The most important tax for employees in Germany is income tax. You pay income tax on all income for a calendar year – for you this will probably be mainly income from employment. If you work for a company as an employee, you do not have to worry about income tax to begin with. Because: Your employer will automatically deduct income tax from your gross wages every month in the form of wage tax and transfer it to the tax office for you. Your employer will also transfer the to the tax office Solidarity surcharge and – if you are a member of a religious community that collects church tax – also the church tax. In addition, he has already deducted the pension, health, long-term care and unemployment insurance from your wages and paid for it. You can see how much your employer is transferring to you and what your net salary is every month on your wage or salary slip.
How much is the income tax?
A applies to all citizens in Germany Basic tax allowance. Up to this amount, there is no tax on your taxable income. In 2021, this exemption was 9,744 euros if you are not married or have a partner. For married and partnered people it is 19,488 euros. If the taxable income is above the stated amounts, you will pay income tax on it. The rates are between 14 and 42 percent. The following applies the higher your taxable income, the higher the tax rate. However, you only pay the top tax rate of 45 percent for taxable income over 274,613 euros a year if you are not married or have a partner. For married or partnered persons, the maximum tax rate applies from an income of over 501,462 euros.
Income tax return
After a calendar year has expired, you can have the state check whether you have paid too much wage or income tax. To do this, give your Income tax return from. With the information you provide about your actual income and financial burdens, the state can then check whether you are entitled to a refund. As a rule, it is worth filling out the tax return form: According to data from the Federal Statistical Office, nine out of ten taxpayers have received a refund. On average, they got almost 1,000 euros back.
How to do your income tax return
You can collect the tax return forms from your tax office or download and print them from the homepage of your tax office. You also have the option of filing your tax return online at www.elster.de. If you are required to submit an income tax return, for example because you have chosen tax combination III and V (3 and 5) or have received progression benefits (e.g. sickness, unemployment or parental allowance) over EUR 410, this must be done by the end of May of the following year be submitted to the tax office. In the tax return, state how much you earned in the past year and how much income tax, solidarity surcharge and, if applicable, church tax your employer has transferred to the tax office for you. The employer will regularly provide you with this information after the end of the calendar year in a separate statement . You then transfer the data to your tax return.
There are expenses that can reduce your tax burden. You also state this in your income tax return . These include, for example:
Expenses for a professional move, including from abroad
Costs for applications also from abroad
Expenses for trips to work
Private pension costs
For many expenses, it is important that you provide proof of the costs by providing copies of the relevant receipts and that the expenses / costs were incurred between January 1st and December 31st of the year in question. However, if you take up an activity that is taxable in Germany and you incurred expenses for this in the previous year, you can also claim this tax deduction. To do this, you must also submit a tax return for the previous year. The tax reduction applies to the year in which you earned income in Germany.
Do it yourself or ask a specialist?
You can also have your income tax return done by a tax advisor or an income tax assistance association. Involving a tax expert is subject to a charge, but it can be worthwhile – for example in the case of complicated income situations – to seek help from, for example, an income tax aid association or that of a tax advisor.
If you prefer to take the tax return into your own hands, the tax office or the help and FAQ function on the Elster website will answer your questions. Elster is an electronic form that you can use to send your tax return online to the tax office. For more comprehensive advice, you can also contact an income tax aid association, which will advise you at low cost or prepare the tax return for you. Alternatively, you have the option of purchasing PC software. The programs then guide you through the tax return and submit the tax return you have prepared to the tax office.