Child Benefit and Taxes – What You Need to Know

In this article, you’ll learn the most important information about child benefits in Germany – what it is, who is entitled to it, what the current amount is, and how to apply for it.

Child benefits in Germany – what is it?

Child benefit is a monthly financial support from the state that is available to you from the birth of your child. It is intended to ease the financial burden on parents like you by covering costs for food, clothing, care, and education. The disbursement is handled by the family benefits office. In addition to the monthly child benefit, there are also one-time special payments such as the child bonus, which provides additional support to families.

In addition, there is the child allowance – a tax relief considered by the tax office as part of your tax return. This amount is retrospectively deducted from the taxable income if it is more tax-efficient than the paid-out child benefit. The tax office automatically checks which option is more advantageous for you.

The child allowance consists of two parts:

– the allowance for the material subsistence of your child,
– the allowance for care, education, or training needs (BEA).

Both amounts are added together and indicated in your tax return.

BEA allowance for care, education, and training needs

The BEA allowance helps you reduce your tax burden. It is generally available to both parents but can be transferred to another person upon request.

Child allowance – who is entitled to it?

You receive the child allowance not only for your biological child but also for:

• adopted children,
  ● foster children,
  ● children you raise as a single parent.

You are automatically entitled to child benefits until your child turns 18. Both parents receive half each – unless you jointly apply for a different distribution. Even if you live apart or are not married, you have this entitlement.

After your child’s 18th birthday, you can continue to receive child benefits if certain conditions are met. For example:

• Your child is under 21, not employed, and registered as seeking work.
  ● They are under 25 and
  ○ in training or education,
  ○ in a maximum four-month transition period between training/studies or military/civil service,
  ○ have not found a training place,
  ○ doing a voluntary social or ecological year, federal voluntary service, or an international volunteer service,
  ○ working as a development aid worker or doing service abroad.

For children with disabilities who cannot support themselves, the following applies: You receive child benefits regardless of age, as long as the disability occurred before the 25th year of life.

Do I have to apply for child benefits?

You do not need to apply separately for the child allowance in Germany – the tax office does this for you. It automatically checks whether the allowance or child benefit is more tax-efficient and calculates accordingly. Child benefit is available to you from the birth of your child – if your child was born in July, you receive child benefits from that month. The child allowance is also partly considered from this time.

Child benefits and tax classes – what should be noted?

The tax class does not affect the entitlement to child benefits – it exists regardless of which tax class the parents are in.

Child benefit – questions and answers

We answer the most frequently asked questions about German child benefits.

How high is the allowance for parents with multiple children?

The tax office assumes that both parents equally care for their offspring, therefore child benefits are automatically credited half for each parent. If you and your partner have two children, each is entitled to the full child benefit. For multiple children, child benefits are credited half to both parents for each child – regardless of the number.

How is child benefit distributed in case of separation or divorce?

A separation or divorce of the parents does not change the amount of child benefit. Each parent receives half of the child benefit.

Can child benefits be transferred to another person?

Of course, that’s possible. The exact requirements for this can be found in the Family Support Act according to § 32 paragraph 6 Income Tax Act (EStG). If you want to transfer the child benefit to another guardian, you must fill out Annex K and send it to the responsible tax office.

Taxation of the child allowance – does that apply?

If you are wondering whether child benefits in Germany are taxable, our answer is that they are not. However, it is a tax allowance within the framework of the family benefit equalization and is therefore considered in the tax return and in comparison calculations, which aim to achieve the most favorable tax assessment for parents. If you want to find out for yourself how much child benefit you are entitled to, you can quickly and easily calculate the amount of the child allowance and tax refund for the tax year of your choice with the Taxando tax return app.