Streamlined tax filing for senior citizens: lower tax-related expenses
For retirees in Germany with straightforward income, the simplified tax return can be a convenient option. Here's what you need to know about the requirements, eligible expenses, and important notes regarding this streamlined tax filing method:
### Requirements for the Simplified Tax Return for Retirees in Germany
- **Age:** Generally for retirees who have reached the standard retirement age. - **Income:** If your income is above the basic tax-free allowance (“Grundfreibetrag”), you must file a tax return and pay tax on your pension income. - **Pension eligibility:** To be entitled to the basic pension, you must have: - Reached the standard old-age pension age. - Paid into the German pension scheme for at least 33 years (including certain care periods and times worked in countries with social security agreements with Germany, excluding Turkey and the USA). - **Residency:** You are considered a tax resident in Germany if you spend more than 183 days a year in Germany or maintain a permanent residence there, which subjects your worldwide income to German tax.
### Eligible Expenses and Deductions
- **Basic tax-free allowance** (“Grundfreibetrag”): Income below this threshold is tax-free. For income above it, pensions become taxable. - **Pension contributions:** Amounts previously contributed to the pension scheme affect the taxable pension income. - **Special expenses and allowances**: Retirees can deduct certain expenses related to healthcare, social insurance contributions, and other allowable deductions according to German tax law, but these are generally handled in the detailed tax return.
### Important Notes
- If retirees in Germany have multiple sources of income or complex situations (self-employment or assets), they may need to file a full tax return rather than the simplified version. - German residents must report worldwide income, including Social Security and foreign pension income, though treaties and foreign tax credits can reduce double taxation. - The pension insurance system automatically verifies eligibility and calculates the basic pension without requiring retirees to apply separately.
### Using the Simplified Tax Return
- To apply for an access number to use the simplified tax return, retirees need to provide their date of birth and personal identification number at simple.elster.de. - The simplified form is not suitable for claiming alimony payments or for retirees with other income sources. - Retirees with additional income (e.g., from renting or running a business) must use the full tax return forms, not the simplified form. - The access number is required to process the simplified tax return. - The tax office automatically receives data for the mentioned income sources, requiring retirees to enter fewer data themselves.
In summary, retirees in Germany must meet age and contribution requirements to receive and be taxed on pensions above the tax-free allowance. The simplified tax return primarily concerns pension income and related deductions, but more complex financial situations require full tax filing.
If you seek detailed personalized advice, especially regarding foreign pension income or cross-border tax treaties, consulting a local tax professional is advisable. If your total annual income exceeds the basic tax-free allowance of 11,784 euros, you are obliged to submit a tax return. Handyman services can be claimed as a tax-relevant expense on the simplified form. It's also important to note that being computer-savvy is a prerequisite for using the simplified form.
In the context of retirees in Germany, vocational training may not directly apply, but it's vital to note that for those seeking personal-finance management skills, there might be vocational training programs available in the community to better understand and navigate the business aspects of their personal finances, including the handling of income, taxes, and investments. Moreover, while discussing the simplified tax return, it's important to consider that additional income sources such as earnings from handyman services can be claimed as a tax-relevant expense.
