Introduction
The selection of tax classes is a crucial decision for married professionals in Germany, aimed at optimizing monthly net household income. Understanding the various combination possibilities and their impact on total net income is essential. This article sheds light on how spouses can find the optimal tax class combination for their unique situation.
Fundamentals of Tax Class Combination
In Germany, there are different tax classes, particularly relevant for married or partnered couples. These classes influence the amount of income tax deducted monthly, thus affecting the available net income. However, the choice of tax class does not affect the annual tax liability determined during the income tax declaration.
Illustrative Example
Consider a married couple where Partner 1 has an annual gross salary of 54,000 Euros and Partner 2 has 24,000 Euros. Depending on the chosen tax class combination, their monthly net income varies. Combinations like IV/IV, IV with factor, III/V, and V/III lead to different distributions of net income between the partners and varying income tax burdens.
Options of Tax Classes and Their Impacts
- IV/IV: Often leads to a balanced distribution of net income but may necessitate a tax declaration in some cases.
- IV with Factor: Considers the income ratio of the partners, potentially leading to a lower monthly tax burden.
- III/V: The higher-earning partner receives more net income, while the other bears a higher tax burden, possibly resulting in tax payments during declaration.
- V/III: The reverse of III/V, results in lower income tax for the lower-earning partner.
Tax Declaration: A Critical Factor
Regardless of the tax class, spouses who choose certain combinations like III/V must file an income tax declaration. The annual income tax is calculated independently of the tax class, meaning the final tax burden is unaffected by the choice of tax class.
Suitable Combinations for Different Goals
- High interim net income: Choose the III/V combination.
- Looking forward to tax refunds: Opt for the V/III combination.
- Balance and avoidance of large payments/refunds: Select IV with factor.
Special Situations
Early transition to tax class III can be advantageous for a partner expecting wage replacement benefits like parental or sickness benefits, as it impacts the benefit amount.
Conclusion
Choosing the right tax class is a significant lever to optimize net income. Each combination has its specific advantages and disadvantages. It is advisable to consider the individual situation and, if necessary, seek professional advice to make the optimal choice.
