Reduced taxable income Line 10
May 13, 2011 | 20,00 EUR | answered by StB Manuela Ponikwar
In the electronic income tax certificate for 2010, a total of 31,000 euros is recorded in line 10, line 11: 3,665 euros, line 12: 201 euros. Resulting from the termination of employment in 2010 and paid severance.
What do I need to enter in the program (WISO) to avoid a significant tax payment? I don't know what to enter under expenses, etc.
The following note is unclear to me: The expenses directly related to these income must be carefully considered when entering expenses.
In my opinion, I have already paid taxes on the severance pay, haven't I?
Thank you.
Dear Client,
Thank you for your inquiry, which I would like to answer as part of an initial consultation and taking into account your efforts as follows:
Severance payments for the loss of a job are taxed at a reduced rate according to §24 No. 1 EStG as compensation under the fifth rule of §34 EStG, if the criterion of "concentration" is met and the payment is made in one year.
That means you must have more income in the year in question due to or because of the severance payment, than if the employment relationship had continued unchanged.
If the compensation paid on the termination of the employment exceeds the income forgone until the end of the assessment period that the employee would have received if the employment had continued, the criterion of the concentration of income is always met.
Your entire income is always taken into account (including, for example, unemployment benefits, your income from the new employer, as well as other sources of income such as rental income).
So there is always a comparison calculation (usually) with the previous year.
If you had a higher income in the year of the severance than in the comparison period, the criterion of concentration is met. Then the tax is levied at a reduced rate according to the fifth rule.
The corresponding amount to be treated is entered in line 10, and the income tax, solidarity surcharge, church tax, etc. paid on that amount in lines 11 and following.
The application of the fifth rule means that the taxable severance payment is taxed as extraordinary income for the purpose of tax calculation with one-fifth as other income, and the tax on this one-fifth is multiplied by five.
So, the fifth rule corrects the negative effect of the severance payment on the progression (i.e., the increasing tax rate with income).
Your employer has already carried out the taxation according to the fifth rule (I have roughly recalculated the values mentioned) and deducted the wage tax from it.
The tax office will check the correct application of the rule as part of the income tax assessment (tax return) and will usually want to see the termination / dissolution agreement.
I do not see any directly attributable costs in the case of a severance payment. You can simply leave this item blank, as you have not incurred any costs to "achieve" the severance. Costs here do not refer to taxes, but to expenses, etc.
The entry of the severance data is done exclusively through the recording of your wage tax certificate. You only need to transfer the data, nothing more really.
I hope this information helps you.
Sincerely,
Manuela Ponikwar
Tax advisor
www.ponikwar.de
