What tax deductions should be considered in a payslip?
December 14, 2023 | 30,00 EUR | answered by Elvira Klinger
Dear Tax Advisor,
My name is Hanna Knorr and I work as an employee in a medium-sized company. Recently, I have been closely examining my payroll statement and have noticed various tax deductions that caught my attention. Unfortunately, I lack the necessary expertise to fully understand these deductions and their impact on my net salary.
Specifically, I am concerned about deductions such as income tax, solidarity surcharge, church tax, social security contributions, and any other possible deductions listed on my payroll statement. I am wondering which of these deductions must be withheld by my employer and which ones I may potentially declare or request additionally to optimize my tax burden.
Furthermore, I am worried about whether there are ways to reduce or bypass these tax deductions without violating any laws. I would like to learn more about tax optimization possibilities to increase my net income and improve my financial situation.
Therefore, my question to you as an expert is: What tax deductions should be considered in a payroll statement and how can I reduce or optimize my tax burden? I would greatly appreciate any specific advice and tips that can help me better understand and potentially improve my tax situation.
Thank you in advance for your support and guidance.
Sincerely,
Hanna Knorr
Dear Ms. Knorr,
Thank you for your inquiry and your interest in consulting regarding payroll and tax deductions. It is understandable that you are concerned about your tax burden and would like to optimize your financial situation. I am happy to provide you with an overview of the most important tax deductions to consider in payroll, and show you options for reducing or optimizing your tax burden.
First and foremost, the following tax deductions should be considered in payroll:
1. Income tax: Income tax is calculated based on the individual tax rate and withheld directly by the employer. The amount of income tax depends on the taxable income.
2. Solidarity surcharge: The solidarity surcharge is usually 5.5% of the income tax and is also withheld by the employer.
3. Church tax: If you are a member of a tax-collecting religious community, church tax will also be withheld. The rate varies by state.
4. Social security contributions: This includes contributions to pension, health insurance, long-term care insurance, and unemployment insurance. These are shared by both the employer and the employee.
Regarding your questions about optimizing your tax situation: In Germany, there are numerous legal ways to reduce your tax burden. This includes utilizing work-related expenses, special expenses, and extraordinary burdens to lower your taxable base.
Additionally, there are various subsidies and tax benefits that you can take advantage of, such as Riester pension, company pension schemes, or splitting income with your spouse. Donations and volunteer work may also be tax deductible.
It is important that you inform yourself in detail about your personal tax situation and consider consulting a tax advisor to discuss individual optimization possibilities.
I hope this information is helpful to you and enables you to better assess your tax burden. If you have any further questions or would like a personal consultation, I am at your disposal.
Best regards,
Elvira Klinger, Tax Advisor
