Tax benefits for families

Whether the child allowance is more favorable than child benefit depends on the parents' income. In principle, families with higher incomes benefit more from the child allowance.

As a guideline, you can assume that single parents with a taxable income of around 40,000 euros or more and couples with a joint income of around 80,000 euros or more will benefit more from the tax advantage of the child allowance. However, these rough guide values can vary depending on the tax rate and individual circumstances.

You receive the tax-free allowance for children until your child turns 18. Under certain conditions, even longer:

You can receive the tax-free allowance until your child turns 25 if they are in vocational training or studying. This also applies if your child is in a transitional period of a maximum of 4 months between two periods of training or between training and basic military or civilian service. The same applies if your child cannot start or continue their vocational training because they cannot find a training place. There is also an entitlement if your child is doing a voluntary social or ecological year, a voluntary service of all generations, a federal voluntary service or an international youth voluntary service. In addition, if your child is involved in development aid or works abroad as a service provider. Please note the vocational training costs incurred.

Special rules apply to the tax deduction of care costs for children with disabilities:

If your child is unable to care for themselves due to a disability, you are entitled to the tax-free allowance regardless of your child's age, provided the disability occurred before your child's 25th birthday.

If you incur costs for childcare or day care, you can claim two thirds of these costs as special expenses for tax purposes. A maximum of 4,000 euros per child per year is deductible.

These conditions must be met:

• The child is your own or your foster child.
• The child belongs to your household.
• The child has not yet reached the age of 14. (This age limit does not apply if the child has a disability.)

You can claim amounts for a kindergarten, daycare center, day nursery or similar facility, childminder, nanny or educator. The tax office must be provided with evidence of the childcare costs, such as invoices or bank statements.

Employer child allowance: Some employers also contribute to the costs of childcare for their employees. A tax-free employer allowance for childcare is a voluntary additional benefit that can further reduce your financial burden. The childcare allowance is fully tax-free for both the employer and the employee

A family household not only costs money, but also time. If you employ domestic help or hire tradespeople to carry out repairs to relieve the burden and save time, you can claim a tax reduction for household-related services:

• You can receive a tax reduction of 20 percent, up to a maximum of 510 euros, for household-related, marginal employment.
• If you commission craftsmen to carry out renovation, maintenance or modernization work, you can claim 20 percent of the costs, up to a maximum of 1,200 euros, against tax.
• For household-related employment and services that do not fall into one of these two categories, there is a tax reduction of 20 percent, up to a maximum of 4,000 euros.

If you are raising your child alone (and no other adult lives in the household), you can also claim the relief amount for single parents.

The relief amount of 4,260 euros per year is taken into account under the following conditions:

• You live without another adult in a shared household with at least one child.
• You are entitled to child benefit or a child allowance for the child.

For the second and each additional beneficiary child, the annual relief amount increases by 240 euros.

You can apply for the relief amount in your income tax return. To do this, you must enter the relevant information on the relief amount in the "Child annex". In order not to benefit from the relief amount when you receive your tax refund, it is advisable to apply to the tax office for tax class 2. This means that the tax relief amount is taken into account directly in the monthly wage tax deduction.

If you make maintenance payments for your child, you can claim these for tax purposes under certain conditions up to a maximum amount of €10,908 for 2023 and up to a maximum amount of €11,784 for 2024.

The prerequisites for this are:

• You are legally obliged to pay maintenance.
• You are not entitled to child benefit, a child allowance and, if applicable, an allowance for care and education or training needs.
• The child is legally entitled to maintenance from you according to domestic standards.
• The child's tax identification number must be provided if the child is subject to unlimited or limited tax liability.

Forms for the maintenance declaration can be downloaded from the website of the Federal Ministry of Finance (German and bilingual) or you can simply provide the information using the ELSTER online procedure.

If you pay school fees for your child because they attend a private school, you can deduct 30 percent of the school fees as special expenses - up to a maximum of 5,000 euros per year and child.

If one parent lives and works in a different location for professional reasons while the family remains at the main residence, the costs for regular trips home can be claimed for tax purposes. These family journeys home are recognized as part of the double household management and reduce the taxable income. Both the travel costs and any accommodation costs can be deducted. The tax deductibility of family journeys home reduces the financial burden for commuting parents and at the same time supports regular contact with the family.

Child benefit is paid out tax-free. However, so that the tax office can check whether the payment of child benefit or the child allowance is more favorable, you should declare the child benefit in your tax return.

The child supplement is also tax-free. Unlike child benefit, it does not have to be declared in the tax return.