Ask a tax advisor on the topic of Income tax return

Capital income of minor children

May 23, 2020 | 50,00 EUR | answered by Steuerberater Knut Christiansen

As a grandfather, I take care of my daughter's tax matters. My daughter's husband (41) passed away suddenly 2 years ago. She has two children (11 and 6). In 2019, they received capital gains totaling around €70,000 as heirs of the husband (50-25-25). There is already a tax assessment notice for this, with each child logically entitled to around €17,500. The paying company, a GmbH of which the deceased was a shareholder, had already deducted the full capital gains tax plus solidarity surcharge on the total amount.

Question: Since the income exceeds the tax-free threshold of around €9,300 per child, does each child now need to file their own income tax return for 2019? The children receive half-orphan pensions of around €1,000 each per year, should these also be reported? The children are currently covered by family health insurance through the mother's company, a BKK. What are the consequences of these capital gains in relation to this? As far as I know, the children's own income is not relevant for child benefit/child allowance for minors, correct? How much tax refund can be expected for the children's capital gains?

Steuerberater Knut Christiansen

Good day,

it is correct that a tax return must be submitted in order to receive a refund of overpaid taxes. In addition to Annex KAP, Annex R must also be filled out for the orphan's pension. The taxes withheld by the GmbH are credited against the children's income tax.

For family insurance, there is generally an income limit of an average of €455 per month (2020. For 2019: €445). This would mean that both of you no longer meet the requirements for family insurance (at least in the year of the payout).

For minor children, child benefit is paid regardless of income.

The refund per child should amount to approximately €2,500-€2,750.

I hope this answers your questions, if not, please feel free to ask any further questions free of charge.

Kind regards,

Knut Christiansen
Tax consultant