How can I have the child allowance entered in the ELStAM?

The child allowance is granted retrospectively, but you can have it entered in your electronic payslip deduction details (ELStAM). Although you will not pay less income tax in advance, the mid-year burden may still decrease. This is because the child allowance is taken into account when calculating church tax and the solidarity surcharge, which are then reduced. You must have the allowance entered at your tax office. You should bring the following documents:

• Identity card or passport
• Payslip
• Birth certificate
• If applicable, paternity recognition certificate if you are not married
• If applicable, proof of life for children registered at a different address

The proof of life must not be older than three years. If you cannot provide the proof of life, e.g. because the child lives abroad, you must contact your tax office. The tax officer will enter the child allowance there.

Parents of adult children must also contact the tax office to have allowances entered.

(2023): How can I have the child allowance entered in the ELStAM?

Child tax allowances pay off

As children, like their parents, are entitled to annual allowances for income tax, the tax burden can be legally reduced. Even though the saver's allowance is not exhausted as quickly as it used to be due to persistently low interest rates, parents should consider to what extent it makes sense to spread capital gains.

For example, with an interest rate of 2.5 percent, you need to invest over 40.000 Euro to exceed the saver's allowance of 1.000 Euro. Children can also benefit from the following increased tax exemptions if they have income solely from capital assets:

• Basic allowance 10.908 Euro
• Saver's allowance 1.000 Euro
• Special expenses allowance 36 Euro
• Total tax-free (per child) 11.944 Euro

This means: Interest, dividends and other income from capital assets, including profits from the sale of securities acquired after 2008, are tax-free up to 11.184 Euro this year.

The gift of capital assets to children is exempt from gift tax up to an amount of 400.000 Euro per child. However, the tax authorities will only recognise a transfer of assets within the family if it is not carried out solely for tax avoidance purposes. The gift must therefore comply with civil law regulations and be credible. The minimum requirement for this is an account or deposit in the child's name.

In addition, parents may no longer be able to access the gifted capital and its interest for their own purposes. It should also be noted that children with high incomes must pay their own contributions to statutory health insurance. For other funding measures such as BAföG, certain income and asset limits must be observed. For larger, more complex asset transfers, it is therefore advisable to seek legal and tax advice beforehand.

(2023): Child tax allowances pay off

Do I receive the same amount of child benefit for each child?

In the past, if you had several children, you did not receive the same amount of child benefit for each child. However, since 2023, the rate has been standardised. The entitlement to child benefit is:

Child benefit is paid for children up to the age of 18 in any case. The child's income is irrelevant.

The entitlement continues for children over 18 until their 25th birthday, as long as they are in education or doing voluntary service. Child benefit is paid by the family benefits offices of the Federal Employment Agency. Public sector employees or recipients of pension payments receive the money from their employers.

(2023): Do I receive the same amount of child benefit for each child?

Families received a 100 Euro child bonus per child in 2022

With the "Tax Relief Act 2022", a one-off child bonus of 100 Euro was paid in July 2022 in addition to child benefit for each child.

• There is an entitlement to the child bonus 2022 for each child for whom there is an entitlement to child benefit in July 2022. Children for whom there is no entitlement to child benefit in July 2022 are also considered if there is an entitlement to child benefit for them in another month of 2022.
• The child bonus is offset against the child allowance. This means that families with high incomes, for whom the tax advantage from the child allowance is higher than the child benefit, do not benefit. The bonus is taken into account together with the child benefit in the comparative calculation to be carried out as part of the income tax assessment in accordance with § 31 sentence 4 EStG. In this so-called favourable assessment, it is checked whether child benefit and child bonus or the relief from the child and care allowance have a more favourable effect. The higher the income, the more favourable the allowances for children are. In these cases, the child bonus is effectively reduced by the gradually increasing taxation.
• The child bonus is granted independently of subsistence-level social benefits. The one-off payment is not considered as income for social benefits whose payment depends on other income ("Act on the Non-Credit and Non-Consideration of the Child Bonus" of 2.3.2009, which still applies).
• Otherwise, all regulations that apply to the - monthly paid - child benefit also apply to the one-off payment. For example, the one-off payment can only be paid to one beneficiary per child. A written notice of amendment may be waived for the determination of the one-off payment.

(2023): Families received a 100 Euro child bonus per child in 2022

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

No. Child benefit entitlement exists for the applicant's biological children and also for their adopted children. You can apply for child benefit for foster children if they live in 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 to the new guardians in Form K. If no other person is entitled to receive child benefit for orphans or children who do not know where their parents are, 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 point. At the same time, your entitlement to child benefit and tax allowances also ends.

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.

(2023): Do I only have a child benefit entitlement for my biological children?

How can I reduce my church tax by claiming child benefit?

The amount of church tax depends on your place of residence. If you live in Bavaria or Baden-Württemberg, church members pay 8 percent; in other states, it is 9 percent. The basis is the assessed income tax. You therefore pay 8 or 9 percent of your income tax as church tax.

Please note: The church tax is also taken into account at the same percentage rate within the withholding tax. If child allowances are entered in employees' electronic payslip data (ELStAM), the monthly church tax is calculated based on a so-called fictitious wage tax.

You live in Berlin and have a gross monthly salary of 3.000 Euro in tax class IV. Your monthly church tax is 31.44 Euro. Church tax with two child allowances: You live in Berlin and have a gross monthly salary of 3.000 Euro in tax class IV. Your monthly church tax is now 13.34 Euro.

If a "number of child allowances" is entered in the ELStAM, the monthly wage tax is not reduced, only the monthly church tax and the monthly solidarity surcharge. This also applies if you receive child benefit during the year.

In the income tax assessment, child allowances only reduce the taxable income if the child benefit is not more favourable than the tax advantage. However, for the calculation of church tax (and solidarity surcharge), the child allowances are deducted "fictitiously".

Advantage: Even if children are only to be considered for part of the year, the full child allowance and BEA allowance are always deducted for the calculation of church tax and the solidarity surcharge. This applies in the case of the end of vocational training or the birth of a child.

(2023): How can I reduce my church tax by claiming child benefit?

How are child benefit and the child allowance related?

For the allowances, the same conditions apply as for the entitlement to child benefit: there must be a parental relationship, the child must belong to your household and be under 18 or meet the conditions for the extended entitlement to child benefit.

The annual child allowance for parents who are jointly assessed for tax purposes is 6.024 Euro in the year 2023, and the BEA allowance (for care, education and training) is 2.928 Euro. Thus, parents are entitled to a total allowance of 8.952 Euro per child for the tax year 2023. For separately assessed or single parents, each parent is entitled to half of the allowance.

Favourability test

These allowances are only granted as part of the tax assessment if the tax saving from the allowances is higher than the child benefit, whereby the entitlement to child benefit and not the actual child benefit received is decisive. However, you do not have to calculate this yourself. The tax office does this, and in tax language, this process is called the favourability test.

Note: In practice, there are numerous cases where child-related benefits are not granted because there is an "entitlement to child benefit" to be credited, but this has not actually been paid. And above all: Since the retroactive payment of child benefit has also been legally limited to six months, it is often no longer possible to realise the child benefit retrospectively. In other words, parents who forgot to apply for child benefit in time, even though they were entitled to it, are more or less left empty-handed under the current legal situation, as the "entitlement to child benefit" is credited.

As a result, the children's subsistence level is taxed. However, there is currently light at the end of the tunnel: Very hidden in the "Act against Illegal Employment and Benefit Fraud" is a legal change affecting child-related benefits in income tax. Due to an amendment to § 31 EStG, it is now no longer the child benefit to which you are entitled that counts, but the child benefit paid out if the child benefit was applied for too late and therefore not paid out. Those affected can then at least benefit from the allowances in the tax assessment.

(2023): How are child benefit and the child allowance related?

How far back can I claim child benefit?

To receive child benefit, an application is mandatory. Child benefit must always be applied for in writing at the relevant family benefits office.

Note: Since 1 January 2018, a special limitation rule with a payment restriction applies to child benefit. The payment period has been significantly shortened: Child benefit is now paid retroactively for only the last six months before the month in which the application for child benefit was received, instead of the previous four years.

For the calculation of allowances, it is irrelevant whether you have actually received child benefit or not. When the tax office compares the amount of child benefit and child allowance as part of the favourable assessment, it does not record the child benefit you actually received, but only your entitlement (see the note on the new regulation below).

During the income tax assessment, the tax office checks whether the tax saving from the child allowance and the BEA allowance is higher than the child benefit. If this is the case, the allowances are taken into account. The child benefit is then added to the calculated income tax.

If the allowances are lower than the child benefit, the child benefit remains. Child benefit is therefore a kind of advance payment on the possible tax advantage. In the favourable assessment, the entitlement to child benefit is taken as the basis, even if no child benefit was actually paid out. This way, the tax assessment does not need to be changed if the parents submit a late application for child benefit.

Currently, as parents, you must always first apply for child benefit, even if you speculate that the allowances will be more favourable for you. In any case, the child benefit is added to the income tax.

Attention: In practice, there are numerous cases where child-related benefits are not granted because there is an "entitlement to child benefit" to be credited, but this has not actually been paid. And above all: Since the retroactive payment of child benefit has also been legally limited to six months, child benefit can often no longer be realised retrospectively. In other words, parents who forgot to apply for child benefit in time, even though they were entitled to it, are more or less left empty-handed under the current legal situation, as the "entitlement to child benefit" is credited. This results in the taxation of the children's subsistence level. However, there is currently light at the end of the tunnel: Very discreetly, the "Act to Combat Illegal Employment and Benefit Fraud" includes a legal change affecting child-related benefits in income tax. Due to an amendment to Section 31 of the Income Tax Act, it now depends on the child benefit paid out, not the child benefit due, if the child benefit was applied for too late and therefore not paid out. Those affected can then at least benefit from the allowances in the tax assessment.

Tax tip for old cases: Until mid-2019, Section 66 (3) of the Income Tax Act stated: "Child benefit is paid retroactively only for the last six months before the beginning of the month in which the application for child benefit was received." There were plenty of cases where child benefit was, for example, retroactively set for the whole of 2017 in January 2018, but only paid out for six months. In any case, the tax authorities and family benefits offices interpreted the regulation in this way.

But that's not how it works! The Federal Fiscal Court has reprimanded the tax authorities and especially the family benefits offices: If child benefit is set, it must also be paid out. The family benefits offices should have set the child benefit for only six months. (BFH ruling of 19 February 2020, III R 66/18).

• The case: The claimant is the father of a daughter born in February 1997. In an application already submitted in 2015, the claimant stated that his daughter intended to start training as an educator in September 2015. The family benefits office initially approved child benefit but revoked it in July 2015 due to the lack of proof of training. With an application received by the family benefits office in April 2018, the claimant again requested child benefit, this time for the period from August 2015. In a decision dated April 2018, the family benefits office approved ongoing child benefit from August 2015. However, it limited the back payment of child benefit to the period from October 2017 to April 2018 (= six months). The tax court upheld the claim and recognised a back payment entitlement for the months August 2015 to September 2017.
• The BFH agreed with the lower court. Since the family benefits office had retroactively set the child benefit beyond the six-month period in the dispute, the BFH also considered it obliged to pay the child benefit to the claimant to this extent.

(2023): How far back can I claim child benefit?

Which benefits comparable to child benefit must I declare?

Generally, all parents are entitled to child benefit, but there are exceptions if you as parents already receive other financial benefits. You must enter these in this form.

If you are entitled to a child allowance from statutory accident insurance or statutory pension insurance, you are no longer entitled to child benefit. If the child receives payments abroad or from an intergovernmental or supranational institution that are comparable to child benefit, you also cannot claim child benefit. However, the child can be counted as a 'counting child' to increase the child benefit entitlement for other children.

If the child supplement or child allowance for the pension is lower than the child benefit, the difference is paid as partial child benefit. This also applies to benefits you receive from another member state of the European Union, the European Economic Area or Switzerland.

Important: You must also declare child benefit entitlements even if you did not receive any child benefit in the relevant year. For example, if your child was born in December of a year, but you did not receive the first child benefit until the following year. Even if you are separated and do not receive child benefit because it was taken into account in the calculation of your maintenance obligation, you must declare half of the child benefit as your entitlement.

(2023): Which benefits comparable to child benefit must I declare?

Do I still need to declare child benefit if my child lives with my ex-partner?

If child benefit is claimed for a child, the parent who looks after the child receives the child benefit. However, if you are separated from your partner and are obliged to pay maintenance for the child, half of the child benefit is added to the maintenance calculation. This way, you indirectly benefit from half of the child benefit.

You must therefore declare half of the child benefit to which you are entitled in your tax return. Of the 250 Euro monthly child benefit to which you would be entitled in the year 2023, you enter 125 Euro per month. If you were separated for the whole year and the parent looking after the child received the child benefit for the entire period, you enter 1,500 Euro (12 times 125 Euro) for 2023 for the first child.

It is irrelevant whether you pay the full maintenance according to the „Düsseldorf Table“ or a reduced rate.

Even if you, as the parent obliged to pay maintenance, have officially waived the crediting of half the child benefit, your entitlement to half the child benefit is included in the favourable assessment, in which the tax office calculates whether the child benefit or the allowances are more advantageous for you.

(2023): Do I still need to declare child benefit if my child lives with my ex-partner?

What is the child allowance?

Child benefit and child allowance are tax reliefs for expenses incurred by parents due to their children. The entitlement to child benefit exists automatically from birth but must be applied for in writing. It is not the children who are entitled to the child benefit, but the parents or guardians responsible for the child's welfare.

Child Benefit
Child benefit is a monthly payment that parents usually receive from the family benefits office. Child benefit is not taxable. The amount of child benefit depends on the number of children.

Child Allowance
In contrast to child benefit, the child allowance is not paid out. The allowance is deducted from the taxable income, thus reducing the income tax. The child benefit already paid monthly is an advance payment on the child allowance. In 2023, the child allowance is 6.024 Euro for jointly assessed parents, otherwise 3.012 Euro per parent. The BEA allowance (for care, education, and training needs) is 2.928 Euro.

Child benefit and child allowance are linked. The tax office automatically determines which is more favourable for the taxpayer at the end of a tax year through a favourable assessment.

Entitlement to Child Allowance or Child Benefit
Parents are entitled to the child allowance from the birth of the child until the

• 18th birthday.
• 25th birthday if the child is still in education or training or doing voluntary service.

If the child is disabled and unable to support themselves, the entitlement to child benefit or child allowance is unlimited.

(2023): What is the child allowance?

How much child benefit can I receive?

Child benefit was previously staggered according to the number of children, but is now a flat rate of 250 Euro per child.

Child benefit is paid for children under 18 in all cases. For children over 18, the entitlement continues until their 25th birthday, as long as they are in education or doing voluntary service. Child benefit is paid by the family offices of the Federal Employment Agency. Public sector employees or recipients of pension payments usually receive the money directly from their employers.

(2023): How much child benefit can I receive?

Minimum standard of living: Are the child allowances unconstitutionally low?

The minimum subsistence level for children must be exempt from tax for constitutional reasons. This is achieved through the child allowance and the BEA allowance (for care, education and training needs). The tax office automatically checks whether these allowances or the child benefit paid during the year are more favourable.

The BEA allowance is 2,928 Euro; the child allowance is 6,024 Euro (year 2023).

The Lower Saxony Finance Court expressed serious doubts about the constitutionality of the child allowance for the year 2014, which led to a suspension of enforcement. The Federal Fiscal Court partially agreed (Lower Saxony FG of 16.2.2016, 7 V 237/15).

Currently, the Lower Saxony Finance Court has deemed the calculation method of the child allowance unconstitutional and has referred the matter to the Federal Constitutional Court. The judges criticise the fact that the child allowance is age-independent, although the social welfare standard needs for children are age-dependent. They demand an increase in the child allowance (FG Lower Saxony of 2.12.2016, 7 K 83/16).

The decision of the Federal Constitutional Court could take up to ten years and affects parents who receive child benefit or a child allowance, as an increase in the child allowances affects church tax and the solidarity surcharge.

(2023): Minimum standard of living: Are the child allowances unconstitutionally low?