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When must I file a (mandatory) tax return?

Sven
27. April 2021

In this blog article, we'll provide you with all the information you need to determine whether you're legally obligated to file a tax declaration, what the financial benefits of voluntary filing are!

Who is excluded from mandatory submissions?

Employees in tax class 1 are excluded from being legally obligated to submit an annual tax return – provided they do not have other types of income. The same applies to married couples and registered life partners (see civil partnership) with the tax class combination 4/4. In all of these cases, the tax office does not require taxpayers to file an annual tax declaration.

Mandatory submission for employees

In many cases, filing an annual tax return is mandatory. These are defined by § 46 of the German income tax law (Einkommensteuergesetz – EStG). Known as “compulsory tax assessment”, it applies under the following circumstances:

Several employers simultaneously

Have you been working for different employers at the same time over the course of one year? Then you have to file a tax return!

You must also file a tax return if you are assigned tax class VI. This tax class is assigned to you if you have had more than one employer during any given tax year.

Married couples & Registered life partnerships

If you and your spouse or registered life partner choose the tax class combination III/V or IV/IV with factor, you must legally file an annual tax return.

This is also the case if one of you applies for a single assessment or decides against splitting the educational or disability allowance for your family equally (50 / 50).

Divorced people must also legally file an annual tax declaration (in the year of divorce) who remarry the same year. The same goes for widowed people!

Wage-replacement benefits

Unemployment benefits, sick pay, short-time wage (Kurzarbeitergeld) or parental allowance are wage-replacement benefits and, therefore, always tax-free. However, they fall under the progression clause (Progressionsvorbehalt) and can increase the personal tax burden on the rest of your income. This means if you received more than €410 per year in wage replacement benefits, you must file a tax return.

Additional income

Do you receive additional income – for example, from renting a property, owning a self-employed business, or income from abroad? If yes, you are legally obliged to include these earnings in your tax return as soon as they exceed €410 per year.

Applied for tax allowance for wage tax caclulation

The tax office expects your tax documents if you have listed allowances for the income tax deduction on your annual payslip – this doesn’t include lump sums for disabled or widowed people or for parents who receive children’s allowances.

Loss carryforward

If you have accumulated tax losses from previous years, you must file a tax return and include this amount in it. This loss carryforward can be offset against the taxable income of the current tax year.

Self-employment & traders

Anyone running a business as well as doing freelance or self-employed work must legally file a tax return.

Call from the tax office

If you receive a letter or call from the tax office asking you to file a tax return, you must comply with their request.

It generally pays off to file a tax return

If one of the above-mentioned situations applies to you, you must file a tax return. However, even if none of these cases apply to you, it is worth noting that if you file even when it’s not mandatory, it often pays off. According to Germany’s Federal Statistical Office, the average tax refund is €1,051. And claiming this money is quick and easy with Taxfix.

Taxfix calculates your estimated refund completely risk-free. Our app assists and guides you through your tax declaration in just 22 minutes. This calculation allows you to determine whether you can expect a sufficient tax refund, and then you can still decide whether or not you want to file your return with the responsible tax office.

Need help?

Hopefully, you now have all the information you need to file your tax declaration and claim your maximum refund. Remember, the average tax refund is €1,051! If you have questions about the filing process with Taxfix, we are always here to help. Get in touch under [email protected]