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Personal Finance:
When must I file a (mandatory) tax return?

21. July 2020
Personal Finance – When must I file a (mandatory) tax return?

Some taxpayers are legally obligated to file an annual tax declaration while others may as well skip it. Read on to get all the information you need to determine whether you are excluded or legally obligated to file a tax declaration. Also, discover the financial benefits of filing even if it isn't mandatory, which could add an average tax refund of €1,027 to your bank account.

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:

Change of employer

Have you been working for different employers 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.

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 you decide 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). The same goes for widowed people who remarry the same year!

Wage-replacement benefits

Unemployment benefits, sick pay, short-time wage 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 property or self-employed business? If yes, you are legally obliged to include these earnings in your tax return as soon as they exceed €410 per year.

Tax allowance / wage tax reduction claim

The tax office expects your tax documents in case 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, then 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 €1,027. 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 find out 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 that you need to file your tax declaration and claim your maximum refund. Remember, the average tax refund is €1,027! Also, if you have questions about the filing process with Taxfix, we are always here to help. Get in touch under support@taxfix.de

Die Nebeneinkünfte versteuern geht aber auch einfacher. Zum Beispiel mit der Taxfix-App. Hier werden alle Daten elektronisch an das Finanzamt übermittelt.