Severance pay and severance agreement
January 18, 2012 | 20,00 EUR | answered by Andreas Schupp
How is the loss deduction from rental and leasing taken into account when applying the fifth rule in the case of a severance payment.
What needs to be certified on the 2012 income tax card, the loss deduction for 1 or 5 years?
Dear inquirer,
Thank you for your inquiry, which I am happy to answer taking into account your input and the rules of this platform.
Please note that my explanations are based on the facts presented by you, and that adding, omitting, or changing life circumstances or the ambiguity of the information provided can affect the correct tax result.
Regarding Question 1: Consideration of the fifths regulation for severance pay and loss deduction from rental and leasing:
The fifths regulation applies to extraordinary income (see § 34 para. 1 and para. 2 of the Income Tax Act).
Extraordinary income occurs whenever, for example, the severance pay leads to an accumulation of income in one assessment period.
In your case, the fifths regulation only applies to your extraordinary income (here: severance pay).
It has nothing to do with the loss deduction from rental and leasing (R&L).
In the case of loss deduction, the income is first offset against similar income and/or, if no positive income of the same type is available, it is offset against other income (including income from employment, including severance pay).
If it is a carried forward loss according to § 10 d from R&L, the loss is primarily offset against positive income (including severance pay) of the current year before charitable contributions, etc.
Regarding Question 2:
On the wage tax certificate, the employer only needs to separately certify the severance pay and the withholding taxes related to it.
I hope that my explanations have been helpful to you.
If there are still uncertainties, please use the option to ask further questions.
