Determination of taxable income
In order to determine the income tax due, first of all the Taxable income (Section 2 (5) EStG), to which the respective tax rate must then be applied. This determination is made in four steps:
Adding up the income from the seven types of income (income from agriculture and forestry, from commercial operations, from self-employment, from employment, from capital assets, from letting and leasing and other income) results in the Total income.
If the respective requirements are met, the old-age relief amount, the relief amount for single parents or the deduction for farmers and foresters can be deducted from this total income, so that the Total amount of income results.
Special expenses and extraordinary expenses can in turn be deducted from this total amount of income, so that the Income results.
If you deduct the allowances for children and the hardship allowance from this income if the requirements are met, you end up with the Taxable income determined.
The third step in particular is repeatedly the subject of legal disputes, as taxpayers naturally regard many expenses as deductible special expenses or extraordinary burdens, while the tax office takes the opposite view.
Exceptional expenses are generally based on exceptional circumstances; the taxpayer must therefore have inevitably incurred expenses of an exceptional nature.
According to §§ 33, 33a EStG, parental maintenance, which children must pay to their parents in accordance with § 1601 BGB if they are in need of care, is of an exceptional nature (see also: Parental maintenance: When the social welfare provider claims the children of those in need of care)
However, whether parental maintenance is deductible under § 33 EStG or § 33a EStG must be decided on a case-by-case basis.
§ Section 33 EStG standardises "general" extraordinary expenses for which a reasonable (personal) burden is set at a certain level.
§ Section 33a EStG standardises extraordinary expenses "in special cases", in which special regulations with maximum amounts - without deduction of a reasonable personal burden - apply.
Extraordinary burden in special cases according to § 33a EStG
As § 33a EStG generally takes priority over § 33 EStG, it must first be checked whether the maintenance debtor is entitled to a deduction in accordance with § 33a EStG.
According to § 33a Para. 1 EStG, parental maintenance can only be deducted up to a maximum of €8,004 per year. In addition, the income of the parent entitled to maintenance reduces this deduction if this income exceeds the amount of €624 per calendar year.
This regulation is illustrated by the following example:
Parent E, who is entitled to maintenance, receives a pension of EUR 650 per month in a calendar year. The son S, who is obliged to pay maintenance, must pay 400 euros per month, i.e. 4800 euros per year, according to the calculation of the social welfare organisation to which E's entitlement has been transferred.
In accordance with § 33a para. 1 EStG, the annual maintenance amount of 4800 euros cannot be deducted by S, as E's annual pension minus the 624 euros (7800 euros - 624 euros = 7176 euros) mentioned in § 33a para. 1 EStG must be offset against this amount.
In other words, S could only deduct the excess parental maintenance in accordance with § 33a EStG as an extraordinary burden if he was liable to pay more than EUR 7176 per year.
Extraordinary burden according to § 33 EStG
However, S could be entitled to deduct the maintenance payments as an extraordinary burden in accordance with § 33 EStG.
§ Section 33 EStG defines extraordinary burdens according to whether the taxpayer incurs greater burdens than the vast majority of taxpayers with the same income.
For this reason, Section 33 (3) of the Income Tax Act (EStG) lists certain percentages of the burden for different groups of taxpayers in relation to three income ranges in order to determine the ratio of the burden for the question of deductibility.
For example, if the son as the father of a child had an annual gross income of 40,000 euros, he could reasonably be expected to make a maintenance payment of 1200 euros (40000 * 3%). For tax purposes, he could then deduct 12 * 400 euros - 1200 euros = 3600 euros from his total income.
Important Note: The content of this article has been prepared to the best of our knowledge and belief. However, due to the complexity and constant evolution of the subject matter, we must exclude liability and warranty. Important Notice: The content of this article has been created to the best of our knowledge and understanding. However, due to the complexity and constant changes in the subject matter, we must exclude any liability and warranty.
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2 responses
Ladies and Gentlemen,
I find it incorrect that the tax authorities deduct the amount of parental maintenance that the social welfare provider has calculated as a recourse payment from the pension amount that the maintenance recipient receives. After all, the pension amount has already been taken into account when determining the parental maintenance. Why, I ask, is the pension amount deducted again when determining the extraordinary burden in accordance with §§ 33 and 33a EStG?
Thank you very much for your competent answer.
Yours sincerely
Werner Schwarze