Income tax allowance
The income tax deduction is in German income tax law an allowance , which on the tax card entered or as electronic PAYE feature (ELStAM) is transmitted. The monthly assessment base, i.e. the taxable gross salary , is reduced by the exemption . Due to the correspondingly lower wage tax , the employee can be paid a higher net salary .
Legal basis
The income tax allowance is regulated in Section 39a of the Income Tax Act. It is entered on the tax card by the tax office at the request of the taxpayer .
The following can be entered:
- Advertising costs , insofar as they have the employee lump sum are
- Special expenses , as far as they are above the lump sum of 36 €
- Exceptional costs
- a range of negative income (such as rental and lease losses)
The following are registered ex officio by the municipality:
- Flat rates for the disabled and survivors
Legal remedies for non-registration
The entry or non-entry of an exemption is the separate determination of a tax base within the meaning of Section 179 (1) of the Tax Code . The taxpayer can first lodge an objection to the decision of the tax office or sue before the tax courts .
A well-known lawsuit against the non-entry of income tax allowances was directed against the new regulation of the distance lump sum (see there).
Economic effect
In Germany, wage tax is an advance payment on income tax . By entering income tax allowances, the taxpayer can avoid being burdened with excessive tax deductions during the current year. This saves him imputed interest. In return, he is obliged to submit an income tax return when entering an exemption .
