Can I change my tax class as a retiree?
July 2, 2023 | 30,00 EUR | answered by Dirk Voigt
Dear tax advisor,
My name is Erika Falk and I am a retiree. For several years now, I have been receiving my pension and am classified in tax class 1. Lately, I have noticed that I have relatively high deductions as a result, and I am wondering if it is possible to change my tax class as a retiree.
While my monthly pension is generally enough to cover my living expenses, I would like to optimize my financial situation and potentially save on taxes. However, my current tax class 1 results in relatively high taxes being deducted, which is an additional financial burden for me.
Therefore, I am wondering if it is possible for retirees to switch to a more favorable tax class and what requirements need to be met for this. Are there specific regulations or opportunities for retirees to change their tax class? What are the advantages and disadvantages associated with this, and what impact would a change in tax class have on my financial situation as a retiree?
I would greatly appreciate it if you could provide me with detailed advice on this matter and suggest possible solutions. Thank you in advance for your assistance.
Sincerely,
Erika Falk
Dear Mrs. Falk,
Thank you for your inquiry regarding a possible change of your tax class as a retiree. I am happy to provide you with detailed advice on this matter.
In principle, it is possible for retirees to change their tax class. However, there are some differences compared to employees. As a retiree, you are usually automatically classified in tax class 1, as retirement income in Germany is considered other income. This means that you generally have the same tax classes as employees.
To change your tax class as a retiree, you would need to meet certain requirements. For example, one reason for changing tax classes could be if you are married and your spouse is in tax class 3 or 4. In this case, you could choose the more favorable combination of 3/5 or 4/4 together with your spouse to save taxes.
Another possibility could be if you have additional income as a retiree, such as from rental or capital gains. In this case, it might be beneficial to change to a different tax class in order to optimize your tax burden.
However, it is important to note that changing tax classes can also have disadvantages. For example, switching to a lower tax class could mean paying less taxes, but also forming fewer reserves for your retirement. Additionally, changing tax classes could result in a higher taxable income, which could affect other tax benefits such as the basic pension.
Therefore, it is important to seek detailed tax advice before changing tax classes as a retiree in order to analyze the individual impacts on your financial situation. I am happy to provide further advice and present concrete solutions.
I hope that this information has been helpful to you and I am available to answer any further questions.
Best regards,
Dirk Voigt
