What tax benefits does a Riester pension offer me in my income tax return?
April 18, 2023 | 50,00 EUR | answered by Andreas Stricker
Dear Tax Advisor,
My name is Albrecht Wagner and I have a question regarding the tax treatment of my Riester pension in my income tax return. For several years, I have been regularly contributing to a Riester pension to provide for my retirement. Now, I am wondering what tax benefits this form of retirement provision brings me in my income tax return.
Currently, I am unsure if I can deduct the contributions to the Riester pension from my taxes and if this will reduce my tax burden. Additionally, I am wondering if the payments from the Riester pension in retirement are subject to taxation and how they will be taxed.
Since I am not particularly knowledgeable in the field of taxes, I rely on your expertise. I would like to know how to optimally include the Riester pension in my income tax return to take advantage of tax benefits and improve my financial situation.
Could you please explain in detail what tax aspects to consider with the Riester pension and what opportunities there are to achieve tax benefits? I look forward to your expert advice and thank you in advance for your support.
Sincerely,
Albrecht Wagner
Dear Mr. Wagner,
Thank you for your inquiry regarding the tax treatment of your Riester pension in your income tax return. The Riester pension is a state-subsidized form of retirement provision that can indeed offer you tax advantages. I would be happy to explain the most important tax aspects that you should consider with your Riester pension.
First of all, you can actually deduct the contributions to your Riester pension from your taxes. This means that you can claim the contributions made in your income tax return as special expenses. By doing so, you reduce your taxable income and therefore decrease your tax burden. It is important to note that the deductibility of contributions to the Riester pension is limited annually. For the year 2021, the maximum deductible amount is 2,100 euros per person.
Furthermore, the payouts from the Riester pension in retirement age are subject to taxation. The Riester pension is subject to deferred taxation, which means that the payouts in retirement age must be fully taxed. However, there are also tax advantages to consider here. The taxation is based on the so-called earnings proportion method, where only a certain percentage of the payouts is considered taxable. This percentage depends on your age at the start of the pension.
To optimally consider the Riester pension in your income tax return and take advantage of tax benefits, it is important to properly document all relevant data and receipts. Keep all documents related to your contributions and benefits ready. This way, you can ensure that you make full use of all tax opportunities and improve your financial situation.
Overall, the Riester pension does indeed offer attractive tax advantages that should be utilized. I am happy to answer any further questions and support you in the optimal consideration of your Riester pension in your income tax return.
Best regards,
Andreas Stricker
