Income tax annual adjustment - deducting maintenance payments according to §33a Income Tax Act
June 6, 2011 | 35,00 EUR | answered by Tobias Rösemeier
Dear Sir or Madam,
My father is in a nursing home. In order to cover the costs of his accommodation, his pension is deducted by the social welfare office and he is granted a pocket money of 96 euros. As there is still a remaining amount to cover the nursing home costs, I am being called upon to make maintenance payments. In my income tax return for 2010, I declared the maintenance costs for my father. However, they were not taken into account because my father receives a pension of 960 euros. The reason given was §33a paragraph 1 sentence 1 in conjunction with 5 (Income Tax Act). (Sentence 1: If a taxpayer incurs expenses for the maintenance and any vocational training of a person who is legally entitled to maintenance from the taxpayer or their spouse, the income tax can be reduced upon request by deducting the expenses up to 8004 euros per calendar year from the total income. Sentence 5: If the supported person has other income or benefits, the sum of the amounts determined in sentence 1 and sentence 2 is reduced by the amount by which these income and benefits exceed 624 euros per calendar year, as well as by the subsidies received by the supported person as education assistance from public funds or from funding institutions receiving public funds for this purpose; benefits also include those mentioned in § 32 paragraph 4 sentence 4.)
Can the pension in this case be considered as benefits and used to reduce the amounts determined in sentence 1, especially since almost everything is deducted by the social welfare office? Is the argumentation of the tax office correct? Is there a way to still deduct the maintenance payments in the income tax return?
Thank you in advance,
Stefan
Dear questioner,
I am happy to answer your question taking into account your description of the situation for a first legal orientation as follows:
Unfortunately, the tax office's legal opinion is correct.
The deductibility of the maintenance payments made requires in particular that the maintenance recipient is in need, meaning that your father does not have an income above €8,004.
The Federal Court of Justice had already dealt extensively with the requirements of § 33a in a proceeding in 2006. It is the following decision: BFH III R 26/05.
The court stated the following in its decision:
"If a taxpayer incurs expenses for the maintenance and any vocational training of a person legally entitled to maintenance from the taxpayer or their spouse, income tax is reduced upon request by deducting the expenses up to 12,000 DM (now €8,004) in the calendar year from the total amount of income (§ 33a para. 1 sentence 1 EStG). According to § 33a para. 1 sentence 3 EStG, it is a prerequisite that neither the taxpayer nor another person is entitled to a child allowance or child benefit for the supported person, and the supported person has little or no assets. If the supported person has other income or benefits that are intended or suitable to cover maintenance, the amount of 12,000 DM (€8,004) is reduced by the amount by which these income and benefits exceed 1,200 DM (€624) in the calendar year, as well as by the subsidies received by the supported person as educational assistance from public funds or from funding agencies that receive public funds for this purpose (§ 33a para. 1 sentence 4 EStG)."
Both the pension and benefits (own income) as well as the additional subsidies from the social welfare office must be taken into account.
Another possibility of deducting maintenance payments is not possible for tax purposes.
I regret not being able to give you any positive news, but I hope I was able to explain the legal situation to you clearly.
Best regards,
Tobias Rösemeier
-Lawyer-
