Soon to be married with a child.. Tax bracket?, Child allowance?, Parental allowance? and Tax return?
September 22, 2011 | 35,00 EUR | answered by Matthias Wander
Hello,
I am getting married on 01.10.2011 and will most likely become a father on 26.03.2012.
Income situation:
Me: Gross annual earnings 106,000,- €
Wife: Gross annual earnings 41,000,- €
Questions:
1. Which tax class is the most favorable? 5/3 or 4/4
2. If 5/3, when is it advisable to switch tax classes, as the wife is expected to receive parental leave benefits from March and the net income will be used to calculate the benefits.
3. Where should the child allowance be entered?
4. Are there any other tax-related issues that should be taken into consideration?
Many thanks!
Dear advice seeker,
Thank you for your inquiry, which I would like to answer based on your information and in the context of your commitment in an initial consultation.
Financially, it would be most cost-effective if after the wedding your wife takes tax class 3 and you take tax class 5. This would increase your wife's net income and therefore also the parental allowance.
However, you should keep in mind that with your income, you would initially have significantly less money available each month, as you would pay more income tax than your wife would save. By filing your income tax return, you would eventually get back the overpaid income tax. However, this would only happen at a later date, and you would have to financially cope with that period until then. And you might only receive around €100 more in parental allowance, if at all, as the calculation of parental allowance is based on the average net income of the last 12 months, and 6 months have already passed. Therefore, I would recommend choosing tax classes 4/4 until the birth.
After the birth, you should definitely switch to tax class 3 for you and tax class 5 for your wife.
The child allowance is split in half for tax class 4/4; tax class 3 receives the full child allowance in tax class 5.
I hope I was able to assist you in the context of your commitment.
Best regards,
Wander
Tax Advisor
