Are there any tax benefits if I use my severance payment for further education or retraining?
September 4, 2022 | 40,00 EUR | answered by Edith Hartmann
Dear Tax Advisor,
my name is Irmgard Klinger and I am faced with the decision of what to do with my severance payment. I recently terminated my employment and will receive a severance payment. Now I am considering whether there are any tax advantages if I use a portion of the severance payment for further education or retraining.
My current situation is that I am looking to reorient myself professionally and am considering pursuing further education or retraining. This raises the question for me whether it is more tax efficient to use the severance payment for these purposes rather than using it elsewhere.
My concerns lie in the fact that I am not sure how using the severance payment for further education or retraining could affect my taxes. I would like to know if there are tax advantages if I use a portion of the severance payment for these purposes and if there are any potential disadvantages that I should be aware of.
Therefore, my question to you is: Are there any tax advantages if I use my severance payment for further education or retraining? What tax aspects should I consider and are there possibly alternative ways to use the severance payment in a tax-efficient manner?
I look forward to your expert advice and thank you in advance for your help.
Best regards,
Irmgard Klinger
Dear Mrs. Klinger,
Thank you for your inquiry regarding the tax benefits of using a portion of your severance package for further education or retraining. This decision can indeed have an impact on your tax burden, so it is important to consider all relevant aspects.
In general, severance packages are subject to income tax. However, if you use a portion of the severance package for professional development or retraining, you may be able to benefit from tax advantages. Expenses for professional development or retraining can be claimed as deductible business expenses under certain conditions.
It is important to note that the training measure must be work-related and should support your current job or enable you to enter a new professional field. Additionally, the costs must be directly related to your job in order to be deductible as business expenses.
So, if you use a portion of your severance package for professional development or retraining, you may be able to claim the corresponding costs as deductible business expenses. This can lead to an overall reduction in your tax burden.
However, it is advisable to consult with a tax advisor beforehand to ensure that all tax aspects are taken into account and to achieve the best possible tax optimization. A tax expert can also show you alternative ways to use your severance package in a tax-efficient manner, depending on your individual situation.
I recommend scheduling a meeting for a personal consultation to discuss all the details and find a tailored solution for your tax situation. I am happy to answer any further questions and look forward to supporting you in your endeavor.
Best regards,
Edith Hartmann
