Approach of a performance refund by the private health insurance in the tax return.
June 19, 2019 | 100,00 EUR | answered by Steuerberater Knut Christiansen
The situation is as follows: With the birth of our second child in May 2014, my wife's entitlement to benefits increased from 50% to 70% (under the official regulations of Rhineland-Palatinate). Accordingly, the private health insurance premium would have become cheaper. Unfortunately, this change was not made at that time (it is unclear whose fault this was).
In late 2017, debeka noticed this mistake and made a retroactive adjustment to the premium. The financial consequences were a refund of contributions from May 2014 to December 2017 totaling around 3,000 euros, and a repayment of benefits also totaling around 3,000 euros. The benefits authority only covered the costs for 1 year citing statute of limitations.
The refund of contributions and repayment of benefits occurred in January 2018, therefore affecting the 2018 tax return. The refund of contributions will reduce the amount of deductible expenses by 3,000 euros.
Question: How can I account for the refund of contributions in the tax return so that it does not affect our tax liability?
Extraordinary expenses threshold for joint assessment according to TAXMAN: 3,166 euros.
Good day and thank you for your inquiry at frag-einen.com!
I would like to answer your question as part of an initial consultation.
In principle, refunds of contributions for previous years must be considered according to the cash flow principle and therefore reduce the special expenses in the year of the refund. The refund amounts are reported by the health insurance companies to the tax authorities, so that there is an automatic reduction of the paid contributions. Therefore, the only possibility left is for you to increase the limited deductible special expenses (contributions to health insurance, liability insurance, accident insurance, disability or occupational disability insurance, life insurance) for the year 2018 as much as possible, so that at least the maximum amounts can be utilized. Often these contributions are "lost", as the special expenses are mostly exhausted by health and nursing care insurance contributions. Therefore, for the year 2018, this may allow you to at least "save" a part through such contributions. Unfortunately, there is no other option. It is also not possible to offset the refunded payments with the contribution refund, as they fall under the so-called extraordinary expenses and therefore offsetting with special expenses is expressly not allowed.
I regret not being able to provide you with a better answer but I am obliged to properly present the legal regulations to you.
I would like to point out that this forum cannot replace a detailed and personal tax consultation, but is mainly intended to provide an initial tax assessment. By adding or omitting relevant information, the legal assessment of your issue could be different.
Best regards,
Knut Christiansen
Tax advisor
