When it comes to financing the first few months after the birth of a new family member, it may be worth changing your tax bracket. However, there are certain deadlines and conditions, so the switch is not worth it for everyone. The following is a brief summary of what you need to pay attention to when deciding on your tax class.
This is what the change does
The parental allowance amounts to roughly 65 percent of the net wages of the last twelve months before receiving parental allowance: the higher the net wage, the more parental allowance (but a maximum of 1,800 euros). Married couples can choose their tax class and thus influence the amount of parental allowance themselves – they have various options. However, variants 3 – 5 are usually the most worthwhile: The partner who earns at least 60 percent of the joint gross wage chooses tax class 3, the other partner chooses class 5. This means that both of them earn the highest possible net wage together. If a child is due to be born, it is worthwhile to arrange the 3 – 5 distribution as follows: The person who will receive parental allowance and stay at home with the child switches to tax class three. The net salary, on which the amount of parental allowance is based, is higher.
If the parent who stays at home earns around 3,000 euros gross and 1,477 euros net wages in tax class 5, he or she will receive 906 euros in parental allowance. However, if the parent switches to tax class 3 according to the deadline, he or she will receive a total of 2,105 euros in net wages and therefore 1,314 euros in parental allowance per month, an impressive 408 euros more. Of course, before changing the tax class, you should calculate whether it will be profitable: the couple’s joint net income may decrease so much in the months before the birth that the change may even result in losses. After all, the tax class must be changed at least seven months before the start of the first month of receipt, otherwise the change has no influence on the amount of parental allowance.
Parental Allowance Plus
Changing the tax class of the parent who receives parental allowance is particularly worthwhile when receiving “basic parental allowance”: both parents can stay at home together for up to 14 months, but one parent can stay at home for a maximum of twelve months.
The calculation must be done differently if, for example, “Parental Allowance Plus” or the “Partnership Bonus” is applied for, where one or two parents continue to work part-time and receive an additional 65 percent of the salary difference to normal full-time income as parental allowance. Depending on how much each partner can earn net, one or the other option is more worthwhile – this is different for all couples.
By the way, the “tax class change for the purpose of increasing parental allowance” has been officially permitted by the Federal Social Court since 2009 – only the seven-month deadline must be adhered to. If you have worked in both tax classes for exactly six months, the tax office will only take the last valid tax class into account when calculating parental allowance. Six months in tax class 3 are theoretically enough for the receiving parent to receive increased parental allowance. After the birth, you can immediately switch back to the previous, overall more advantageous tax brackets – this no longer has any influence on the amount of parental allowance.
Special cases: civil servants, soldiers, self-employed people and newly married people
There are some special cases when it comes to parental allowance: Civil servants and soldiers do not receive maternity allowance, but receive full salary until the birth. It is therefore sufficient for members of these groups to apply for the tax class to increase parental allowance only seven months before the birth – and not the first month of parental allowance payment.
For self-employed people, the amount of parental allowance is not calculated based on the income of the last twelve months before receiving parental allowance, but rather based on the income of the last calendar year. The tax class must therefore be changed in the calendar year before the birth in order to increase the parental allowance, otherwise it is not worth changing – but this is only possible until November 30th. allowed for one year.
Newly married people have the option of applying for a tax class change retroactively: If the wedding was within the twelve-month calculation period, the change can be applied for retroactively “in the month of the marriage”.
Olga Rogler / editorial team finanzen.net