How can I choose the most cost-effective tax bracket for myself and my partner?
June 5, 2022 | 40,00 EUR | answered by Yvonne Schreiber
Dear tax consultant,
My name is Artur Wittkopf and I have a question regarding the selection of the most favorable tax class for me and my partner. We are both working and would like to know how we can best combine our tax classes in order to pay less taxes.
Currently, we both have tax class IV, as we are not married and do not have children. However, I have heard that there are more favorable tax classes for married couples or registered civil partnerships. My partner earns more than me, so it would be important for us to know if it would make sense for him to choose tax class III and me tax class V, or if there are other ways to save taxes.
We are unsure if we should both keep tax class IV or if it would be financially advantageous to choose a different combination. Our concern is that we may have to pay more taxes if we make the wrong decision.
Could you please advise us on which tax class would be best for us to save taxes and what requirements need to be met for that? We would like to know how to proceed in order to select the most favorable tax class for both of us.
Thank you in advance for your help.
Best regards,
Artur Wittkopf
Dear Mr. Wittkopf,
Thank you for your question regarding the selection of the most favorable tax class for you and your partner. It is understandable that you are thinking about how to optimize your tax burden. The choice of the right tax class can indeed have an impact on the amount of your tax payments.
First of all, it is important to mention that the choice of tax class in Germany depends on various factors, such as marital status, income, and number of children. Since you and your partner are not married and do not have children, you have the options of tax classes I, II, IV, and V.
In your current situation, where both of you have tax class IV, you share the basic tax-free allowance equally. If your partner earns more than you, it could indeed be beneficial for him to choose tax class III and for you to choose tax class V. This combination would increase your partner's net income while decreasing yours. This can result in overall lower tax payments.
However, there are other combinations that may be advantageous depending on individual circumstances. For example, in some cases, it may be beneficial for the partner with the higher income to keep tax class IV and for the partner with the lower income to choose tax class III.
To determine the optimal tax class combination for you, I recommend consulting a tax advisor. A tax advisor can analyze your individual situation and provide you with a tailored recommendation based on your personal circumstances.
I hope that this information has been helpful to you. If you have any further questions, please feel free to reach out to me.
Best regards,
Yvonne Schreiber
