Increase in the maximum maintenance amount for 2022
Maintenance payments to dependants can be deducted as special extraordinary expenses up to the maximum maintenance amount, without any reasonable burden being applied (§ 33a para. 1 EStG). This deductible maximum amount is based on the tax-free allowance.
According to the case law of the Federal Constitutional Court (decision of 13.12.1996, 1 BvR 1474/88), unavoidable maintenance obligations must be exempt from taxation at least to the extent of the subsistence level. Therefore, the increase in the tax-free allowance must be applied in parallel to the deduction of maintenance expenses in § 33a para. 1 EStG. In 2021, the maximum maintenance amount is 9.744 Euro.
For the year 2022, the maximum maintenance amount was mistakenly not adjusted to 10.347 Euro in line with the tax-free allowance. This is now being rectified.
Retroactively from 1.1.2022, the maximum maintenance amount will be increased from 9.744 Euro to 10.347 Euro. From 2023, any further increases will be dynamically adjusted in line with the tax-free allowance (§ 33a para. 1 EStG, amended by the "Inflation Adjustment Act").
The maximum maintenance amount is often not granted in full but is reduced. This reduction is by one twelfth for each full calendar month in which the conditions are not met, by the recipient's own income and earnings exceeding the allowance of 624 Euro, and by one, two, or three quarters if the recipient lives in a country with a lower standard of living.
If the maintenance payer also covers contributions to basic health and long-term care insurance for the recipient, these contributions have been deductible beyond the maximum amount since 2010. It does not matter whether you pay the contributions to the dependant so that they can meet their contribution obligation, or whether you pay the contributions directly to the insurance company via the shortened payment method.
(2022): Increase in the maximum maintenance amount for 2022
Maintenance payments: Cash payments for relatives abroad deductible
Many foreign nationals living and working in Germany support their relatives abroad. In such cases, the tax office imposes stricter requirements for proof of maintenance payments and the recipient's need. Often, cash amounts for relatives are also given to intermediaries travelling to the home country.
An intermediary can also be a neutral commercial transport company. The tax office generally does not recognise such a cash transfer for tax reduction purposes (BMF letter dated 7.6.2010, BStBl. 2010 II p. 588, para. 17).
An exception is only made if, due to the special situation in the country of residence (e.g. crisis area), no other payment method is possible. In this case, you must document the identity of the intermediary (name and address), the exact travel itinerary, and provide complete proof of the origin of the money in Germany and its handover to the maintenance recipient. The journey itself must be proven by tickets, fuel receipts, border crossing stamps, flight tickets, visas, etc.
Currently, the Baden-Württemberg Finance Court has slightly relaxed the strict view of the tax authorities and decided that maintenance payments to close relatives in Italy are also tax-deductible if the cash is handed over via couriers and if the delivery can be proven by questioning the courier as a witness (FG Baden-Württemberg dated 21.7.2015, 8 K 3609/13, published on 2.3.2016).
The case: An Italian guest worker wants to deduct maintenance payments of 6.000 Euro as extraordinary expenses, which he made to his parents living in Italy. 200 Euro had been transferred via money order to an Italian bank, the other amounts of 1.800 Euro and 4.000 Euro had been withdrawn from his bank account and given to a friend who worked as a food importer and therefore made regular trips to southern Italy.
The father had been unemployed for a long time, and the mother had only a small income from part-time work as a cleaner. The parents did not have their own bank account. The tax office did not recognise the maintenance expenses. The finance judges saw this differently after questioning the courier as a witness. The witness's detailed account of the trips to Italy and the handover of the cash amounts was considered credible and consistent by the finance court.
Currently, the Federal Ministry of Finance has issued two comprehensive decrees on the deduction of maintenance payments, including the question of proof of maintenance payments. There are several points to consider, especially for payments to relatives living abroad (BMF letter dated 6.4.2022, IV C 8-S 2285/19/10002 :001 and 10003 :001). Among other things, the following applies:
Transfers to relatives abroad must generally be proven by postal or bank documents (booking confirmations or account statements) showing the person being supported as the recipient. If several people living in a shared household are supported, it is sufficient if the transfer documents are in the name of one of these people. For transfers to an account abroad not in the name of the person being supported, a bank certificate is required, confirming the account authorisation and the time, amount, and recipient of the payment.
The taxpayer can also choose another payment method if the maintenance payment made in this way is sufficiently proven. For cash maintenance payments and all other payment methods, increased proof requirements must be met. Withdrawal receipts and detailed recipient confirmations are required. There must be a sufficient factual connection (period of no more than two weeks) between the withdrawal and the respective cash handover. The journey must always be proven by tickets, fuel receipts, border crossing stamps, flight tickets, visas, etc.
There are easements for family visits by the taxpayer to his supported family living abroad. A family visit only occurs if the taxpayer visits his spouse living abroad, who continues to maintain the family household there. If the spouse also lives in Germany and the taxpayer only visits his children or parents living abroad, it is not considered a family visit, and increased proof requirements apply again.
For employees, it can generally be assumed that the taxpayer takes a net monthly wage for the maintenance of the spouse, children, and other relatives living in the spouse's household on each family visit. This proof easement applies only to up to four family visits per calendar year that are proven. However, within the framework of the proof easement, a maximum amount can be claimed, which results when the fourfold net monthly wage is reduced by payments made and proven or credibly demonstrated in other ways. If the taxpayer claims higher expenses than (flat rate) the fourfold net monthly wage, all payments must be proven according to the general principles.
Cash transfer through an intermediary (this also includes a neutral commercial transport company) can generally not be recognised. This does not apply if, due to the special situation in the country of residence (e.g. crisis area), no other payment method is possible. In this case, in addition to the identity of the intermediary (name and address), the exact travel itinerary must be presented, and complete proof of the origin of the money in Germany and every single step until the handover to the person being supported must be provided. The journey by a private intermediary must always be proven by tickets, fuel receipts, border crossing stamps, flight tickets, visas, etc.
A recipient confirmation must be issued for the handover of each individual amount of money. It must include the name and address of the taxpayer and the person being supported, the date of issue and the recipient's signature, as well as the place and time of the cash handover. To fulfil its intended proof function, it must be issued in exchange for the cash amount. Subsequently issued or combined recipient confirmations do not meet the proof requirements.
Maintenance payments are deductible as extraordinary expenses up to the maximum amount of 10.437 Euro (2022) without crediting a reasonable burden. However, own income and benefits above 624 Euro per year are credited.
The maintenance maximum amount and credit allowance are reduced according to the country group classification by one, two, or three quarters if the maintenance recipient lives in a country with a lower standard of living.
Attention: The Federal Fiscal Court has recently ruled as follows: Maintenance payments can only be considered for tax purposes until the end of the year, and the maximum amount is prorated monthly for payments made during the year (BFH ruling dated 25.4.2018, VI R 35/16).
The case: The son-in-law makes a maintenance payment of 3.000 Euro in December 2010 to his father-in-law living in Brazil, intended for a whole year. Monthly payments were not feasible due to high fees for international transfers. However, the tax office only recognises this payment with one-twelfth of the maximum amount (for December), as maintenance payments are only deductible if they serve the ongoing living needs of the supported person in the calendar year of the payment. The Nuremberg Finance Court had recognised the entire payment in 2010. The BFH has now contradicted this.
(2022): Maintenance payments: Cash payments for relatives abroad deductible
Avoid retroactive payments
Retroactive payments are not possible, i.e. an amount transferred in August can only be intended for maintenance in August or subsequent months. If the support payments do not cover the entire calendar year but only individual months, the maximum amount for support payments will be reduced accordingly.
(2022): Avoid retroactive payments
Are maintenance payments classed as special expenses or exceptional costs?
Maintenance payments to your divorced or permanently separated spouse can be deducted either as special expenses or as extraordinary burdens. This decision applies to your entire maintenance payment, meaning you cannot enter part as special expenses and part as extraordinary burdens in the tax return. Which option is better depends on the individual case.
Especially for higher maintenance payments, it is advisable to deduct them as special expenses, as the maximum tax saving can be higher. The person obliged to pay maintenance can deduct up to 13.805 Euro per year plus the contributions to health and nursing care insurance for the maintenance recipient. However, the recipient of the payments must give their consent and fully tax the income. The application for the tax deduction and the recipient's consent are made with the "Form U".
The deduction as extraordinary burdens is simpler, as you do not need the consent of your ex-partner. For this, you can deduct up to 10.347 Euro per year plus health/nursing care insurance contributions (the contributions made for the maintenance recipient's security) in 2022. In the year of separation, joint assessment is usually more tax-efficient. If you opt for joint assessment in the year of separation, maintenance payments are not considered and cannot be deducted in that year.
(2022): Are maintenance payments classed as special expenses or exceptional costs?
How can I claim maintenance payments to a person in need?
If you pay maintenance to a relative, you can claim this as extraordinary expenses for tax purposes, without any deductible being applied. However, the tax office will only consider the support if it is in a reasonable proportion to your net income. After deducting the maintenance payments from your net income, it must still be sufficient to cover your living expenses and those of your partner and children. This is the so-called sacrifice limit, the limit up to which the tax office recognises your maintenance payments. The sacrifice limit does not apply to maintenance payments to your ex-spouse or permanently separated spouse. The same applies if you pay maintenance to your destitute partner with whom you live in a shared household.
How is the sacrifice limit calculated?
The basis for calculating the sacrifice limit is your net income, i.e. all income (taxable and tax-free). This includes, for example, your wages, child benefit, and unemployment benefit. Deductions include income tax, church tax, social security contributions, the solidarity surcharge, and the employee allowance or work-related expenses. The sacrifice limit is then one per cent for every full 500 Euro of net income. For spouses, the joint income is used for the calculation. However, a maximum of 50 per cent of your net income is recognised as the sacrifice limit. The percentage is reduced by five percentage points for each of your children for whom you receive child benefit and by five percentage points for your spouse, but by no more than 25 per cent in total.
Example: You are married, have two children, and support your parents with 9.000 Euro per year. Your annual net income is 24.000 Euro.
Net income: 24.000 Euro
- 1 per cent for every full 500 Euro: 48 per cent
- Less spouse: -5 per cent
- Less 2 children: -10 per cent
- Remaining: 33 per cent
Your sacrifice limit is therefore 33 per cent of 24.000 Euro, i.e. 7.920 Euro. Of your maintenance payments of 9.000 Euro, only 7.920 Euro are recognised. The maximum maintenance amount of 10.437 Euro (2022) also applies here, plus any contributions to health and nursing care insurance if you have paid such contributions for the maintenance recipient.
(2022): How can I claim maintenance payments to a person in need?
Can I also specify one-off payments?
Occasional or one-off maintenance payments are tax deductible as part of maintenance payments to dependants.
For a one-off maintenance payment, the tax office always assumes that it is intended to cover maintenance needs until the end of the year. The maximum maintenance amount is then reduced by one twelfth for each preceding month. If you make a payment in September, the maximum maintenance amount is reduced by 8/12. However, if you make the one-off payment in January, the maximum maintenance amount is not reduced. A maintenance payment in January thus secures the full maximum maintenance amount for the whole year, provided the supported person is in need for the entire year. The maintenance payment should always cover living expenses until the next payment. It does not matter whether these payments reach the pro rata maximum amount.
Maintenance payments to a spouse can always be deducted up to the maximum maintenance amount, regardless of when the payment is made.
(2022): Can I also specify one-off payments?
