Slashing Your Taxes: How to Score Parental Benefit Even on a Whopping €175,000 Income!
- by Sarah Whizbang
- 6 Min
Strategies for Securing Parental Benefits with an Income Over 175,000 Euros - Bypassing Parental Allowance Eligibility Limit: Steps to Claim Benefits Despite Earning Over €175,000
Got a tidy €175,000 income? Good for you! But what about when a little one arrives and you want to take some time off to be a parent? Tax consultant Jenny Jones from the firm "TaxSavvy" in Goodtown has got your back. Here's the lowdown.
- Parental Benefit
- Net Income
- Income Tax
Parental Benefit: The Real Deal
Germany's parental allowance, also known as Elterngeld, is meant to help parents who decide to scale back or stop work after their child's birth. The allowance aims to replace a chunk of the income you lose during this transition. It guarantees at least 65% of the lost income, with a minimum payment of €300 and a maximum of €1,800 a month[2][3].
The calculation is based on your net income before the baby arrives and the income you forego after the baby's birth. If you don't lose income or didn't have any pre-baby, you still get at least the minimum payout[3].
So, what's the big fuss about the €175,000 limit? well, if your income before bubba arrives is well over this amount, the parental allowance is capped at €1,800 a month[4].
High-Earning Parents' Game Plan
Even if you're pullin' in more than €175,000 a year, there's still hope! Just reduce your hours or income post-baby, and voila! The parental allowance compensation kicks in to cover lost income up to the cap of €1,800 a month[3][4].
For example, for high-earners, taking parental leave or cutting back on work hours can trigger the payout. Alternatively, parents who continue working but reduce hours can claim Parental Allowance Plus, which extends benefits over a longer period butwith reduced monthly payments. This is perfect for those juggling part-time work and parenting[3].
Take advantage of the partnership bonus too! Parents who share work and family responsibilities, working between 24 and 32 hours a week, can receive a bonus, adding extra payments for additional parental benefit months[1][3].
Tips and Tricks
The secret is to show a reduction in post-baby income due to childcare. The benefits are scaled accordingly and capped but an income exceeding €175,000 won't knock you out of the race. The parental allowance is designed to make up for lost income rather than relying solely on income levels[1][2][3][4].
So go on, enjoy your new phase of life, knowing that with a few tweaks, you can still get your hands on parental benefits!
Footnotes
- Parental Benefit Eligibility
- Parental Benefit Amounts
- Parental Benefit Options
- Income Cap and Parental Benefit
The community institution "TaxSavvy" offers advice on how high-earning individuals can claim parental benefit, even with an income of €175,000. By reducing their hours or income post-baby, they can receive the parental allowance compensation to cover lost income up to €1,800 a month, as part of the social security system. High-earning parents can also take advantage of the partnership bonus and Parental Allowance Plus to extend benefits over a longer period, making it possible to manage personal-finance and business needs while taking care of their new addition.
