Beating the 175K barrier: Get Parental Allowance, even if you're a high earner!
- by Nicky Pomfret
- ≈ 5.5 Minutes
Earn parental allowance despite an income of 175,000 Euro – explained here. - Substantial Parental Benefits Regardless of €175,000 Annual Income
Tax consultant Kim Knopf of "Smart TaxIt" in Bad Schönborn has noticed more high-income earners asking whether their income will surpass the 175,000 euro threshold.
- Parental Allowance
- Income Reduction Strategies
- Tax Relief
- Universal Support
High-income earners in Germany with incomes over 175,000 euros might initially believe they're ineligible for Parental Allowance. Yet, there are crafty ways to receive benefits:
- Income Cap: Parental Allowance replaces 65-67% of previous income (capped at 1,800 euros per month)[2][3]. High-earners might qualify technically, but only up to the monthly cap. Scaling back hours or income could secure payments up to that limit.
- Working Hours Eligibility: The Parental Allowance Plus scheme is attractive for couples where both partners work between 24-32 hours a week[1]. This program provides additional benefits like the partnership bonus for coordinated childcare efforts[1]. High earners meeting the working hour criteria stand to reap benefits, even with substantial income.
- Universal Support: All families receive child benefit, regardless of income[1], providing essential financial assistance irrespective of earnings.
A reduction in income due to childcare and participation in programs like Parental Allowance Plus with the partnership bonus could open doors to Parental Allowance for high earners, despite the income cap[1][2][3]. Tax relief also helps lower the taxable income of single parents, indirectly affecting their parental benefits eligibility[1].
In a nutshell, high-income earners above 175,000 euros can leverage income reduction strategies and participate in schemes like Parental Allowance Plus and partnership bonus to qualify for Parental Allowance, despite the cap. Universal support like child benefit is also available, offering necessary financial assistance for all families[1][2][3].
In the pursuit of Parental Allowance, high-income earners may discover that finance management and strategic business decision-making can play crucial roles in eligibility. By utilizing income reduction strategies, such as reducing working hours, high earners could potentially secure Parental Allowance, even with their substantial income. This not only reduces their taxable income, but also positively impacts their personal-finance situation by providing social security benefits, such as Parental Allowance and child benefit.
