The moment when parents move into a nursing home is not only emotionally but also financially challenging for many families. The statutory pension and nursing care insurance often are not enough to cover the high monthly care costs. If the parents’ income or pensions are insufficient to cover these costs, their children are generally obligated to provide financial support – within the framework of what is known as parental maintenance. In this article, you will learn whether and to what extent these maintenance payments are tax-deductible.
Tax deductibility of parental maintenance – how is the allowance calculated?
When calculating the reasonable parental maintenance, a so-called preventive allowance is taken into account. This is an amount you are allowed to set aside for your own retirement provision before it is determined whether and to what extent you may be required to contribute to parental maintenance. The amount of this allowance depends, among other things, on your income and the number of your working years. Since there is no uniform legal regulation, different courts base their calculations on different methods – some assume 35 working years as a flat rate, others evaluate the actual work biography.
Tax refunds for parental maintenance and pensions
Even in retirement, you can continue to provide for your financial security. Savings intended for your own retirement provision – such as private pension insurances or other provision contracts – generally remain untouched and need not be used for parental maintenance. Whether and to what extent you are still obliged to provide financial support depends on your individual income and asset situation.
Can you obtain a tax refund for parental maintenance with the assets set aside for retirement security?
It is legally possible to set aside the necessary financial means for one’s own retirement security. These can be, for example:
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- Premiums for a life insurance,
● Contributions to a Riester pension.
It is not necessary to set aside or utilize these assets just to be able to pay parental maintenance.
Support for the tax deduction requirements of parents – Summary
The questions related to the refund of maintenance tax for parents seem very complicated to many people. Precisely for this reason, the federal government has decided to simplify the related rules. The settlement of the aforementioned costs will certainly become much easier if a certified tax consultant is brought in, who – with the help of the appropriate German tax software – calculates the deductible amounts within the framework of parental maintenance. If you use the PREMIUM package from Taxando, you can be sure that your data will be encrypted and protected.
Maciej Szewczyk
He gained experience as a consultant on IT projects for many international companies. In 2017, he founded the startup taxando GmbH, where he developed the innovative tax app Taxando, which simplifies the filing of annual tax returns.
Maciej Szewczyk combines technological expertise with in-depth knowledge of tax regulations, making him an expert in his field. In his private life, he is a happy husband and father and lives with his family in Berlin.
