Childcare costs: parents can save taxes

Whether daycare, after-school care or babysitter: Parents can take care of the child Deduct tax.

The Cost of the Childcare can be deducted from tax. Although this has been the case since 2006, the relevant regulations have so far been very complicated. The Treasury has now implemented a significant simplification. Dr. explains the details Michael Bormann, tax expert at bdp Bormann Demant & partner.

Of the annual costs of up to 6,000 euros, two thirds can be claimed as special expenses. That makes 4,000 euros per child. With a top tax rate plus solidarity surcharge, the tax savings amount to almost 1,900 euros.

Tax expert Michael Bormann.

Above all, however, the Treasury has simplified the procedure considerably. Since the beginning of 2012, it no longer matters for what reason childcare costs are incurred. The tax office no longer differentiates between whether parents work or not, whether they are sick or in training. The deduction from taxable income has always been a special expense since the beginning of the year. Until then, a distinction was made between operating expenses, advertising costs and special expenses.

Requirements for the children and parents

Parents or single parents can claim the special expenses for biological children, but also for adoptive and foster children. Stepchildren or grandchildren are excluded from the regulation. In addition, the children must be under the age of 14 and belong to the taxpayer’s household. In the case of unmarried, separated or divorced parents, only the parent who has borne the costs can apply.

What costs the Treasury recognizes

The tax office generally allows the costs for a care facility to apply. These include kindergartens, crèches, crèches and the like. The costs for an external childminder or for a caregiver who comes home can also be deducted from the tax. If family members take over childcare, it is advisable to conclude a written contract. In addition, regular transfers of care costs are essential.

Childcare costs also include expenses for babysitters. However, the Treasury does not recognize cash payments. It is therefore advisable to pay by bank transfer.

With au pairs, it depends on whether they are fully dedicated to looking after the children or taking on light housework. In the first case, the expenses are considered childcare costs and can be claimed as special expenses. In the second case, half of the total expenditure can be considered as a household service. Since this is less advantageous for tax purposes, the contract with the Au-Pair be well thought out.

Where the Treasury says no

With the following support services, on the other hand, you flash off at the tax office:

Tuition or foreign language lessons, music lessons or computer courses as well as sporting or other leisure activities.

In general, it should be noted that the costs of childcare must be proven. The taxpayer should therefore firstly receive an invoice and secondly be able to present a bank transfer at the request of the tax office. Childcare costs are also granted regardless of child benefit or allowances.

With the new regulations on childcare costs, the legislature has achieved a rare feat: it has simplified tax legislation without creating new disadvantages. In other areas, this would also be highly desirable.

Requirements for the children and parents

What costs the Treasury recognizes

Where the Treasury says no

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