How did the COVID-19 pandemic change taxes for students?

Unemployment during the COVID-19 pandemic led to students coping with unexpected financial burdens. While companies were quick to promise help, the situation for students remained uncertain for a long time. In 2020, the Federal Ministry of Education and Research (BMBF) put together an aid package worth over 100 million euros. Many received help by the end of the first application period on September 30, 2020. Additional aid was granted in November 2020. Students had the chance to apply for this aid until the end of September 2021.

Students can apply for two different forms of help as part of the state aid program during the COIVD-19 crisis: the interest-free KfW student loan and the emergency aid fund. Only the grants from the emergency aid fund do not have to be repaid. The Bridging Aid (Überbrückungshilfe) is not taxable for students because it’s considered a social benefit. Therefore, they do not have to be taken into account in your annual tax return.

Students can also deduct home office from their tax return, provided the room follows certain requirements e.g. being an enclosed room in a living space. The expenses for study items, or telephone and internet costs are also independently tax deductible.

Many students found themselves in a difficult financial situation during the pandemic. Not all students were entitled to claim the regular BAföG help, which is why students receive help options from the BMBF:

1. The KfW student loan: From May 8 2020 onwards, students can apply for an interest-free loan during the Corona pandemic. A relatively unbureaucratic online application, the BMBF pays the interest on the loan. An aid of up to 650 euros per month is possible.
2. Grants from the emergency aid fund: Students could receive up to 500 euros from the emergency aid fund until the end of September 2021. All you had to do was to prove that you were financially in need. Due to the improved situation, this aid was suspended in October 2020. However, it was granted again in November of the same year and was available until September 30, 2021. Depending on the student’s current account balance, between 100 and 500 euros were granted. If you have 500 euros or more in your account, you will not receive any help from the emergency aid fund.

The following documents had to be submitted online to apply for bridging assistance:

Identity card or proof of identity

Details of your personal German bank account

A bank statement proving that the student is in a pandemic-related emergency

The Überbrückungshilfe is not taxable, but bear in mind:

If students receive (or plant to receive) interim aid from the emergency aid fund, they do not have to pay taxes on it. Nevertheless, it can make sense for students to submit a tax return. Some are even obligated to do so.

Which students have to submit an annual tax return?

Students only have to pay taxes from the annual income of 10,347 euros (tax year 2022). Anything below that amount is tax-free. This applies to income from side jobs, marginal employment, mini jobs and student jobs. The income from the bridging aid of the emergency fund is excluded.

Even self-employed students must submit an annual tax return on their income tax. The income from the interim aid must be included in this declaration and, if necessary, taxed.

Can students deduct home office from tax?

Absolutely! Even as a student, you can deduct home office from your tax return.

During the pandemic, many had to switch from the office and university to their own four walls: the home office. Many have set up offices with telephones and printers. Often a personal WLAN connection is needed for work. Unfortunately, not everyone can claim their home office for tax purposes. Legally, a room can only be deducted from tax if the study is a separate and closed room.

Examples:

• Tax Deductible Study: A dedicated, enclosed space set up for work. The room may not be used for any other purpose.
• Non-tax deductible study: A room furnished with a phone, printer, and stationery, but with an additional bed for guests. Here it would not be plausible for the tax office to deduct this room from the tax.
• Regardless of this, office supplies and purchases can be claimed for tax purposes.

The Home office flat rate offers the possibility of deducting something if only a work corner is used and no separate room is available. You can find out more about this in our post.