Anyone who receives a special payment at the end of the year can noticeably reduce their tax burden through clever planning. What matters is which rules apply to bonuses, bonuses or severance payments. The right strategy prevents unnecessary taxes and uses legal leeway.
Importance of the payout time
The time of payment determines which tax year a bonus or special payment is taken into account. According to the online portal Biallo & Team GmbH, only the payment flow is decisive and not when the service was provided. Anyone who receives the bonus payment in the current year increases their taxable income for this year. However, if the payment is not due until January, this can be more tax-efficient, especially if your income fluctuates. This allows progression effects to be avoided, which are particularly important if incomes are high at the end of the year.
Tax rules for bonuses and special payments
Year-end bonuses are generally considered taxable wages. The tax consulting company Anders explains that this also applies to other benefits and particularly applies to severance payments and comparable one-off payments, which can be treated separately for tax purposes. Bonus payments and severance payments should be correctly documented contractually and allocated correctly for tax purposes in order to avoid disadvantages, as they are always included in regular income taxation. In addition, employees can use additional tax savings potential at the end of the year by making work-related expenses in the same calendar year so that they can be taken into account in the tax return, as the German Press Agency reports.
Application of the fifth rule
In the case of extraordinary income, the fifth rule according to Section 34 of the Income Tax Act (EstG) can be applied. According to the income tax assistance association Vereinigte Lohnsteuerhilfe eV (VLH), a fifth of the special payment is mathematically added to the income, the tax is then recalculated, the difference to the previous tax burden is calculated and finally multiplied by five, which can result in a tariff reduction. This is particularly relevant for high one-off payments. The tax consulting company Anders emphasizes that this benefit is only possible if the payment is made in one calendar year. Splitting it over several years would exclude the tax relief.
Editorial team finanzen.net