What impact does choosing a tax class have on my tax return?
March 22, 2022 | 40,00 EUR | answered by Dirk Voigt
Dear tax advisor,
my name is Norbert Koch and I am currently unsure which tax class is the best choice for me. I am married, have two children, and am the sole earner in my family. Currently, I am classified in tax class IV. My wife is not employed and takes care of the household and children.
I am wondering if it would be beneficial to switch tax classes in order to take advantage of tax benefits. I am concerned that I may be paying too much in taxes or that we are not optimizing our tax benefits.
Could you please explain to me what impact the choice of tax class has on my tax return? How does switching tax classes affect my financial situation? Is there a tax class that may be more advantageous for me and my family?
I would greatly appreciate your help in making this decision and providing me with possible solutions.
Thank you in advance for your support.
Sincerely,
Norbert Koch
Dear Norbert Koch,
Thank you for your inquiry regarding the choice of the optimal tax class for you as the sole earner with a wife and two children. It is important to choose the right tax class in order to maximize tax benefits and potentially avoid paying too much in taxes.
As the sole earner, you generally have the option to choose between tax classes III, IV, and V. In your case, you are currently classified in tax class IV. This tax class is preferred for married couples where both partners have similar incomes. Since your wife is not employed, it may be advisable to consider switching tax classes in order to take advantage of tax benefits.
Switching to tax class III could be advantageous for you, as this tax class is designed for sole earners with a non-working spouse. By switching to tax class III, you would pay less in taxes, as your taxable income would be taxed at a lower rate. Your wife would automatically switch to tax class V, meaning she would have to pay more in taxes. However, overall, this switch should result in a lower tax burden for your family.
It is important to note that switching tax classes can have an impact on your financial situation. It is advisable to create a forecast of the tax implications for the current year to determine if switching tax classes would be beneficial. A tax advisor can help you determine the optimal tax class for your situation and provide you with possible solutions.
I hope this information will assist you in making your decision. If you have any further questions, please feel free to contact me.
Sincerely,
Dirk Voigt, Tax Advisor
