Child tax credit

The child tax credit is a tax allowance in the tax law that a certain amount of money is tax-free in the taxation of the parents.

Germany

In income tax fee paid child benefit and tax savings through the child tax credit be offset against each other, that each comes out the best for the taxpayer. In solidarity surcharge and church tax, the child tax credit will be credited in each case.

Level of child allowances

In Germany, the assessment for income tax according to § 32 paragraph 6 Income Tax Act for each child to be considered from 2010 per year allowances totaling € 7008 ( child allowance ) to. This includes an allowance for the care, education and training needs of 2640 euros. For parents who are not predisposed together, each parent receives half the allowance. The federal government estimates the material minimum subsistence level for children in the Seventh Report ( Bundestag printed paper 16/11065 ) to 3,864 euros per year. The Sixth subsistence Report ( Bundestag printed paper 16/3265 ) was reported as a neuter subsistence for children for the year 2008, an amount of 3,648 euros per year.

A claim for allowances for children is on the month of birth of the child, as long as also entitled to child benefit is.

Child allowances do not represent children's promotion represents the tax exemption of the subsistence minimum for children is merely a fundamental principle of tax equity to, which is also taken into account, for example, for adults on the course of the tax rate.

A transfer of allowances for children on the Stief-/Großeltern is possible with the consent (Appendix K).

Development of child allowances

Basic allowance and child allowance

In the past there was in Germany several times to replace plans, child tax credit and tax-free allowance by a so-called children's basic allowance, which were ultimately never realized. In this model would children who have their own income to a significant extent, even " consume " the basic allowance in whole or in part, and the parents only then can take a child tax credit claimed if and to the extent the child has not used up his (children's) basic allowance. The shift of income from the parents to the children loses its appeal. If the child has no independent income, it can transfer its (children's) basic allowance to the parents.

Child tax credit and child benefit

The tax burden of income that must be expended for the maintenance of a child, is effected in Germany primarily on child benefit. As far as the child allowance for tax relief is not required, it will support the families (§ 31 Income Tax Act).

The child tax credit will be effective if this in determining the taxable income as more favorable to the taxpayer proves that ( iA already related ) child support. The relief provided by the Children's allowance ( income tax ) exceeds by taxpayers who are taxed according to the splitting table from a taxable income of around € 63,500, child benefit; in taxation according to the basic table, the limit is about 33,500 euro (see chart above, calculated with 2010 tariff and child allowance of 7,008 euros ). Beyond these limits, the child support shall be credited against the tax relief.

Since 2004 is sufficient for recognition of the child tax credit entitlement to child benefit, since 2007 also with any foreign claims into expected.

This interplay of child benefit and child tax credit only applies to the income tax. In the calculation of the surcharge and church tax always the allowances are taken into account.

Examples

• Couple with 1 child:

Taxable income 40.000 € → tax (tariff 2010) € 5,402. /. 1 child allowance € 7008 = Taxable income 32.992 € → tax (tariff 2010) € 3,568 = Tax savings of 1 child allowance € 1834 Imputation 1 child benefit € 2,208 Child benefit is by 374 € higher than the tax advantage. Unmarried with maintenance obligation for one child:

Taxable income 40.000 € → tax (tariff 2010) € 9,007. /. 1/2 child allowance € 3504 = Taxable income 36.496 € → tax (tariff 2010) € 7,770 = Tax savings of 1/2 child allowance € 1237 Imputation 1/2 child benefit share € 1,104 The tax saving is € 133 higher than the share of child support. Consideration of children at the PAYE

For the determination of the tax base of the church tax and solidarity surcharge each child allowance of 2244 euros to the counter 0.5 and each child allowance of 4488 euros is included with the counter 1. In determining the monthly income tax, the child allowances and the allowances for the care and education or training needs are not taken into account. For children of parents who are not married, is regularly listed as child allowance figure 0.5. Is entered Likewise, the baby with the counter 1, if the other parent does not fulfill its maintenance obligations at least 75 percent. In addition, the counter 1 is in the control class choice III / V with married and live apart in the domestic spouses, the spouse with the income tax class III entered, while the spouse with income tax bracket V the consideration of the child does not occur.

Can only be considered in the child tax credit with the counter number 1 without further testing Notwithstanding this, a child of a parent, if the other parent is deceased or can not be determined whose domicile or habitual residence or the father of the child is not officially determined. The same applies if the other parent is expected during the entire calendar year is not liable to income tax or a child has been adopted only by only one parent.

Moreover, it must be considered when a parent for a child instead of the child tax credit counter the 0.5 meter 1 if that parent can show that the conditions for the transfer have been fulfilled and are not expected to change. Children up to age 18 who live at the beginning of the year in Germany and therefore assessable to tax here are considered. Where a child is reported with the parents apartment, they have the community for this child to submit a life certificate, not older than three years. Such a certificate is issued at the request of a parent from the community in which the child is registered with the apartment. It shall be accompanied by appropriate documentation showing the relationship. Students Children over 18 years are considered on application.