What are the advantages of tax class III for married couples?
July 8, 2024 | 30,00 EUR | answered by Dirk Voigt
Dear tax consultant,
My name is Tatiana Schottmann and I have a question regarding tax classes for married couples. Currently, my husband and I are both classified in tax class IV. We are wondering if it could be advantageous for one of us to switch to tax class III.
We have heard that in tax class III, the income of the spouse who earns less is more heavily tax relieved. Since my husband currently has the higher income, we are considering if it would be beneficial for him to switch to tax class III while I remain in tax class IV.
Our concern, however, is that this could potentially result in less net income available to us. We are also wondering if it could have implications for any tax repayments or refunds.
Could you please explain to us what specific benefits tax class III offers for married couples and if a switch could be beneficial for us in our situation? Are there any possible risks or pitfalls that we should be aware of?
Thank you in advance for your help and advice.
Best regards,
Tatiana Schottmann
Dear Mrs. Schottmann,
Thank you for your question regarding the tax classes for married couples. It is indeed wise to consider a switch to a different tax class in order to maximize tax benefits. Let me explain to you the differences between tax class III and IV, as well as the potential impact on your net income.
In tax class IV, the incomes of both spouses are combined and taxed according to a splitting procedure. This means that both partners have a similar tax rate, regardless of who earns the higher income. In tax class III, on the other hand, the income of the spouse who earns less is more heavily relieved, as they are assigned a lower tax rate.
If your husband has the higher income and switches to tax class III, this could mean that overall less taxes need to be paid. However, it is important to note that this could lead to a decrease in net income, as a lower portion of the income remains tax-free.
It is also possible that tax repayments or refunds may change if one of you switches tax classes. This could result in you having to make a repayment at the end of the year or receiving a refund. Therefore, it is advisable to regularly review the tax situation and make adjustments if necessary.
So, there are indeed benefits but also risks involved in switching to a different tax class. It is recommended to seek advice from a tax advisor who can analyze your individual situation accurately and provide you with specific recommendations.
I hope that this information has been helpful to you. If you have any further questions, please feel free to contact me.
Best regards,
Dirk Voigt
