If you have high income-related expenses, you can already take these into account in the monthly income tax deduction. To do this, you must apply for an exemption from the tax office. This is now possible for the year 2023.
It can be gratifying to secure a hefty repayment by filing your income tax return. But if you need the money earlier in times of high inflation, you can ensure that it doesn’t go to the tax office in the first place. With an application for a wage tax reduction and the associated granting of an exemption, says Daniela Karbe-Gessler from the Taxpayers’ Association.
The procedure increases the monthly net income of taxpayers. For example, the tax office can grant an allowance for income-related expenses if the deductible expenses exceed a total of 600 euros per year.
This can be the case, for example, with long journeys to work, training costs incurred or expenses for the home office. The employer receives the allowance from the tax office as part of the payroll accounting and takes this into account on a monthly basis. The allowance for income-related expenses only applies if they are above the employee allowance of 1,200 euros, which is already taken into account.
Child allowances or losses from other types of income, such as renting or commercial activity, can also be taken into account in the wage tax reduction procedure and reduce the monthly wage tax.
In order for the amounts to be taken into account in the salary tax deduction by the employer, the employees must submit an application for a wage tax reduction to their responsible tax office. “The application can be made from October for the following year – i.e. 2023 – by November 2023 at the latest,” says Karbe-Gessler. The financial administration accepts applications both in paper form and via the Elster portal.
Without a corresponding application, the costs can only be claimed as part of the income tax return. With the allowance, taxpayers benefit earlier from the tax relief.
If you apply for a wage tax reduction, you must submit a tax return at the end of the year. This is how the financial administration checks the corresponding amounts.
