Parents who have a maintenance obligation toward their child and who cover the child's health and long-term care insurance contributions can claim these as their own contributions for tax purposes.
In the case at issue, the parents of a child in vocational training sought to claim the statutory health and long-term care insurance contributions withheld by the employer as special expenses (Sonderausgaben) for tax purposes.
They based their claim on the argument that they had provided their child — who still lived with them — with maintenance in kind.
On this point, the BFH ruled that a tax deduction requires that the parents actually paid or reimbursed the contributions to the child.
This is not the case where maintenance is provided in kind.
BFH of 13 March 2018 – X R 25/15
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Frequently asked questions
Frequently asked questions
Can parents deduct their child's health and long-term care insurance contributions as special expenses?
Yes, parents can claim the health and long-term care insurance contributions of their dependent child as their own special expenses (Sonderausgaben) for tax purposes. The prerequisite is an existing maintenance obligation toward the child. The deduction is made as part of the pension and insurance expenses (Vorsorgeaufwendungen) in the parents' income tax return.
Is in-kind support sufficient to deduct a child's insurance contributions for tax purposes?
No, merely providing in-kind support (e.g., free board and lodging in the parental home) is not sufficient. In its ruling of 13 March 2018 (X R 25/15), the BFH held that parents must have actually paid or reimbursed the contributions to the child in order to deduct them.
What condition must be met for parents to deduct their child's health and long-term care insurance contributions?
Parents must have actually reimbursed the contributions to the child in cash or paid them directly. A purely notional offset against in-kind maintenance is not sufficient. We recommend documenting the actual payment or reimbursement in a verifiable manner.
What exactly did the BFH decide in its ruling X R 25/15 of 13 March 2018?
The BFH ruled that parents may deduct contributions to statutory health and long-term care insurance withheld by their child's employer as their own special expenses (Sonderausgaben) only if they have actually reimbursed or paid these amounts to the child. Providing support in kind (Naturalunterhalt) does not satisfy this requirement.
Does the special expense deduction also apply to contributions withheld directly from the child's wages?
Generally yes, provided the parents have a maintenance obligation and actually reimburse the child for the withheld contributions. If the contributions are not refunded to the child in cash, only the child may claim the deduction in their own tax return.