How is short-time work allowance taken into account in the payroll?
July 28, 2023 | 30,00 EUR | answered by Claudia Köhler
Dear tax advisor,
My name is Alice Vollmann and I work for a company that has introduced short-time work due to the current economic situation. My employer is now paying me short-time work allowance as compensation for the lost wages. I am concerned about how this short-time work allowance will be considered in my payroll and what impact it could have on my tax situation.
The current situation is as follows: my regular salary has been reduced and I now receive short-time work allowance as a supplement. I am unsure if the short-time work allowance is treated as taxable income and if it has any impact on my social security contributions. Additionally, I wonder if there is anything I need to consider when filing my tax return regarding the short-time work allowance.
My concern is that I may be faced with a tax bill at the end of the year, as I am not sure how the short-time work allowance is accounted for in the payroll. I would like to know how best to prepare for this and if there are ways to avoid tax payments.
Could you please explain how short-time work allowance is accounted for in the payroll and what tax aspects need to be considered? Are there any tips or recommendations you can provide to avoid possible issues related to the short-time work allowance? I look forward to your support and thank you in advance for your help.
Sincerely,
Alice Vollmann
Dear Ms. Vollmann,
Thank you for your inquiry regarding short-time work allowance in payroll and the associated tax aspects. It is understandable that you are concerned about how short-time work allowance may affect your finances. Therefore, I will gladly explain in detail how short-time work allowance is taken into account in payroll and what tax aspects you should consider.
First and foremost, I want to assure you that short-time work allowance is taxable. This means that it is included in your regular salary in the payroll and taxed accordingly. Short-time work allowance is treated as earned income and is subject to income tax. It is usually paid directly to you by your employer and separately listed in your payroll.
As for social security contributions, these are usually calculated only on your regular salary. While short-time work allowance is taxable, it is not subject to social security contributions. This means that you do not have to pay social security contributions on short-time work allowance.
When it comes to tax returns, it is important that you declare and pay taxes on short-time work allowance. In the income tax return, you must report all income, including short-time work allowance. You can also claim deductions for expenses to reduce your tax burden. It is possible that you may have to make a tax payment at the end of the year if the short-time work allowance was not adequately taxed. To avoid potential issues, I recommend regularly reviewing your financial situation and, if necessary, setting aside reserves for possible tax payments.
In summary, short-time work allowance is taxable in payroll but not subject to social security contributions. You must declare and pay taxes on short-time work allowance in your tax return. It is important to keep an eye on your financial situation and set aside reserves for tax payments.
I hope that this information has been helpful to you. Please feel free to contact me if you have any further questions.
Best regards,
Claudia Köhler
