax-free!”
Pay upfront for private health insurance
“As of January 1, 2020, there was a new rule that contributions to basic health and long-term care insurance can be deducted for subsequent years in the current pay year,” says Walter. They cannot exceed three times the contributions paid for the payment year. “That way, you can use these maximum amounts again in future years by prepaying your health insurance contributions for the next three years.”
Advance payments are not useful:
- for those with legal health insurance, as the employer must pay the monthly contributions;
- if one of the spouses has private health insurance and the other has statutory health insurance;
- if the old method of calculating maximum amounts is more favourable to pensioners
Payments to the health insurance company must be made before December 22, 2023, to be able to use this trick in 2023. However, not all health insurance companies allow prepayment.
Marriage at the end of the year
Wedding with tax advantages. “If both spouses earn the same amount, the marriage makes less sense for income tax reasons.”
However, the situation is different if the salary is different. Fabian Walter explains this with an example: “In 2023, the woman has a taxable income of 50,000 euros. The man from 0 euros. By marrying by December 31, 2023, the couple will save €5,046 in retroactive income tax on their 2023 tax return.”
Selling your rental property instead of giving it away
Tax experts advises parents who own a rental property should not initially think about a gift when passing it on to their children. Better make a sale-purchase deed. Taxable rental income falls, so you pay less tax.
It is important to note that “rental properties can only be sold tax-free after ten years of tenancy, so you should take this into account if you want to sell sooner, for example”.
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