What is the difference between tax class 1 and 4?
May 14, 2024 | 40,00 EUR | answered by Ralf Otten
Dear tax advisor,
My name is Claudia Weber and I have a question regarding the income tax return. I am single and work full-time. I have always been classified in tax class 1. Now, a friend has advised me to switch to tax class 4, as this could be more advantageous from a tax perspective.
However, I am unsure about the exact difference between tax class 1 and 4, and what implications a switch could have for me. I have always done my tax return myself, but in this case, I want to make sure I am making the best decision.
Could you please explain to me what the two tax classes entail and what advantages and disadvantages a switch could have for me? Are there specific requirements that need to be met to switch to tax class 4? And how would a switch affect my tax burden?
Thank you in advance for your help.
Sincerely,
Claudia Weber
Dear Mrs. Weber,
Thank you for your inquiry regarding the income tax return and the question about tax classes 1 and 4. I am pleased to be able to assist you in clarifying your question.
First of all, I would like to explain to you what the two tax classes are all about. In Germany, there are a total of six different tax classes, of which tax classes 1 and 4 are the most commonly used. Tax class 1 is the standard tax class for single employees without children. In this case, the monthly gross income is taxed at a fixed tax rate.
Tax class 4, on the other hand, is a combined tax class for married couples and life partners who are both employed. By combining the incomes of both partners, it can lead to a lower tax burden, as the partner with the higher income is classified into tax class 3 and the partner with the lower income is classified into tax class 5.
A switch from tax class 1 to tax class 4 can be advantageous if you are married or in a registered life partnership and your partner has a lower income than you. This way, you can benefit from a lower tax burden.
There are no special requirements that need to be met in order to switch from tax class 1 to tax class 4. You can simply request the change at your local tax office. However, it is important to note that a switch during the current year will always be retroactive, which means that the change in tax classes will only take effect from the date of the application.
Regarding the impact on your tax burden, a switch to tax class 4 can indeed lead to a lower tax burden, especially if your partner has a lower income. This way, you may have more net income available.
I hope that I could help you with this information. If you have any further questions or need assistance in making a decision, I am happy to help.
Best regards,
Ralf Otten
