How do I deal with it?
October 3, 2011 | 55,00 EUR | answered by Oliver Burchardt
Dear Sir or Madam,
The following key data:
Widow's pension 325€
Half orphan's pension
For the son 125€
Child benefit 180€
Church tax: no
Annual gross income approx. 30,000€ (excluding the above amounts)
Severance pay 75,000€
Tax class 1 + 1 child
- In the company, 1.5% of the monthly salary is invested in company pension scheme. Is it correct that a sum of up to 1,800€ (up to this limit per month) can be invested from the severance pay into this plan without it being considered for tax purposes?
- Taking into account the statutory notice period of 4 weeks to the end of the month. Are these deadlines met to avoid a block by the employment office?
- How would the tax burden change if the notice period of 6 months is observed, with wage compensation and exemption?
- The termination is to be made for health reasons. Does this entitle her to an occupational disability pension (according to the BFA, she will receive it if she can no longer perform her job) or are there disadvantages? A medical report can be provided, as she has been undergoing psychiatric treatment for years.
- Assuming she would invest 10,000€ in the company pension scheme, what would be the tax burden or how much would be left in the end?
- Can she take on a 400€ job despite receiving the pension? Without any problems arising. It would be a different job.
- If she invests this sum completely or partially in a self-employed activity or makes it available to someone else, would the tax burden be calculated differently?
- Does the fifth rule apply here?
- Does it make sense to do a annual tax return? She has never done it.
Yours faithfully
Dear Seeker,
Thank you for your inquiry, which I am happy to answer as part of an initial consultation.
Please note that the tax assessment is based on the information provided. Changing, adding, or omitting information can potentially alter the outcome significantly.
Regarding your specific questions:
1. Tax-free contributions to company pension scheme
I assume you are referring to the tax-free amount that can be paid by the employer each year according to § 3 No. 63 EStG for contributions to a company pension scheme.
The amount specified cannot be considered in isolation. In 2011, you can contribute a total of 4,440 EUR tax-free to a company pension scheme. Whether this contribution comes from a severance payment or regular income is irrelevant for tax exemption. If more than the maximum limit is contributed in total, the excess amount is subject to taxation.
2. Termination / Mutual agreement to terminate
In this forum, I cannot provide legally valid information on this matter as it depends on the specific legal wording in each case. Generally, if you actively participate in the termination of the employment relationship (e.g. by agreeing to a settlement or termination agreement), the employment agency may deny benefits. However, there is room for negotiation. I recommend consulting a specialist lawyer in labor law on how to structure agreements to avoid benefit suspensions by the employment agency.
For legal reasons, I am unable to provide an answer to this question as it constitutes legal advice reserved for lawyers.
3. Entitlement to occupational disability pension
The fact that the termination is due to health reasons and a medical report can be presented is not sufficient for entitlement to an occupational disability pension. To be eligible for an occupational disability pension, a disability within the meaning of SGB VI must be present. This can only be determined by the relevant social medical service of your health insurance or a medical report.
4. Accepting a minor employment
In principle, you can take up a minor employment (so-called 400-euro job) even with a disability pension. However, there is an additional earnings limit that is calculated relatively complexly. The earnings limits are specified in the pension notice. If you earn income beyond this limit, it will be offset against the pension.
5. Contribution of 10,000 EUR to the company pension scheme
Unfortunately, based on the information provided, I cannot make this calculation.
I need information on the pension, unemployment, and health insurance contributions paid in 2011, as well as information on how much has already been invested in tax-free pension schemes (see also 1.). Additionally, it is worth considering whether the contribution to the company pension scheme may be eligible for tax advantages as a so-called basic provision ("Rürup pension").
If you provide me with this information using the follow-up function, I will be able to perform an approximate calculation.
6. Taxation of severance pay
Severance pay is generally subject to favorable tax treatment as extraordinary income (the so-called fifth rule). Although the specific wording in the termination agreement is important, if it is clear that the severance pay is for the loss of social status and the job, there should be no obstacles to applying the reduced tax rate. The use of the severance pay does not affect the taxation.
7. Income tax return
You cannot file an annual income tax return yourself. This is done by the employer.
However, I assume you are asking whether you should submit an income tax return. While it is not necessary if you only have income subject to wage tax deduction, it is advisable in any case.
I hope my explanations have been helpful within the scope of your inquiry and professional limitations.
Sincerely,
Oliver Burchardt
Tax Advisor
