In recent years, a tax return in Germany has yielded an average of €800 to €1,000 to a taxpayer in Germany. This simply means that anyone who does not file a tax return in Germany is basically throwing away money!
However, as an international student in Germany, filing your tax return may present a challenge: on the one hand, there is the language barrier; on the other hand, the German tax system differs from the one you are accustomed to. But don’t worry, once you’ve perfected your German tax return, the money joy will rapidly outweigh the stress. In this article, I share what a tax return in Germany is and everything you need to know about filing a tax return in Germany for students
What is Tax Return in Germany?
Before we dive right into it, it is important to know what tax return in Germany means.
A majority of German taxpayers, including foreigners and German residents, file an annual income tax return called Einkommensteuererklärung with the Federal Central Tax Office. By filing a tax return, you ensure that you paid the correct amount of tax for the previous financial year. Nine out of ten people who file a tax return receive a refund. The tax office uses the tax return in Germany to reconcile the amount of income tax you have paid with other financial implications such as any additional earnings you may have.
Tax Return in Germany for Students
Now, you may be wondering why you need to file a tax return as a student in Germany. The answer is simple. As a student in Germany, you are permitted to work while studying and your income is taxable. This implies that if you’re working while studying in Germany, you are expected to pay tax. However, don’t fret because the regulations for tax on students are different from those of other workers. Part-time jobs for international and German students in Germany are available during semester holidays. You are subject to income tax if your monthly income exceeds €450. As a result, students can claim this income tax from the Tax office, Finanzamt, each year. The German Tax Department does not voluntarily refund this money. So, if you wish to receive taxable money, you must file a student tax return in Germany. Students are required to either pay a little amount of tax or do not pay any tax at all. As a student in Germany, it is advisable to complete a tax return so that you can obtain any refunds that you are entitled to.
Do I Need to File for Tax Return as a Student in Germany?
It’s often unclear to students whether or not they should file for a tax return in Germany. If you earn money while studying, it is a good idea to file a tax return. However, there are various factors that can determine how much or how little you can profit from filing taxes, such as your study state, the type of employment you have, and your income.
As a student in Germany, you must also file a tax return if any of the following conditions apply to you:
- You earn more money through self-employment than the student tax allowance of €9,408 per year.
- You have a yearly rental or capital income of greater than €9,408
- You are employed by more than one employer, i.e. you are classified as a tax class VI employee, and you have placed tax allowances on your income tax card
There is no need to file your taxes if you are pursuing your first degree and are not working. However, if you are pursuing a second degree and are not working, you should probably file your taxes because you may be entitled to a loss carryforward.
If you are pursuing your first or secondary degree while working and paying taxes during the year, you will most likely profit from completing a tax refund. Most students with taxable employment have their taxes deducted automatically from their paychecks each month.
Voluntary Tax Return in Germany (Steuererklärung)
Students who earn €450 or less a month do not have to pay any taxes because €450 is a tax-free income in Germany. Therefore, you are not required to file for a tax return in Germany as a student who makes €450. However, some students may file a voluntary tax return in Germany without having to pay any income tax. The reason is simply that they stand to get some money back in the process.
What Can Be Claimed in a Student Tax Return in Germany?
As a student, you must pay for a variety of expenses that might be deducted from your taxable income. Understanding what qualifies as a deductible cost can help you get more money back while in school.
Here are some of the most typical student deductions:
- tuition fees
- course and exam fees
- student loans
- Cost of study trips
- Learning software and equipment
- writing materials.
It’s almost impossible to get a full refund for these items because the tax office normally only offers you a percentage of what you paid. As a result, declaring these items on a student tax return in Germany may be a wise move. At the very least, you’ll get something in the end.
Tuition fees cannot be refunded, however, filing tuition fees on a tax return in Germany can give you a benefit in the future. This benefit is a reduction in income tax on the first payment received by you after completing your education and beginning full-time work.
How to File A Student Tax Return in Germany
To file for a student tax return in Germany, you need the following documents:
- Tax Identification Number (Steuernummer)
- Resident permit number (Identifikationsnummer)
- Salary tax information (Lohnsteuerbescheinigung) – only required for online third party software
- Bank account information
- Study expense receipts or invoices
There are two ways to file a tax return in Germany: Online and manually.
Filing Online for Tax Return in Germany
There are several online tax filing sites students can use to file a tax return in Germany. The following are the most well-known private websites for filing a student tax return: ELSTER, Wundertax, Taxfix, and Ssteuergo.
Below are the steps to file for tax return in Germany using the ELSTER website:
- Create an account on the ELSTER official website.
- Check your identification.
- Fill up and submit the online tax declaration form with your personal details.
After a few weeks, your money will be returned to you in a bank account.
If you wish to file your tax return using any private website, go to their official website and follow their instructions. These websites also provide English-language tax declaration services.
How to Manually File Your Student Tax Return in Germany
To file a tax return manually with the local tax department office, follow these steps:
- Go to the local tax department for your residential area.
- Get the appropriate tax declaration form from reception. Always receive the correct form because each year has a different form.
- Fill in your personal information on this form and submit it to the reception.
The tax filing form is separated into sections, and understanding it without good knowledge of the German language is challenging. The most challenging part is deciding where to put the study expenses. You must write various information on various points.
If you understand, properly fill out the form with all of your information. If you don’t understand the entire form, just fill in your personal information, including your tax ID and bank account details. Sign and return the paperwork to reception. The Finance department will then determine an average amount of study costs and apply it to your income tax amount automatically. Most students file their tax returns in this manner and receive tax amounts plus an average amount of study expenditures.
When is The Best Time to File A Student Tax Return in Germany?
Generally, the deadline is July 31st of the following year. If you are short on time, you can request an extension. Using a tax consultant AKA Steuerberater gives you even more time, as they have until February of the next year to complete it (eg: a submission in Jul 2022 for the year 2020). Be advised that there is a €25 late payment penalty every month. In Germany, they normally offer you an extra two or three months to complete your tax return. If you work directly with a tax consultant (Steuerbera) they can even do it until the next year!
When Do You Get a Response After Filing Tax Return in Germany?
The tax office typically takes 8-12 weeks to process your papers and get your tax refund in Germany on your behalf. It is usually faster to send everything out online.
If you believe the tax office made a mistake in processing your case, you have one month after obtaining the tax report to file a protest and open a case to clarify your circumstances.
Can You File for Tax Return After Leaving Germany?
Absolutely! You can file a tax return in Germany for the year you left the country. If you provide the tax office with all of the relevant information and a specific request, they will transfer the funds to your international account. However, you will bear the costs of the transfer.
I hope this article has answered the questions you had about filing a tax refund for students in Germany. If you’re still wondering if it is a good idea to file a tax return as a student, the answer is simply yes! Go ahead and file your tax return in Germany and see what you stand to benefit.