To the delight of many families, child benefit increased on July 1, 2019. The child allowance was also raised again this year. And there is another good news: different as before the child allowance actually paid becomes the decisive factor in the low-cost check.
Child allowance, child allowance, benefit assessment
Parents must apply for child benefit from the family benefits office. It is paid monthly regardless of income and varies in amount depending on the number of children: Since July 1, 2019, parents have received EUR 204 for the first and second child, EUR 210 for the third child and EUR 235 for each additional child. The following applies to applications from 2018: Child benefit is set for four years – but only retrospectively for the last paid six months after filing the application.
The child allowance is one of the tax allowances and is the amount of parental income that remains tax-free on taxation. It is made up of the BEA allowance (EUR 2,640) and the allowance for the de facto subsistence minimum. The latter was raised in 2019 – from 4,788 euros to 4,980 euros. The entire amount of EUR 7,620 will be deducted from the taxable annual income by the tax office at the end of the year.
When submitting the tax return, the tax office then carries out the so-called beneficiary check: It checks whether either the child benefit or the child allowance brings a greater tax benefit for the taxpayer. The cheaper, better version is then used.
Legislative change in the favorable assessment
So far, it has been of secondary importance for the calculation of the cheaper test whether you actually received child benefit or not. The allowance was the fixed entitlement to child benefit compared. And this is exactly where there is an important amendment to the law that was passed by the Bundestag: From now on, the tax-free allowance should no longer apply with the fixed but with the child benefit actually paid be compared.
You notice that you are entitled to child benefit of EUR 2,382 in 2018 and will apply for it in July 2019. The family fund will set your entitlement to child benefit for the whole of 2018, but will not pay child benefit due to the six-month period being exceeded. In the tax return for 2018, you then apply for the favorable assessment. When comparing the child allowance and child benefit, the change in law now uses the amount of child benefit actually paid (here 0 euros) – and no longer the fixed child benefit that you have not received at all (here 2,382 euros). The result: the tax office will probably take the full child allowance for 2018 into account in the tax assessment. There is a tax advantage for you as parents.
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