Both in tax class 4 while planning for children, is it a loss when aiming for higher parental benefits?
Hello, I am in tax class 3 and my wife (civil servant) is in tax class 5. Our annual gross income is distributed approximately 70% (me)/30% (my wife). We are planning to have a second child and would like to increase my wife's later parental leave benefits by switching to tax class 4/4 in a timely manner, resulting in a higher net income for her. What confuses us is the following: According to calculations, in tax class 4 I would have a monthly net income that is 770 EUR lower than in tax class 3, and my wife would have a monthly net income that is 310 EUR higher than in tax class 5. In total, we would have approximately 460 EUR less per month in tax class 4/4 compared to tax class 3/5. Additionally, the last joint tax return (based on 3/5) resulted in a refund of 334 EUR (both with only the standard deduction for advertising costs, and me with an additional 1933 EUR in Riester pension contributions and 475 EUR in child allowance). We have read multiple times that with tax class 4/4, the tax return would result in neither a refund nor a payment. If we switch to tax class 4/4 before the birth compared to staying in tax class 3/5, wouldn't we end up with a loss overall? We would be giving up 460 EUR per month, which would not be recovered in the following year's tax return with tax class 4/4. Which tax classes do you recommend for us? Thank you for your assessment.
