Do I only have a child benefit entitlement for my biological children?

No. Child benefit is available for the applicant's biological children and their adopted children. You can apply for child benefit for foster children if they live with your family and there is a permanent relationship of supervision, care, and upbringing. Furthermore, the custody and care relationship with the biological parents must no longer exist. Occasional visits from the biological parents are harmless. If you have taken siblings into your household, you are entitled to child benefit if they can be equated with foster children.

Child benefit is also paid if a stepchild or grandchild lives in your household. In these cases, however, there is no child relationship in the sense of tax law. Therefore, step- or grandparents are not automatically entitled to a child allowance, but only if the biological parents transfer the child allowances in Form K to the new guardians. If orphans or children who do not know where their parents are have no other person entitled to receive it, the children themselves can receive the child benefit. They then receive the amount that would be due to them for their own first child.

If you, as parents, have given a child up for adoption, the child relationship between you and the child ends at that time. Your entitlement to child benefit and tax allowances also ends at the same time.

For a child you have taken into your household with the intention of adopting, you can receive child benefit even before the adoption, as there is usually a foster relationship.

(2022): Do I only have a child benefit entitlement for my biological children?

When can I deduct childcare costs?

You can only claim childcare costs if there is a parental relationship. This applies to biological children, as well as adopted and foster children. You cannot claim childcare costs for stepchildren and grandchildren.

Furthermore, the child must belong to your household. This is also the case if, for example, they are in a boarding school and regularly come home. It is important that there is a family home used by the child and that you are responsible for the child's welfare.

In general, you can only claim childcare costs for children under 14 years of age. This age limit is waived only for disabled children.

Note: If the employer provides tax-free benefits for pre-school childcare, the deduction for special expenses must be reduced by the amount of these benefits, as the deduction for special expenses requires expenses that actually and definitively burden the taxpayer financially (BFH ruling of 1.9.2021, III R 54/20).

(2022): When can I deduct childcare costs?

How old can my child be for me to deduct childcare costs?

Until your child's 14th birthday, you can claim childcare costs; after that, you cannot.

For children with disabilities, there is no age limit if the disability occurred before their 25th birthday. A disability card is sufficient as proof.

(2022): How old can my child be for me to deduct childcare costs?

How do I provide evidence of my childcare costs?

Childcare costs can be proven with invoices and the corresponding transfer documents. A receipt from the recipient is not sufficient! Even small amounts, such as to the babysitter, must not be paid in cash if you wish to claim the costs later.

You do not need to include the documents with your tax return, but you must present them if requested by the tax office.

(2022): How do I provide evidence of my childcare costs?

For whom should I enter the childcare costs?

The maximum amount of 4.000 Euro applies per child, not per parent.

If you are jointly assessed as a married couple, it does not matter who paid for the care. In the case of individual assessment, the partner who incurred the costs can deduct them. If this applies to both, each may deduct their share up to 2.000 Euro. However, you can also agree on a different allocation.

This can also make sense, as the following example shows:

Childcare costs amount to 5.500 Euro per year. The mother incurs costs of 4.000 Euro, the father pays 1.500 Euro per year. If both partners do not intervene in the allocation, the following picture emerges:

Mother: 2/3 of 4.000 Euro = 2.667 Euro

Father: 2/3 of 1.500 Euro = 1.000 Euro

Since each parent can deduct a maximum of 2.000 Euro, a total of 3.000 Euro can be deducted jointly by both parents.

If the father and mother agree that the mother may claim a maximum amount of 3.000 Euro and the father 1.000 Euro, they can claim 1.000 Euro more in childcare costs.

It becomes more complicated if you are not married. If you do not live together, the person with whom the child lives may deduct the childcare costs. Single parents can claim up to 6.000 Euro, just like married couples. However, if you live with your partner without being married, you can split the childcare costs. This is particularly worthwhile if one of you earns little and therefore does not benefit from the tax advantage.

For unmarried parents, the tax office only recognises the costs of the person who signed the contract with the childcare facility. If both of you want to claim childcare costs, you should both sign the contract.

Note: If the employer provides tax-free benefits for pre-school childcare, the deduction for special expenses must be reduced by the amount of these benefits, as the deduction for special expenses requires expenses that actually and definitively burden the taxpayer financially (BFH ruling of 1.9.2021, III R 54/20).

(2022): For whom should I enter the childcare costs?

What relationship must exist with the child for them to be considered for tax purposes?

For tax purposes, a child relationship must exist. This applies to children who are directly related to you or your foster children.

A direct relationship exists with legitimate and illegitimate biological children as well as adopted children. When a minor child is adopted, the child loses their child relationship with their biological parents.

Foster children are considered if they live in your household and have been integrated into your family. Additionally, there must be no custody and care relationship between the foster child and their biological parents.

Grandchildren and stepchildren are not considered for the child allowance, education allowance, and allowance for care, education, or training (BEA allowance). However, this can be circumvented by transferring the allowance. For this, the biological parents must give their consent.

(2022): What relationship must exist with the child for them to be considered for tax purposes?

Are adoption costs tax-deductible?

Under previous legislation, adoption costs were not deductible as extraordinary expenses under Section 33 of the Income Tax Act. This is because an adoption is "not unavoidable for legal, factual or moral reasons, but is based on free will not determined by external factors" (BFH ruling of 13.3.1987, III R 301/84). And this remains the case. However, there was once hope for a change.

• In 2012, the VI Senate of the BFH, which has been responsible for extraordinary expenses since 2009, wanted to change the case law and recognise adoption costs, but the previously responsible III Senate did not agree.
• In 2013, the VI Senate referred the question to the Grand Senate as to whether, in the event of an intended change in case law, there is really an obligation to obtain approval from the Senate whose previous decision is to be deviated from (BFH decision of 18.4.2013, VI R 60/11).
• In 2014, the Grand Senate of the Federal Fiscal Court answered the inquiry to the effect that a change in case law requires the approval of the previous Senate if it is still dealing with this issue. If approval is refused, the Grand Senate must provide clarification (BFH decision of 9.10.2014, GrS 1/13).
• In 2015, the VI Senate of the BFH resignedly refrained from calling on the Grand Senate and frustratedly confirmed the previous case law of the III Senate: adoption costs are not recognised as extraordinary expenses under Section 33 of the Income Tax Act. This also applies to "expenses incurred by a couple due to the adoption of a child in the case of organically caused sterility of one partner" (BFH ruling of 10.3.2015, VI R 60/11).
• Although a constitutional complaint was filed against this ruling with the Federal Constitutional Court, the court did not accept the complaint for decision due to lack of prospects of success. Thus, it remains the case: Adoption costs are unfortunately not tax-deductible. This decision deeply disappointed the hopes of many parents. Objections to tax assessments that had previously been suspended due to the pending proceedings are now being rejected (BVerfG decision of 13.6.2016, 2 BvR 1208/15).

(2022): Are adoption costs tax-deductible?