What is the basic tax-free allowance and how does it affect my tax return?
March 16, 2022 | 40,00 EUR | answered by Ralf Otten
Dear tax advisor,
I am Sandra Köhler and I am currently facing the challenge of preparing my income tax return for the past year. In doing so, I came across the term "basic tax allowance" and I am wondering how high it actually is and to what extent it affects my tax return.
Regarding the situation: I am an employee in a medium-sized company and earn an average salary. In my tax return, I want to take advantage of all possible tax savings and not miss out on any money unnecessarily. Therefore, it is important for me to understand how the basic tax allowance can reduce my tax burden.
So far, I have not delved deeply into the topic and I am unsure whether I have already taken the basic tax allowance into account or if I still have opportunities to save taxes. I want to make sure that I provide everything correctly and avoid making any mistakes that could cause problems for me later.
Therefore, my question is: How high is the basic tax allowance for the past year and how exactly does it affect my tax return? Are there specific requirements that I must meet in order to claim the basic tax allowance? And are there possibly other allowances or tax reductions that I should be aware of?
I look forward to your expert advice and thank you in advance for your help.
Sincerely,
Sandra Köhler
Dear Mrs. Köhler,
Thank you for your inquiry regarding the basic tax-free allowance in the income tax return. I am happy to assist you and provide you with more detailed information on this topic.
The basic tax-free allowance is a tax-free amount that every taxpayer is entitled to and therefore does not have to be taxed. For the year 2020, the basic tax-free allowance is 9,408 euros for single individuals and 18,816 euros for married couples filing jointly. This amount is adjusted each year according to the inflation rate.
The basic tax-free allowance directly affects your tax return, as it is deducted as the first amount from your taxable income. This reduces your tax burden, as only income above the basic tax-free allowance needs to be taxed. This means that you do not have to pay income tax up to this amount.
To claim the basic tax-free allowance, you simply need to be subject to unlimited tax liability in Germany. This means that you have your residence or habitual abode here. Additionally, you should ensure that you do not receive any tax-free income such as tax-free employee allowances or pensions that could exceed the basic tax-free allowance.
In addition to the basic tax-free allowance, there are other allowances and tax reductions that you should consider in your tax return. These include, for example, work-related expenses, special expenses, exceptional burdens, and child allowances. It is therefore worth taking advantage of all possible tax-saving opportunities to further reduce your tax burden.
I hope that I could help you with this information and I am happy to assist you with any further questions. Please do not hesitate to contact me if you need additional support with your income tax return.
Best regards,
Ralf Otten
