Assessment basis for parental allowance - tax class change or alternative ideas
January 14, 2015 | 30,00 EUR | answered by Anton Pernitschka
Hello everyone,
I have a question regarding the calculation of parental leave benefits.
We are both working and expecting our child at the end of July (due date is 28.7.2015). My wife will take 12 months of parental leave and I will use the two partner months. Currently, I am in tax class 3 and my wife is in tax class 5.
If I apply for a tax class change in January so that we can switch tax classes, we will only have the new tax classes starting from February. Parental leave benefits are calculated based on my understanding on the gross income of the last 12 months before the birth minus a lump sum for social security contributions and the amount of income tax paid based on the predominantly used tax class.
I am now wondering what I can do to ensure that my wife's parental leave benefits are calculated based on tax class 5 even if it is very close. I am extremely annoyed that I only now had the idea to educate myself, but that's how it is and I hope there is still a loophole that I have overlooked.
There may be a possibility to exclude the start of maternity leave from the calculation, but in order to reach at least 6 months (starting from February), July would also have to be considered in the calculation of income assessment.
Is there still a chance that we can manage this, if our child is indeed born in July, meaning can the month in which the child is born also be included in the assessment? (We would need that month to reach at least 6 months for her in tax class 3.)
If the birth deviates from the estimated date and the child is actually born in early August, is there a possibility to structure the parental leave benefits application in a way that we can calculate the benefits based on tax class 5?
What would you do? If there is a chance, we must react quickly and change tax classes, so I would be very grateful for a prompt response.
Best regards
Dear inquirer,
In the context of an initial consultation and your fee contribution, while considering the regulations of this forum, I would like to answer your question.
For married couples who want to maximize their benefits in the first 12 to 14 months, it is advisable to switch to the appropriate tax classes in a timely manner, as the parental allowance is based on net income before the birth. The parent who will be taking the most parental leave should ideally choose the more favorable tax class III.
Since the beginning of 2013, the "Law on Simplification of Parental Allowance Enforcement" has limited the opportunities for switching tax classes significantly. Parents now need to take action even before a positive pregnancy test. The change of tax class must be requested at least 7 months before the start of the six-week maternity leave. This leaves only until the second week of pregnancy for the switch.
If the estimated due date is July 28, 2015, the maternity leave will start on June 16, 2015, so the application had to be submitted by mid-December 2014 in order to take effect in January 2014. The fact that the new tax class only applies for 6 months with full salary is irrelevant for the parental allowance office. They calculate as if the tax class had applied for the entire assessment period of 12 months. The month in which the child is born is not taken into account.
If the child's due date falls in August, there may still be an opportunity to switch if the application is submitted in January.
If the switch is made too late, the old, less favorable tax class will be used. However, the mother can request that a month of maternity leave be taken into account in the parental allowance calculation.
Because maternity pay does not cover the full salary, the average income for the crucial 12 months will decrease. However, compared to the tax class advantage, this disadvantage usually does not weigh as heavily.
If maternity leave starts later, there is more time for a tax class change. Maternity leave is not mandatory and can vary in length.
A tax class change is worthwhile at least in the classic constellation where the expectant mother is employed but earns less than the husband and is therefore in the unfavorable tax class V. Although there will be slightly less net income before the birth, this can be reclaimed through the tax return. However, there is no compensation for the losses in parental allowance.
If the switch is not made in time, there is still a silver lining. Parental allowance is subject to progression proviso, which increases the average tax rate. Couples who receive more parental allowance should therefore be prepared for a tax repayment.
The response is based on the information provided. Missing or incorrect details about the actual circumstances can affect the legal outcome.
Best regards,
Anton Pernitschka
Tax consultant
