Which tax class is most advantageous for me as a freelancer?
March 6, 2023 | 30,00 EUR | answered by Dirk Voigt
Dear tax advisor,
my name is Thomas Kock and I work as a freelance graphic designer. I am currently trying to decide which tax class would be most beneficial for me. Currently, I am classified in tax class I, as I am single and have no children.
So far, I have not had significant income from my freelance work, but this year my projects have increased significantly. I am concerned that this could push me into a higher tax class and result in me paying significantly more taxes.
I am aware that there are special regulations for freelancers that can affect the choice of tax class. Therefore, I would like to know from you which tax class would be most advantageous in my situation. Are there specific criteria I should consider in order to save taxes?
Furthermore, I am wondering if it might be beneficial to choose a different tax class in order to optimize my tax burden. What would be the effects of changing tax classes on my taxes and how should I proceed in this case?
Thank you in advance for your support and I look forward to your professional advice.
Best regards,
Thomas Kock
Dear Mr. Kock,
Thank you for your inquiry regarding the optimal tax class for freelancers like you as a graphic designer. It is understandable that you are thinking about which tax class is most advantageous for you, especially since your income from self-employment has significantly increased.
Generally, freelancers like graphic designers are classified in tax class IV, regardless of their marital status. This tax class is often considered the most favorable for self-employed individuals, as income tax is calculated based on the total income of both spouses. Since you mentioned that you are single, this option is not available to you and you will remain in tax class I for the time being.
However, there are also opportunities for singles like you to optimize your tax burden. One option would be to apply for the so-called "factor procedure." With this method, the income tax is calculated based on individual income and not according to the splitting tariff for married couples. This could potentially bring you tax benefits, especially if you have fluctuating income as a freelancer.
Another option to optimize your tax burden would be to choose tax class III, which can be interesting for singles without children with higher income. Less income tax is withheld in this tax class, leading to a higher net wage payment. However, you should be aware that you may have to pay higher taxes at the end of the year if your income turns out to be higher than expected.
You can easily request a change of tax class by submitting the form "Application for Wage Tax Reduction" to the tax office. Here, you can indicate which tax class you would like to choose and, if necessary, apply for the factor procedure.
In conclusion, I would like to emphasize that the choice of the optimal tax class depends on many individual factors, such as income level, planned investments, or the development of your workload. Therefore, I recommend consulting with a tax advisor in a personal consultation to find the best solution for your tax class.
I hope this information is helpful to you and I am available for any further questions.
Best regards,
Dirk Voigt
