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Separate parents can transfer child allowance
The child tax credit pays off for many parents. If parents separate, they can transfer the child allowance completely to one of them. However, this is not always worthwhile.
Separate parents can transfer the child tax allowance completely to one parent for tax purposes. The person who looks after and cares for the child can claim the tax-free allowance on request.
A prerequisite for a transfer is that the other parent is less than 75 Percent of Maintenance costs arise. The Federal Association of Wage Tax Assistance Associations (BVL) in Berlin draws attention to this.
It should be noted that the child allowance consists of two components: the allowance for the child’s so-called minimum subsistence level of EUR 2358 and the allowance for childcare, upbringing or training needs of EUR 1320 per parent.
"In many cases, however, transferring the entire child allowance to single parents is not recommended from a tax perspective," explains BVL Managing Director Uwe Rauhöft. The reason: The tax-free allowance often only brings a tax advantage if you have a higher income. It is often cheaper to only transfer the allowance of 1320 euros for childcare, education or training needs. This is possible if the child is not yet of legal age and has not been registered with the other parent. The other parent can only object to the transfer if they themselves Childcare costs carries or regularly looks after the child.
"If only the tax-free allowance for childcare, education or training needs is transferred, only half and not all of the child benefit is included in the calculation for the benefit assessment," explains Rauhöft. This means that from an annual income of around 17,000 euros, the child allowance approach is cheaper than child benefit.
The allowance can be transferred even if the parent who is taking care of the child is remarried.
If the other parent is dead or im foreign countries lives and is therefore not subject to unlimited tax liability, the entire child allowance is automatically taken into account for the remaining parent. A separate transfer of only the allowance for childcare, education or training needs is then not possible.
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