Which factors play a role in choosing the optimal tax bracket?
June 9, 2024 | 45,00 EUR | answered by Friedhelm Peters
Dear tax advisor,
my name is Alexander Eder and I have a question regarding tax classes. I am married and have two children. So far, my wife and I have both been classified in tax class IV. Now I am considering whether it would be beneficial to choose a different tax class in order to save taxes or take advantage of other benefits.
Currently, the situation is that my wife works part-time and I work full-time. We have a shared income, which consists of both of our salaries. However, my wife received a salary increase this year while my salary has remained the same. Additionally, I am considering whether it would be worth it to change tax classes as we plan to buy a house in the near future.
My concerns are that we may be paying too much in taxes by staying in tax class IV. I also wonder if changing tax classes could bring us financial benefits, especially with regards to the planned real estate investment.
Could you please explain to me which factors play a role in choosing the optimal tax class? Are there specific criteria we should consider in order to make the best decision? What are the implications of changing tax classes on our shared income and tax obligations?
Thank you in advance for your help and advice.
Best regards,
Alexander Eder
Dear Mr. Eder,
Thank you for your question regarding tax brackets. It is understandable that you are considering whether a change in tax bracket could be beneficial for you and your family, especially in light of the planned real estate investment.
First and foremost, it is important to understand that the choice of the optimal tax bracket depends on various factors. In your case, being married with two children, factors such as income, salary increases, the planned real estate investment, and other tax obligations play a role in the decision-making process.
Generally, there are tax brackets I to V, as well as tax bracket VI. For married couples, the usual combination is IV/IV, where both spouses are in tax bracket IV. This means that the income of both partners is taxed together and each partner can benefit from half of the joint tax advantage.
If your wife has recently received a salary increase and you continue to remain in tax bracket IV, you may be paying too much in taxes. In this case, a change in tax bracket may be beneficial to optimize the tax burden. One possible option could be the combination III/V, where the partner with the higher income is placed in tax bracket III and the partner with the lower income in tax bracket V.
A change in tax bracket can have an impact on your joint income and tax obligations. Therefore, it is advisable to compare the different tax brackets and consider which combination is most advantageous for you. When making the decision, you should also take into account the planned real estate investment, as a change in tax bracket may have a positive effect on your financial situation.
To make the best decision possible, I recommend contacting a tax advisor. A tax advisor can analyze your personal situation, calculate different scenarios, and assist you in choosing the optimal tax bracket.
I hope this information is helpful to you and I am available for any further questions you may have.
Best regards,
Friedhelm Peters
