When should I change my tax class?
October 10, 2022 | 40,00 EUR | answered by Babette Schneider
Dear tax advisor,
my name is Artur Huber and I have been working in a permanent employment for five years. So far, I have been in tax class 1, as I am single and childless. However, I recently got married and my wife is currently in tax class 5. We also plan to have children in the near future. Now I am wondering if it would make sense to change tax classes and if so, when would be the best time to do so.
I am aware that the tax class has an impact on the amount of taxes I pay and that it may be beneficial to make this change. However, I am unsure if it would be advisable to change tax class now, after the wedding, or only after the birth of the children. I am worried that we may end up paying too much taxes if we do not change tax class in time.
Could you please explain to me which factors I should consider when deciding to change tax classes and when the ideal time for it would be? Are there any tax benefits that we could take advantage of by changing tax classes? I would greatly appreciate your help in making this important decision.
Thank you in advance for your support.
Best regards,
Artur Huber
Dear Mr. Huber,
Thank you for your inquiry regarding a change in tax class after your wedding and planned family planning. As a tax consultant, I would like to help you make the right decision.
First of all, congratulations on your wedding! Through marriage, your tax class automatically changes from class 1 to class 3, if your wife was previously in tax class 5. Tax class 3 means that as a spouse with a higher income, you pay less taxes, as the tax burden is redistributed between the spouses. However, it is important to note that the tax class combination 3/5 requires overall more taxes to be paid to the tax office than 4/4.
If you are planning to have children, it might be wise to carefully consider the timing for a tax class change. Because with the birth of a child, it can be tax advantageous to switch to tax class 4, as parents can benefit from certain tax advantages such as child benefit and child allowance. By combining tax classes 4/4, you as a couple can react more flexibly to changes in income.
However, there are other factors to consider when deciding on a tax class change. These include, for example, the amount of your income, possible special payments like Christmas or holiday bonuses, possible tax deduction opportunities such as work-related expenses or extraordinary burdens, and the tax progression. It may therefore be beneficial to create a forecast of the tax implications of different tax class combinations together with a tax consultant.
Regarding the ideal timing for a tax class change, I recommend deciding this taking into account your individual life situation and financial goals. It is advisable to deal with the topic early and, if necessary, to register a tax class change with the tax office in good time.
Finally, I would like to point out that individual tax advice is always recommended to find the best possible solution for your personal situation. I am happy to provide you with comprehensive advice and support you in your decision for a tax class change.
I hope this information is helpful to you and I am available for further questions.
Best regards,
Babette Schneider, Tax Consultant
