on Deductibles

Are Sick Payments for House-keepers Subject to Progression in Taxation?

2008-11-07T23:02:43+01:00

Are Sick Payments for Housekeepers Subject to Progression in Taxation?

The BFH decided on June 17, 2005 (published on September 7, 2005) on the question VI R 109/00 if the received household benefits from your health insurance company following an accident are subject to taxation.

Can You do Deduct Your Home Study Even Though You Have an Office at Work?

2008-11-07T23:00:42+01:00

Can You do Deduct Your Home Study Even Though You Have an Office at Work?

Are you one of those people who cannot work on non-routine concepts at work? Only the tranquility and seclusion of home provides the inspiration you need. Wouldn't it be nice to deduct that space? The FG Nuremberg has brought some clarification on this matter (re I 317/2002 on 22.6.2004).

Childcare Costs - Federal Tax Ministry Brings Clarity

2009-02-05T15:32:02+01:00

Childcare Costs - Federal Tax Ministry Brings Clarity

Since 2006, parents have been permitted to deduct two thirds, up to € 4,000 p.a. per child of costs for childcare from their personal taxes. The Federal Ministry of Finances has published a new letter clarifying many unresolved issues. These questions concern exactly which costs can be deducted and if they are employment/business related costs, special expenses or household-like services. This nine page letter from the Bundesfinanzministerium (letter of January 19, 2007, Az. IV C 4 - S 2221 - 2/07) is summarized below.

1. Which expenses and which kinds of service can be deducted?

The tax advantage is for childcare costs considering shepherding and overseeing services for children. Expenditures for accommodating the kids in kindergardens, You can collect this bonus also for expenses for employing caretakers, child nurses, educator homework assistance, like private lessons, are also deductible.

Hint:

Do you have a relative with a slim wallet? Consider paying this person to take care of your children. You will be able to take deduct costs from your taxes. However, the authorities will scrutinize this legal constellation very carefully in order to prevent misuse. Therefore, it is highly recommended that you have a written contract. Also make sure that the duties are fulfilled as if this relative were not a family member. N.B. this model doesn't work for unmarried couples.
The services rendered by the relative may not be such as normally done among relatives and without payment. When grandma looks after her grandchild for a whole working day, five days a week, this is surely not family help anymore. To be on the safe side, consider asking the attorney declaring your taxes to define the details into a contract. If you have a Steuerberater, a tax consultant, preparing your tax return; he is not permitted to consult on this matter as the contract between you and your "employee" have nothing to with taxes anymore.

2. Want to reduce your salary and thus deduct these "costs"?

Nice idea but it won't work. While your children will surely be happy that you have more time for them after reducing your time at work, it goes without saying that a reduced working time results in less payment. This "cost" is not eligible.

Commuting Allowance - now Reinstated by BVerfG

2009-01-23T16:14:14+01:00

Commuting Allowance - now Reinstated by BVerfG

Good news for commuters: The Federal Constitutional Court decided against the German government on December 9, 2008 (re 2 BvL 1/07, 2 BvL 2/07, 2 BvL 1/08 und 2 BvL 2/08) on the commuting allowance (Pendlerpauschale). But what does this mean for you? We will tell you!

Costs of Civil Proceedings Deductible as Extraordinary Burden

2011-09-02T17:19:10+02:00

Costs of Civil Proceedings Deductible as Extraordinary Burden

The Federal Fiscal Court changed its ruling case law concerning the deductibility of costs from cases in civil courts to the advantage of us taxpayers. Such is the bottom line of its judgment of May 12, 2011 (re VI R 42/10).

Credit Interest to Obtain Shares from Employing Corporation

2008-11-07T22:55:04+01:00

Credit Interest to Obtain Shares from Employing Corporation

An employee of a joint-stock corporation wanted to deduct interest for a loan in order to purchase shares from her employer as income-related expenses. This was necessary to climb up the ladder of hierarchy one-step further. Upon questioning of the tax office, she argued that she was required by labor contract to obtain shares from her employer that she hoped to be advanced. The Finanzamt considered this expense as related to income from capital and not from gainful employment. The taxpayer wanted to have this expense deducted from her income from capital. After going through all instances, The BFH ruled per judgment of April 5, 2006 (re IX R 111/00 [published on July 12, 2006]), that such expenses are usually related to income from capital.

Deductibility of a Home Office When having a Double Household

2009-02-03T16:20:46+01:00

Deductibility of a Home Office When having a Double Household

When having the family in town A but one’s job in city B, you can generally deduct the room in B as a double household. But can you also deduct a home office in B, your double household? The Federal Tax Court passed a judgment on August 9, 2007 (re: VI R 23/05) and answered this question.

Minnie and Mickey acquire income from employment. Among other details, they wanted to deduct rental costs of DM 26,520 for double housekeeping for a three-room apartment in B, having a space of 92.73 m². Their tax office only accepted DM 17,136 on expenses because a 60 m² apartment suffices for a single person.

The Bundesfinanzhof judged that the tax office incorrectly conglomerated the rules for a double-household and the regulations for a home office. Generally, a home office can be deducted also in a double household setting for the apartment away from home §9 I cl. 3 no. 5 EStG). The general requirements have to be met and/or limits must not be passed. Depending on the individual circumstances, you might be able to deduct the second household but not a home office. In other situations, you might be able to take off the costs of double-householding and a home office. The rules for both deductions are to be tested separately.

Published on the old CMS: 2008/6/19
Read on the old CMS till November 2008: 2,746 reads

Deductibility of Artificial Insemination for Unmarried Women

2008-05-25T22:54:05+02:00

Deductibility of Artificial Insemination for Unmarried Women

Good news for many single women needing the detour through artificial insemination: Upon judgment of the Federal Tax Court (May 10, 2007, re III R 47/05), the fiscal administration will participate on your costs for such treatment.

Deductibility of Extra Costs to Marry Foreign Spouse

2012-11-03T18:21:58+01:00

Deductibility of Extra Costs to Marry Foreign Spouse

Can the additional costs for marrying a foreigner be considered as an extra-ordinary expense in terms of the law? What do you think the FG Berlin-Brandenburg said in its judgment of August 15, 2012 (re 7 K 7030/11)?

Deductibility of Remote Location Offices for an Employee

2008-11-21T00:44:16+01:00

Deductibility of Remote Location Offices for an Employee

In the process of corporate restructuring, an insurance company offered its employees the possibility to work from home. The home-based office was to be installed following the rules of labor protection and following certain operational models. The employer simultaneously reduced its office space and its number of desks. Employees did not receive an expense allowance to prepare their office at home. Employee Max, a mathematician of this insurance company, claimed in his tax return an amount of DM 25,244 as costs for installing his office at home by renovating his den. The tax office denied this deduction because the employer still wanted the employee to work two days a week in the company offices, and three days at home. From February 1999, Max was mainly working from his home office. This situation did not make tax payer Max eligible for deducting costs for his home office. So, Max submitted a letter from his employer that he worked two days in the company and three days at home. Then the tax office partially gave in and accepted part of the costs in 1999.