As parents have to pay to support and educate their children, they are forced to bear significant financial expenses. The child allowances aim to provide tax relief for taxpayers with children compared to those earning the same income without children.
The child allowances include
- the child allowance totalling EUR 2,184 per year (actual subsistence level), and
- the allowance for childcare and upbringing or education/training needs totalling EUR 1,320 per year for each applicable child.
Child benefits or allowance?
From the child's birth month onwards, only child benefits are initially paid during that year. When assessing the income tax, the finance authority officially checks, for every single child, whether the allowance can be deducted or not. Allowances apply if the child benefit entitlement cannot balance the individual tax effect of the allowances. This will usually only be the case for relatively high incomes.
Depending on what is more favourable to you, you are thus either entitled to child benefits or child allowances.
If the child allowances are deducted, the calculated income tax is increased by the amount of the child benefit entitlement. If child allowances are entered onto the 2010 wage tax card or 2011/2012/2013 substitute document, you do not pay less wage tax during the current year, but the allowances do affect the amount of the solidarity surcharge and, if applicable, the church tax.
Double the amount for married parents
If, as a married couple, your income tax is assessed jointly, the above amounts are doubled if you are both the child’s parents. Moreover, you alone are also entitled to the doubled allowances of EUR 4,368 or EUR 2,640 if, for instance, you have adopted the child alone or the other parent is deceased.
Transfer of allowances
If an underage child only resides with one parent, this parent can ask the finance authority for the other parent’s allowance for childcare and upbringing or education needs to be transferred over to him / her. This is possible regardless of the child allowance. Transfers are not possible if the parent for whom the child is not registered objects to the transfer because he / she (also) bears child-care costs or spends a lot of time regularly looking after the child.
If the child has come of age, the allowance for childcare and upbringing or education / training needs for the relevant year can only be transferred for the time period during which the child is still underage.
On request, the finance authority can also transfer the child allowances to which the parents are entitled to a step-parent or grandparent, if either of these has taken the child into their home or if they are obliged to pay support.
If the child lives outside the European Union or European Economic Area, it is possible that only 75 %, 50 % or 25 % of the allowances will apply.
Which children are eligible to receive allowances?
- Biological and adopted children of the tax payer(s), and
- Foster children (not boarders / lodgers)
For what period of time?
Child allowances can be granted from the child's month of birth until at least the month they turn 18.
The tax deduction ends the month after a child gets married, because the parents then generally no longer have to support the child.
Children aged 18 years and over
For children who have turned 18, allowances are only provided under certain conditions:
18 years of age until their 21st birthday, if the child
- is unemployed or only holds down a job in the zero tax bracket, and
- is registered with an employment agency as a job-seeker.
18 years of age until their 25th birthday, if the child
- is completing vocational training / an apprenticeship
- is in a maximum four-month transition period between two stages of training or between a stage of training and completing voluntary service,
- is completing a gap year to work as a voluntary on social or environmental projects, is completing European or developmental voluntary service, a volunteering service for all ages, an international youth voluntary service, or a federal volunteer service,
- cannot commence or continue a vocational training course or apprenticeship due to lack of training positions.
Given that the income and benefits limits ceased to apply as of 1 January 2012 by virtue of the 2011 Tax Simplification Act, the amount of income earned by the child aged 18 and over is no longer relevant (a limit amount of 8,004.00 Euro still applied in 2011). Since 2012, children aged between 18 and 25 who have completed their first vocational training or course of studies will become relevant for tax purposes only if they do not engage in more than 20 hours of gainful employment per regular working week. An apprenticeship contract or mini job does not affect anything.
If children are unable to support themselves because of a physical, intellectual or mental disability, the child allowances are granted for an unlimited time if the disability appeared before the 25th birthday. (Exception: For children who developed such a disability before 1 January 2007, the former age limit of 27 years applies.)
No separate application is required for the finance authority to check whether child allowances apply or not.
- Complete a Child Attachment ("Anlage Kind") for each of your children in your income tax statement.
- When processing your tax statement, the finance authority will check, for each of your children, whether a child allowance or child benefit entitlement would be more beneficial to you.
- If the tax effect for child allowances is higher than the child benefit entitlement, the allowances are automatically taken into account. The calculated income tax is increased by the amount of the child benefit entitlement.
- The finance authority makes a note on the tax assessment whether the child allowances have been applied or not.
Significance for wage tax deduction
Allowances for underage children were previously automatically registered on your wage tax card. You could request for the finance authority to add this later on for older children meeting the requirements for child allowances. This procedure does not change even after the electronic wage tax deduction criteria (ELStAM) have been introduced.
Electronic recording of wage tax deduction criteria (electronic wage tax card)
Amt24 process description
Underage children are then taken into account in the database as a wage tax deduction criterion with relevant counter (for example 0.5 or 1) – automatically based on registration data – until they turn 18; the employee does not need to request this from the finance authority.
Children of legal age
For children of legal age, you must still ask the finance authority to calculate the relevant number of child allowances (if applicable by enclosing the appropriate proof). In future, however, children of legal age will be able to be entered for multiple years as part of the electronic process (for example: children of legal age for the duration of their vocational training).Ask the finance authority to register children of legal age via the "Simplified request for wage tax relief" form.
- Information on the children in the income tax statement ("Child Attachment")
- For children aged 18 years and over: the relevant proof / documents (for example on the child's education or income and earnings)
- Income tax statement
- Simplified request for wage tax relief
(Duration / Deadline)
You must submit the income tax statement for any year to the finance authority by 31 May of the following year.
free of charge.
- § 31 Income Tax Act (EStG) – Family tax-relief package
- § 32 EStG – Children, child allowances
- § 39 EStG – Wage tax deduction criteria
- § 39b EStG – Procedure for formulating and applying the electronic wage tax deduction criteria
Based on the German version authorized by Sächsisches Staatsministerium der Finanzen
Finanzamt (finance authority)
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