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 p.a. 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 "Anlage U".

The deduction as extraordinary burdens is simpler, as you do not need the ex-partner's consent. For this, you can deduct up to 10,908 Euro per year plus health/nursing care insurance contributions (the contributions made for the maintenance recipient's security) in 2023. 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.

(2023): Are maintenance payments classed as special expenses or exceptional costs?

How much of the maintenance payments to ex-spouses can I deduct as special expenses?

Claiming maintenance payments to an ex-spouse as special expenses is known as income splitting. This allows the payer to claim their expenses for tax relief, while the recipient of the payment must declare it as other income.

To deduct maintenance payments as special expenses, the payer must apply for the deduction, and the recipient must agree and confirm that they will declare the payments minus any income-related expenses. The payer can deduct contributions of up to 13,805 Euro as special expenses.

If you support two ex-spouses, the maximum amount applies twice. Additionally, contributions paid by the maintenance payer for the health and nursing care insurance of the entitled person can be deducted, in addition to the maximum amount of 13,805 Euro. The amount of 13,805 Euro is an annual amount and is available to you even if you lived separately for only part of the year and opted for individual assessment.

Mr X pays his ex-wife maintenance of 600 Euro per month. His taxable income (zvE) amounts to 40,000 Euro per year.

Income tax without income splitting according to basic rate including solidarity surcharge:

• Income: 40,000 Euro
• Income tax 2023: 7,828 Euro

Income tax with income splitting according to basic rate including solidarity surcharge:

• Income: 40,000 Euro
• minus maintenance: 7,200 Euro
• zvE: 32,800 Euro
• Income tax 2023: 5,573 Euro

Tax saving: 7,828 Euro - 5,573 Euro = 2,255 Euro

(2023): How much of the maintenance payments to ex-spouses can I deduct as special expenses?

What can I deduct as maintenance payments to ex-spouses?

You can deduct all maintenance payments to your ex-spouse, regardless of whether they use the funds for this purpose or not. It does not matter whether you make the maintenance payment voluntarily or are obliged to do so.

You can deduct the following expenses as maintenance, provided they are typical maintenance payments:

• Regular cash payments
• Goods
• Insurance contributions
• One-off payments
• Consumption-based costs, e.g. for heating, electricity, water
• Rental value of the house or flat provided, up to the usual local rent
• Payments to offset tax disadvantages incurred by the recipient due to the taxation of maintenance payments
• Payments to third parties for the benefit of the maintenance beneficiary (e.g. rent payments directly to the landlord)

In the case of free provision of a flat, this is considered maintenance in kind, which can be taken into account in real splitting at the local rental rate. The local rental rate must be applied even if the parties have agreed on a lower housing benefit for maintenance purposes (BFH ruling of 29.6.2022, X R 33/20). However, the BFH makes the following restriction: If the joint children continue to live in the provided flat, the housing benefit attributable to them is not taken into account in the maintenance payments deductible under § 10 (1a) No. 1 EStG.

The BFH also points out another special feature: The provision of a flat to the divorced or permanently separated spouse may also be based on a paid legal relationship. In other words, the provision of use is not maintenance, but a "genuine" rental. This does not fall within the scope of § 10 (1a) No. 1 EStG, i.e. real splitting, but is to be assessed as income from renting and leasing, as in the case of renting to third parties.

In the case in dispute, the BFH assessed the separation and divorce settlement as not intended to be a rental in the traditional sense, but rather maintenance in kind. However, this may be different in individual cases, especially if there is explicit mention of "rental of living space" or if the contract text includes the terms "rent" or "payment".

(2023): What can I deduct as maintenance payments to ex-spouses?

What cannot be deducted as maintenance payments to ex-spouses?

Of course, not all payments to your ex-spouse can be claimed as special expenses. This includes gifts you give your ex-partner on special occasions (birthday, Christmas, etc.). Child maintenance is also not deductible.

This should be covered by child benefit or child allowances. Payments and benefits resulting from asset equalisation are also not deductible (e.g. taking over a car). The same applies to legal and court costs incurred to obtain your ex-spouse's consent to income splitting.

(2023): What cannot be deducted as maintenance payments to ex-spouses?

How can I deduct maintenance payments to my ex-spouse?

In order to deduct your maintenance payments to your ex-spouse or permanently separated spouse as special expenses, their consent is required. This is because the recipient of the payments must declare them as "other income" for tax purposes.

Consent must be proven by submitting "Anlage U" to the tax office. It is then valid indefinitely until revoked. However, the person liable for maintenance must submit Anlage U to the tax office each year. The application is then binding for that year. The revocation of the realsplitting must be submitted to the tax office before the beginning of the calendar year for which the realsplitting is no longer to apply.

The consent does not need to be obtained anew each year by the maintenance recipient and submitted to the tax office, as is the case with the application. If the consent is already on file with the tax office and has not been revoked, make the required tick in Section B at the appropriate place.

As a maintenance recipient, you should make your consent to the realsplitting dependent on the obligation of the maintenance payer to compensate for any tax and non-tax disadvantages you incur as a result of the taxation of the maintenance payments.

(2023): How can I deduct maintenance payments to my ex-spouse?

Which maintenance payments should be entered here?

Maintenance payments to a divorced or separated spouse can be deducted as special expenses up to a maximum amount of 13.805 Euro. In return, the recipient must tax the same amount as other income (so-called limited real splitting).

If you, as the maintenance payer, also pay contributions to health and nursing care insurance for your ex-spouse - either directly to your ex-spouse (because they are the policyholder) or directly to the insurance company for them (because you are the policyholder) - these contributions are additional maintenance payments within the framework of real splitting that can be deducted beyond the maximum amount of 13.805 Euro.

The following can be deducted as special expenses or taxed as other income:

• Cash maintenance,
• Benefits in kind, particularly the value of the accommodation provided to the ex-spouse. If you do not charge rent, it is apparently a "free provision". If you provide the accommodation to your ex-spouse based on a maintenance agreement and this reduces your cash maintenance obligation, you can deduct all expenses as special expenses within the framework of real splitting.
• Payments to offset tax and non-tax disadvantages incurred by the recipient due to the taxation of maintenance payments,
• Contributions to the ex-spouse's insurance,
• Rent payments and other ongoing housing costs for the benefit of the ex-spouse,
• Assumption of tax consultancy costs for the ex-spouse.

Not deductible as special expenses are:

• Legal and court costs incurred for obtaining the ex-spouse's consent to real splitting.
• Expenses for the funeral of the ex-spouse and for the purchase of a grave right.

Tip: The Münster Finance Court has recently ruled that legal costs incurred to obtain post-marital maintenance are deductible as income-related expenses if the maintenance recipient taxes the maintenance payments as other income in accordance with § 22 No. 1a EStG (FG Münster of 3.12.2019, 1 K 494/18 E).

(2023): Which maintenance payments should be entered here?