Finance

When it is worth changing the tax class

The tax bracket determines how high your current tax burden is. Couples should therefore consider changing the tax bracket. Read here how this works and what you should consider.

Whether with the tax return or in a new job: sooner or later everyone stumbles across his Tax bracket. The tax bracket, earlier Income tax bracket categorizes every employee who is not self-employed into a category – depending on family or professional status.

The tax class determines how high the current tax burden is – and how much is paid through the tax return. Because depending on the tax bracket, there are different ones Tax allowances. The tax bracket, however, cannot reduce the overall tax burden.

Nevertheless, a change in the tax bracket can be worthwhile. With the right tax bracket, insured persons have more money throughout the year – and do not have to wait until the tax is paid back. In addition, a particular tax bracket can get the most out of government benefits.

But what tax bracket am I in – and why? When can I change my tax bracket? And how do I do that? t-online.de will explain this to you.

Which tax classes are there?

There are a total of seven different tax classes. In the language of the tax office, each has a Roman numeral:

  • Tax class I: It applies to all singles, i.e. single, divorced or widowed employees. You remain in this tax bracket until a possible wedding. The basic tax-free allowance here is EUR 9,408 for the 2020 assessment year.
  • Tax class II: This class is for single parents. The basic tax-free allowance is 9,408 euros, and there is also the so-called single-parent relief amount of 1,908 euros in 2020. For each additional child, this amount is increased by 240 euros.
  • Tax class III: It is intended for married people who have a significantly higher income than their spouses. The aim is that income is taxed less, since the basic tax-free allowance in this tax bracket is EUR 18,336 in 2020. The other spouse is then automatically assigned to tax class V. Attention: This class has the obligation to submit a tax return.
  • Tax class IV: This tax bracket the tax office automatically allocates newlyweds – regardless of whether both are employed. This class is particularly worth taxing if both spouses have approximately the same salary. The basic allowance is € 9,408 per spouse in 2020.
  • Tax class IV with a factor: This tax bracket takes into account the couple’s expected tax burden. Larger reimbursements or additional payments are usually not made, provided that personal circumstances do not change in the current year. The tax office calculates the percentage breakdown of allowances or flat rates for this tax bracket every month – and divides it precisely among the partners. The basic allowance is 9,408 euros in 2020.
  • Tax class V: This tax class is given to the spouse who earns significantly less than his partner in tax class III. The reason: The annual basic allowance does not apply. A tax return must also be submitted in this class.
  • Tax class VI: This class is intended for second or part-time jobs. There is no tax exemption here.

When is it worth changing the tax class?

The tax bracket decides how high your monthly tax burden is. However, it is a misconception that changing the tax bracket can reduce your overall annual tax burden. This is not possible.

Conversely, that means: If you are in a tax bracket that is unfavorable for you, this is not too bad. Finally, you can have the taxes paid reimbursed via the income tax return.

Nevertheless, the following applies: You should always consider changing the tax class if your life situation has changed – for example after a marriage or a divorce. An overview:

marriage

After a wedding, the tax office sorts the two partners into tax class IV. It happens automatically. First of all, this is the right choice. But it can be that one partner earns significantly more than the other. A change to tax class III can then be worthwhile; the other spouse is then automatically sorted into tax class V.

In addition, partners must consider whether they are going for the so-called Joint assessment of their taxable income. Then the so-called spouse splitting takes effect. The spouses’ income is then jointly recorded and taxed. This can result in a tax advantage – especially if the income is far apart.

divorce

In the so-called separation year, divorces generally retain their previous tax bracket – the joint assessment also still applies (see above). It must apply that the partners live separately from each other, and neither partner may transfer money to the other.

Afterwards, the ex-partners are usually sorted into tax class I. Switching to another tax bracket is not possible – unless you have custody of your child or marry again.

Raise

If one spouse receives a higher income and thus earns more than the other, it is usually worthwhile to switch from tax class IV to tax class III – since less is deducted here. The other partner then automatically switches to tax class V.

birth

If you are expecting a child, you should try to change the tax class at an early stage. The reason for this is the parental allowance. This depends on the amount of the net salary before the child is born. The parent who initially wants to stay at home after the birth and receive parental allowance should switch to the tax class that is favorable for him – i.e. tax class III.

unemployment

If a spouse expects to receive so-called wage replacement benefits in the course of the year because he has lost his job, a change in the tax class – that is, in tax class III or V – can be worthwhile.

Divorce with child

If you have children and are getting a divorce, you should apply for a change of tax class. As a rule, you are initially classified in tax class I – but with child, tax class II is more worthwhile.

If you do not know whether a change of tax class is worthwhile for you, you can easily calculate it. It works best with the Tax class calculator of the Federal Ministry of Finance. The online calculator you’ll find here.

How do I change my tax bracket?

It’s pretty easy. All you have to do is fill out a specific form (“Application for tax class change for spouses / life partners”) and submit it to your local tax office. To do this, you must provide the following information, among other things:

  • Tax number and tax ID
  • Name and address (own and that of the spouse)
  • previous tax class combination (see above)
  • Estimated annual gross wages
  • Insurance data

Where can I get the tax class change form?

You receive the application to change your tax class from your tax office. You can usually find it online on the website of your tax office and download it there.

However, you will also find it on the side of the Federal Finance Administration. There you can then search for the “Application for tax class change for spouses / life partners”.

How often can I change the tax bracket?

You can change your tax bracket twice a year. Until 2019, a change was only possible once a year.

Where can I find my tax bracket?

You can find out your current tax bracket in two ways. You can either request your so-called Elstam data from your tax office, i.e. your electronic income tax card.

However, you can also use the portal “elster.de“View your tax bracket. You can do this in the” My Magpie “tab.

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