What advantages does tax class IV offer compared to tax class III?
May 9, 2022 | 30,00 EUR | answered by Dirk Voigt
Dear tax advisor,
My name is Norbert Richter and I have a question regarding tax classes III and IV. I am married and both my wife and I work full-time. Currently, we are both classified in tax class IV. I have heard that there may be some advantages to switching to tax class III.
Currently, we both have relatively similar incomes, so I am wondering if it would be beneficial to switch to tax class III. I have heard that the tax burden is often lower in this tax class compared to tax class IV. Is this true and if so, how would it impact our financial situation?
I am also concerned about any possible disadvantages or pitfalls I should be aware of when switching to tax class III. Are there specific requirements that need to be met in order to make the switch? And what would be the effects on our paychecks and potentially other tax-related aspects?
Therefore, could you please explain to me the specific advantages that tax class III offers over tax class IV, and whether a switch could be beneficial for us as a married couple in our current situation? I would greatly appreciate your help in making this decision.
Thank you in advance.
Sincerely,
Norbert Richter
Dear Mr. Richter,
Thank you for your question regarding tax classes III and IV. A switch to tax class III can indeed offer some advantages, especially when one spouse earns significantly more than the other. In tax class III, less income tax is deducted than in tax class IV, which can have a positive impact on the financial situation.
However, in your current situation where you and your wife have similar incomes, a switch to tax class III may be less advantageous. In tax class III, the income of the spouse with the lower income is taxed higher, while the income of the spouse with the higher income is taxed lower. This can result in more income tax being deducted overall than in tax class IV.
A switch to tax class III is generally possible if one partner earns less than the other. There are certain requirements that must be met to switch to tax class III, including both partners being subject to unlimited income tax liability and living in the same household.
A switch to tax class III would affect your payroll, as less income tax would be deducted. Additionally, other tax aspects such as the amount of solidarity surcharge or church tax to be paid could also change.
Overall, you should carefully consider whether a switch to tax class III is beneficial for you and your wife. In your current situation with similar incomes, it may be more worthwhile to stay in tax class IV. Therefore, it is recommended to consult with a tax advisor or financial expert to discuss the individual advantages and disadvantages of a switch.
I hope this information helps you in your decision. If you have any further questions, please feel free to contact me.
Sincerely,
Dirk Voigt
