Are you a commuter with high travel expenses? Or do you incur costs due to running two households? Do you have high income-related expenses as an employee (e.g. commuting to work, significant expenses for work equipment, work clothing or training costs) that you claim annually on your tax return? Or do you pay maintenance to a divorced spouse that you claim on your income tax return? Do these expenses exceed EUR 600 or your income-related expenses exceed EUR 1,000? Then take advantage of the option to have a higher net salary paid out to you each month. Otherwise, you will only receive the overpaid wage tax back much later as part of your income tax return. And that can take a while: after submitting your income tax return to the tax office (which is only possible the following year), you then have to wait until the tax office processes the assessment and you receive the eagerly awaited tax notice. The electronic tax card does not contain any allowances for the monthly wage tax deduction. If you do not want to wait until the annual return, you can apply for a wage tax reduction. This is done by submitting an official form, the so-called "Antrag auf Lohnsteuerermäßigung" (Application for Wage Tax Reduction), which you complete and send to your tax office. You can also find the application in the Form Management System (FMS) of the German Federal Tax Administration online: here. We are happy to help you complete the application or answer any questions you may have about the wage tax reduction for 2014 — simply get in touch with us.
Frequently asked questions
Frequently asked questions
What are the benefits of filing an application for wage tax reduction (Lohnsteuerermäßigung)?
An application for wage tax reduction (Antrag auf Lohnsteuerermäßigung) allows allowances to be entered for the monthly wage tax deduction. This increases your monthly net salary because your employer withholds less wage tax. Otherwise, any overpaid wage tax is only refunded after filing your income tax return in the following year.
Which expenses justify an allowance on the income tax card (Lohnsteuerkarte)?
Eligible items include in particular substantial work-related expenses such as commuting costs, travel expenses for occupational commuters, dual household expenses, work equipment, work clothing or training costs. Maintenance payments to a divorced spouse may also be taken into account. Registering an allowance is therefore especially attractive for employees with regularly high deductible expenses.
What minimum amounts apply for registering a tax allowance?
For a tax allowance (Freibetrag) to be registered, the claimed expenses must total more than EUR 600. For pure work-related expenses (Werbungskosten), they must additionally exceed the employee lump-sum allowance (Arbeitnehmer-Pauschbetrag) of EUR 1,000. Only then is an application for wage tax reduction (Lohnsteuerermäßigung) worthwhile.
How do I apply for an income tax allowance (Lohnsteuerermäßigung)?
The income tax allowance is applied for using the official form "Antrag auf Lohnsteuerermäßigung," which must be completed and submitted to the competent Finanzamt (tax office). The form is available online via the Form Management System (FMS) of the German Federal Tax Administration. Without such an application, no individual allowances are recorded in the electronic wage tax card (ELStAM).
Why is the tax allowance worthwhile compared to a refund via the tax return?
Without a registered allowance, overpaid wage tax is only refunded after submitting the income tax return in the following year and after processing by the tax office. With a registered allowance, you benefit immediately every month from a higher net salary. This provides a liquidity advantage throughout the entire year.