Which tax bracket is the best for married couples with different incomes?
March 11, 2022 | 30,00 EUR | answered by Dirk Voigt
Dear tax advisor,
My name is Christiane Endres and I am married. My husband and I have different incomes, he earns significantly more than I do. We are wondering which tax class would be most advantageous for us as a married couple and how we can save on taxes.
Currently, we are classified in tax classes IV/IV, as we are both employed. However, I have heard that for couples with significantly different incomes, it might be more beneficial to choose tax classes III/V. I do not fully understand how the tax classes affect us and what advantages and disadvantages they have.
Our concern is that by choosing the wrong tax class, we may end up paying too much in taxes and therefore have less money available. We would like to know which tax class is best suited for us to optimize our tax burden and save on taxes.
Could you please explain how the different tax classes affect our income and give us a recommendation on which tax class would be most advantageous for us as a married couple with different incomes? We would like to know if there are ways to reduce our tax burden and how we should proceed.
Thank you in advance for your help.
Sincerely,
Christiane Endres
Dear Mrs. Endres,
Thank you for your question regarding the optimal tax class choice for a married couple with different incomes. As a tax advisor, I can help you find the best tax class combination to save taxes and optimize your financial situation.
First of all, I would like to explain how the different tax classes affect your income. In Germany, there are a total of six different tax classes that can be chosen depending on marital status and income levels. Tax classes III, IV, and V are particularly relevant for married couples.
In tax class III, the income of the spouse with the higher earnings is taxed, while the partner with the lower income is classified in tax class V. Through this combination, the partner with the higher income can benefit from a lower tax deduction and therefore have more net income available. However, it is important to note that a higher tax deduction occurs in tax class III than in tax class IV.
In tax class IV, on the other hand, both spouses are taxed individually, regardless of their income differences. This can lead to a higher tax burden in some cases, especially when income differences are significant. Furthermore, in tax class IV, there is the possibility to achieve tax advantages through a joint assessment in the income tax return.
In your case, as a married couple with significantly different incomes, the combination of tax class III/V could be advantageous for you. By choosing this option, you could reduce the overall tax burden and have more money available. However, it is advisable to perform an individual calculation to determine which tax class model is best suited for you.
To save taxes and optimize your financial situation, I recommend you to get in touch with a tax advisor. Together, you can analyze your income situation and determine the best tax class combination for you.
I hope that I could help you with this information. If you have any further questions, please do not hesitate to contact me.
Best regards,
Dirk Voigt
