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The income tax return for 2023 is likely to be more time-consuming for many citizens than in previous years. Some forms have become more complicated. However, there are good prospects for a significant refund.
Mostly annoying, often necessary – and in the vast majority of cases associated with a refund: every year the income tax return is due. And for millions of German taxpayers, the deadline for this is looming.
Longer deadlines
Since the Corona crisis, however, the tax authorities have granted German taxpayers more generous deadlines for submitting their tax documents. Instead of the end of May as before the pandemic, this year they have until October 2nd to submit the forms online on the Elster tax platform or traditionally on the printed forms. Those who use a tax advisor can even take their time until June 2nd, 2025.
While self-employed people, freelancers and tradespeople are generally required to submit a declaration, this does not apply to all employees. For example, anyone who has not earned any additional income above an allowance of 410 euros in addition to their salary does not have to submit a declaration.
The tax office pays back an average of 1095 euros
In the vast majority of cases, however, it makes sense to still prepare an income tax return, as Fabian Walter, tax expert and active on social media as “Steuerfabi”, explains: “It is particularly worthwhile for those who can voluntarily submit a tax return. According to the Federal Statistical Office, of the 14.4 million taxpayers who voluntarily submitted a return, 12.7 million received a tax refund. The average was 1,095 euros.”
In many cases, the tax return forms for the past year have become longer and more extensive. Form N for employees, for example, requires more entries. The form on which “energy-related measures” – such as thermal insulation or replacing the heating system – are documented has also become longer. The form for pension expenses is now three pages long, and the form for children has even grown to four pages.
Four pages form for a rental
“One big change affects the entire area of rental,” says tax advisor Axel Auer from the wage tax assistance association VLH. “This means that if you rent out a property, you had to fill out two pages until 2022, now it’s four pages for a normal rental. If you lease or share a property, there are two extra pages. And another two pages for holiday homes.” Overall, says Auer, it is noticeable that the queries from the tax authorities have become “more detailed and significantly more complex.”
In return, taxpayers have more flexibility in the form of allowances and the possibility of deducting expenses. “The education allowance was raised from 924 to 1,200 euros for parents whose children are in school or vocational training. In addition, the relief amount for single parents was raised to 4,260 euros,” Fabian Walter explains.
Basic allowance and Savings allowance gone up
The basic allowance, up to which no taxes have to be paid at all, is 10,908 euros, 600 euros higher than the previous year. And anyone who has capital gains can receive up to 1,000 euros (or 2,000 for married couples) tax-free from 2023. Until then, the “saver’s allowance” was 801 euros or 1,602 euros for couples for years. Anyone who gives their bank a corresponding exemption order can receive their capital gains fully or partially tax-free in the current year.
The increase in the home office allowance is also likely to have a positive tax effect for many employees. Until 2022, a maximum of 120 working days in the home office could be claimed at five euros each. “Now you can deduct a maximum of six euros times 210 days, which is 1260 euros, from your taxes,” says tax advisor Auer.
However, the expert points out a special feature: “There is the variant in which the employee has to document that he has worked predominantly at home. But then there is also the case where you do something at home for which the employer does not have a workstation available. Then you can drive to work that day, but you can still deduct the six euros, up to a maximum of 1,260 euros per year.”
Pension contributions fully deductible
Last but not least, since last year, taxpayers have been able to deduct 100 percent of their contributions to the statutory pension insurance from their taxes for the first time. In the previous year, this was only 96 percent of contributions. This also applies to contributions to the so-called “Rürup pension”, a voluntary basic pension for freelancers.
These pension expenses are declared as special expenses in the tax return. However, from 2040 onwards, pensions will also be fully taxed through deferred taxation.