What impact does choosing a tax class have on my child benefit?
October 29, 2023 | 30,00 EUR | answered by Yvonne Schreiber
Dear tax advisor,
my name is Sven Gruhlke and I have a question regarding the choice of my tax class and its impact on my child benefit. Currently, I am in tax class III, as my spouse has no income and I have therefore chosen the cheaper tax class. We have two children for whom we receive child benefit.
My concern is that choosing tax class III may have negative effects on the child benefit. I have heard that the amount of child benefit also depends on the tax class and I am therefore unsure if I may have chosen the wrong tax class.
I would like to know what specific effects choosing tax class III has on our child benefit and if it might be more beneficial to choose a different tax class to optimize the child benefit. Is there a tax class that is particularly advantageous for families with children and that positively affects the child benefit?
I would appreciate your assessment and possible solutions to choose the best tax class for us and to optimize the child benefit.
Thank you in advance.
Best regards,
Sven Gruhlke
Dear Mr. Gruhlke,
Thank you for your question regarding the choice of your tax class and its impact on child benefit. It is understandable that you are concerned about whether tax class III is the right choice for you and your family.
First and foremost, I want to assure you that the choice of tax class III itself does not have a direct impact on the amount of child benefit. Child benefit is paid regardless of the tax class and is based on the number and age of the children. So, you will continue to receive the same child benefit, regardless of whether you are in tax class III or not.
However, the choice of tax class III can have indirect effects on the available income and thus on the financial situation of your family. Since tax class III results in lower taxation, you have more net income available monthly. This can have a positive impact on your financial situation and give you more flexibility to make expenses for your children.
There are other tax classes that may be beneficial for families with children. For example, tax class IV with factor takes into account the tax relief amounts for children already in the wage tax calculation and may result in you having to pay less wage tax monthly. This also means you have more net income available without having to make a high tax repayment at the end of the year.
Therefore, it is recommended that you seek advice from a tax advisor to choose the optimal tax class for you and your family. A tax advisor can analyze your individual situation and provide you with specific solutions to best utilize child benefit and optimize your tax burden.
I hope this information has been helpful to you and I am available if you have any further questions.
Kind regards,
Yvonne Schreiber
