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Created on Tuesday, 10 May 2011 08:28

Last Updated on Friday, 28 December 2012 18:52

Not Showing Need for Support for Parents Living Abroad Not Always Accepted

When your parents live abroad and you support them, then would it not be nice to reduce your tax bill? Right you will need a certificate from abroad to prove this. Even with such certificate, a deduction is not always guaranteed. This was correct decision of the BFH of November 11, 2010 (re VI R 16/09).

Up to a certain limit, children can make the tax office participate on supporting their parents abroad. One of the main requirements is the proof of payment and an official certificate from abroad on support payments. However, when your parents‘ need is not evident or plausible, the tax office can deny the deduction. In this case, when children’s payments do not suffice for living then the parents will have to show supplementing sources of income. The Federal Tax Court held that in such case a personal deduction will be eliminated.

Hint:

Especially when the situation is somewhat unclear, it will make sense to submit supplementing documents and / or a short letter explaining your parents’ financial situation. That will not only prevent questions but also doubts.