The child allowance is an allowance under German tax law, which makes a certain amount of money tax-free when parents are taxed.
In income tax , child benefit paid and tax savings are offset against each other through the child allowance so that the best comes out for the taxpayer. In the case of the solidarity surcharge and church tax , the child allowance is always offset.
Amount of child allowances
|year||Total per child
|1983 ... 1985||432 DM|
|1986 ... 1989||2,484 DM|
|1990 ... 1991||3,024 DM|
|1992 ... 1995||4,104 DM|
|1997 ... 1999||€ 3,534 (DM 6,912)|
|2000 ... 2001||€ 5,080 (DM 9,936)||€ 774|
|2002 ... 2007||€ 5,808||€ 1,080||1,824 €|
|2009||€ 6,024||€ 1,080||€ 1,932||€ 3,864|
|2010 ... 2013||€ 7,008||€ 1,320||€ 2,184|
|2015||€ 7,152||€ 2,256||€ 4,512||
|2016||€ 7,248||€ 2,304||€ 4,608|
|2017||€ 7,356||€ 2,358||€ 4,716|
|2018||€ 7,428||€ 2,394||€ 4,788|
|2019||€ 7,620||€ 2,490||€ 4,896|
|2020||€ 7,812||€ 2,586||€ 5,004|
- from 2002: care and education or training needs
In Germany, when assessing income tax according to ) EStG, each parent is entitled to a child allowance and an education allowance for each child to be considered . The transfer of the tax exemptions to the other parent, a step-parent or grandparent is possible with consent (Annex K) and under certain conditions also without consent, for example if one parent does not meet his / her maintenance obligations, does not assume any care costs or the child only looks after the child to an insignificant extent. A parent fails to meet his or her maintenance obligation if he does not actually pay at least 75 percent of his or her maintenance obligation (Section 32 (6), sentence 6 of the Income Tax Act). In the case of partial cash maintenance obligations for children of legal age, at least 75 percent of the share due to the respective parent must be paid in order not to completely lose the right to the child allowance. Child allowances do not yet represent child support. The tax exemption of the subsistence level for children only implements a basic principle of fair taxation , which is also taken into account, for example, for adults by the course of the tax rate . The allowances are based on the requirements of the subsistence level reports of the federal government . In December 2016, following a lawsuit by a tax advisor, the Lower Saxony Finance Court expressed doubts as to whether the structure of the child allowance was constitutional and referred the proceedings to the Federal Constitutional Court .(6
Children are entitled to exemptions from the month of birth of the child, as long as they are also entitled to child benefit.
Basic tax allowance and child tax allowance
In the past, Germany had multiple plans, child tax credit and tax-free allowance by a so-called children's basic allowance to replace that were ultimately never realized. In this model, children who have a significant amount of their own income would "use" the basic allowance in whole or in part and the parents would only be able to claim a child allowance if and to the extent that the child has not used its (child) basic allowance . Shifting income from parents to children is therefore becoming less attractive. If the child does not have any income of their own, they can transfer their (child) basic allowance to their parents.
Child allowance and child benefit
In Germany, the tax relief of the income that has to be used for the maintenance of a child is primarily effected through child benefit . To the extent that child benefit is not required for tax relief, it is used to promote families ( EStG).
The child allowance becomes effective if, when determining the taxable income, it proves to be more favorable for the taxpayer than the (generally already received) child benefit. For taxpayers who are taxed according to the splitting table, the relief effect of the child allowance (on income tax) exceeds the child benefit from a taxable income of around 64,000 euros; with taxation according to the basic table, the limit is around 33,800 euros (see graphic above, as of 2016). Beyond these limits, the child benefit is offset against the tax relief.
Since 2004, the entitlement to child benefit has been sufficient to offset the child allowance; since 2007, any foreign entitlements have also been taken into account.
- Married couple with 1 child:
zu versteuerndes Einkommen 40.000 € → Steuer (Tarif 2020) 4.692 € ./. 1 Kinderfreibetrag 7.812 € = zu versteuerndes Einkommen 32.188 € → Steuer (Tarif 2020) 2.704 € = Steuerersparnis aus 1 Kinderfreibetrag 1.988 € Anrechnung 1 Kindergeld 2.448 € Das Kindergeld ist um 460 € höher als der Steuervorteil.
- Single person with maintenance obligation for 1 child:
zu versteuerndes Einkommen 40.000 € → Steuer (Tarif 2020) 8.452 € ./. 1/2 Kinderfreibetrag 3.906 € = zu versteuerndes Einkommen 36.094 € → Steuer (Tarif 2020) 7.126 € = Steuerersparnis aus 1/2 Kinderfreibetrag 1.326 € Anrechnung 1/2 Kindergeldanteil 1.224 € Die Steuerersparnis ist um 102 € höher als das anteilige Kindergeld.
Consideration of children when deducting income tax
When determining wage tax (unlike income tax), the child allowances and the allowances for care and education or training needs are not taken into account. They are only taken into account when determining the solidarity surcharge and the church tax. For this purpose, the number of child allowances is saved in the wage tax deduction criteria.
For children of parents who are not married to each other, 0.5 is regularly entered as the child allowance number. Counter 1 is entered if the other parent does not meet at least 75 percent of his or her maintenance obligations. In addition, the numerator 1 is entered for married spouses who are not permanently separated in Germany for the spouse with income tax class III, while the child is not taken into account for the spouse with income tax class V. With income tax class IV, both parents receive the numerator 1.0 per child.
Notwithstanding this, a child of one parent can only be taken into account in the child allowance number with the numerator 1 without a special check if the other parent has died or his or her place of residence or habitual residence cannot be determined or the father of the child cannot be officially determined. The same applies if the other parent is not expected to be subject to unlimited income tax for the entire calendar year or if a child has only been adopted by one parent.
In addition, for one parent, the counter 1 may be taken into account for a child instead of the child allowance counter 0.5 if this parent can demonstrate that the requirements for a transfer are met and are unlikely to change. Children up to the age of 18 who live in Germany at the beginning of the year and are therefore subject to unlimited tax here are taken into account. If a child is not registered with the parents with an apartment, they must present the municipality with a certificate of life for this child that is not older than three years. Such a certificate is issued at the request of a parent by the municipality in which the child is registered with the apartment. Appropriate documents showing the relationship must be enclosed with the application. Student children over 18 years of age will be considered upon request.
- Sixth subsistence level report: BT-Drs. 16/3265 ; Information from the Federal Government: Report on the subsistence level of adults and children for 2008 (PDF file, approx. 198 kB), November 2, 2006
- Seventh subsistence level report: BT-Drs. 16/11065 ; Information from the Federal Government: Report on the subsistence level of adults and children for 2010 (PDF file, approx. 205 kB), November 21, 2008
- Ninth subsistence level report: BT-Drs. 17/11425 ; Information from the Federal Government: Report on the amount of the tax-free subsistence level for adults and children for 2014 (PDF file, approx. 419KB), November 7, 2012
- Law to increase the basic tax credit, the child tax credit, the child benefit and the child allowance. July 10, 2015, accessed August 24, 2016 .
- Report on the level of the tax-free subsistence level for adults and children for 2016 (10th subsistence level report) , PDF accessed on January 14, 2017
- Law on the tax relief of families as well as on the adjustment of further tax regulations (Family Relief Act), (BGBl 2018 I, 2210)
- Lawsuit against child allowance successful . FAZ.NET . December 2, 2016. Retrieved December 5, 2016.
- Tax calculator of the Federal Ministry of Finance. Retrieved January 6, 2020 .