Class selection for parental benefits
December 29, 2009 | 30,00 EUR | answered by Michael Herrmann
Dear Sir or Madam,
currently, my wife and I are taxed in tax class 4/4. My wife is now going on maternity leave, followed by parental leave for two years. The full parental benefit for 12 months is approximately 920 euros. My annual income is around 44,000 euros and is not expected to change for the time being.
What would happen if I were to switch to tax class 3 and my wife to tax class 5? Although parental benefit is not taxed, it is added to my income. How much would a tax repayment be in the year 2011 if we were to switch to tax classes 3/5 starting in 2010?
Using a normal net/gross calculator, I would have around 350-400 euros more per month, but it doesn't make sense if I have to pay it back in the end. The parental benefit may be split over 24 months. Would this be an advantage in the income tax calculation?
Thank you for your help.
Best regards,
Dear inquirer,
First of all, thank you for your inquiry, which I would like to answer based on the information provided by you and in the context of your situation as part of an initial consultation. The response will be based on the facts presented. Missing or incorrect information about the actual circumstances can affect the legal outcome.
I cannot provide a specific statement regarding the tax repayment expected for 2011 based on the information provided. Apart from the fact that the tax tables are not yet available, a comprehensive tax calculation considering the expected income tax deduction is necessary.
In general, I can only recommend a change of tax class for you. The parental allowance is only added to your income to determine the tax rate (progression clause). This means that the rest of your taxable income is taxed at a higher rate than it would be without receiving the parental allowance. However, since the parental allowance is only a fraction of the gross salary that would otherwise be taxed, the tax burden of the parental allowance is not as high as the tax relief from tax class III.
According to a rough calculation, receiving the parental allowance can increase the monthly income tax by a maximum of 100-130 euros. Therefore, this disadvantage is much lower than the relief from tax class III. The distribution over 24 months further reduces the tax burden, as the addition under the progression clause is lower.
The change of tax class should only be made at the beginning of receiving the parental allowance, as otherwise the lower net income of your wife would reduce the parental allowance.
I hope that these explanations have given you an initial overview of the situation and remain
Yours sincerely,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax consultant
