Are there tax benefits for families with children?
July 31, 2023 | 40,00 EUR | answered by Lilli Reuter
Dear tax lawyer,
My name is Christiane Bauer and I am a mother of two preschool-aged children. In the past, I have never delved deeply into tax-related topics, but now I am wondering if there are any tax benefits available for families with children.
My husband and I both work full-time and earn an average income. We have heard that there may be tax advantages that could benefit our family. We are wondering if there is, for example, child benefit, child allowances, or other tax benefits that we could claim.
Our concerns are that we may have overlooked unused tax benefits so far and as a result, are paying unnecessarily high taxes. We want to optimize our financial situation and ensure that we make use of all possible tax benefits.
Could you please provide us with information on what tax benefits are available for families with children? Are there specific requirements that we need to meet in order to claim these benefits? What steps should we take to ensure that we make use of all possible tax advantages?
Thank you in advance for your help and support. We would greatly appreciate your professional advice on this matter.
Sincerely,
Christiane Bauer
Dear Mrs. Bauer,
Thank you for your inquiry about tax benefits for families with children. As a tax lawyer, I would like to provide you with a detailed answer.
There are indeed a variety of tax benefits that families with children can take advantage of. The most important ones include child benefit, child tax credits, and the so-called "family splitting".
Child benefit is a state benefit that parents receive monthly for each child up to the age of 18. Currently, child benefit is €204 per month for the first and second child, €210 for the third child, and €235 for each additional child. Child benefit is paid regardless of the parents' income and is intended to support the costs of caring for and raising children.
Child tax credits, on the other hand, are tax-free allowances that parents can claim on their income tax return. They directly reduce the tax burden and lower the taxable income. Currently, the child tax credit is €7,812 per child per year. Parents can choose whether to receive child benefit or claim child tax credits. In general, it is more tax advantageous to utilize child tax credits as they can lead to greater tax savings.
"Family splitting" is a tax regulation that married couples with children can benefit from. It involves combining the taxable income of both spouses and dividing it by two. In many cases, this results in a lower tax burden, as it mitigates the progression of the tax rate.
To take advantage of the mentioned tax benefits, you must meet certain requirements. These include, among others, having the children living in your household and caring for their upbringing. Additionally, you must include the children in your tax return and file the appropriate applications.
To ensure that you are maximizing all possible tax advantages, I recommend contacting a tax advisor or a tax lawyer. An expert can analyze your individual situation and help you make the most of the available tax benefits.
I hope this information has been helpful to you. If you have any further questions, please don't hesitate to contact me.
Best regards,
Lilli Reuter
