How Your Adult Children Affect Your Taxes

Since January 1, 2012, children above 18 (trainees and students) can earn an unlimited amount of additional income without affecting their entitlement to child benefits. Previously, there was an income limit of 8,004 Euros for children above 18 years of age.

If your child has served in the army or similar civilian service, you receive child benefits for an extended duration. This extension is applicable in the following cases:

• If your child faces unemployment beyond the age of 21
• If your child is enrolled in a training (Berufsausbildung) beyond the age of 25

For example, if your 26-year-old child is a student and has served in the military for two years after graduating from high school, you are still entitled to child benefits.

Has your (adult) child already completed their first vocational training or first degree (Erststudium) and is still under 25 years of age?

Then you can continue to receive child benefits and allowances under certain conditions. This is possible if the child pursues further education or completes a bachelor’s or master’s degree. Additionally, special tax rules apply to students enrolled in Erststudium.

What if your child wants to perform voluntary military service after the initial training?

No problem. As long as your child is not gainfully employed, he or she is entitled to child benefits. The tax office defines gainful employment or ‘Erwerbstätigkeit’ as all activities that are contractually agreed to be more than 20 hours and exceed regular weekly working hours. In this context, an apprenticeship or a 450-Euro job is not detrimental at all.

However, your child may not take on several jobs earning more than 450 euros. Marginal employment is okay as long as the limit of 20 hours per week is maintained. In this case, it is permissible if the child works more than 20 hours for, say, two months and less for the rest of the year.

Is your child older than 25? You may deduct some expenses from the tax i.e. expenses for maintenance and vocational training, for example. Here you can claim up to 9,408 euros in 2020 and up to 9,744 euros in 2021 for one year as an extraordinary burden (außergewöhnliche Belastung) . This amount increases in proportion to the dependent child’s basic insurance (statutory health and long-term care insurance) costs.

If your adult child is in school or vocational training and no longer lives with you, you can claim another allowance to compensate for special needs during vocational training.

The training allowance (Ausbildungsfreibetrag) amounts to 924 euros per year and is not the same as the care, education, and training allowance intended for minors. The prerequisite is that you are entitled to child benefit or the child allowance. If you don’t meet these requirements for the entire year, the tax office will reduce the funding accordingly. If, for example, your child has discontinued education in November, the amount will be reduced by two-twelfths or one-sixth.

You are entitled to unlimited child benefit for an adult child with a disability. However, two conditions must be met:

The disability allowance can be transferred from the child to the parents. With a degree of disability of 100 per cent, this currently amounts to 1,420 euros. From the 2021 tax assessment period, it increases to 2840 euros. Every year, the lump sum must be applied for in the tax return.

Parents are also entitled to the care allowance of 924 euros if the child is helpless or has a care degree of at least 4. From the assessment period of 2021, this amount will nearly double to 1,800 euros.