Child Benefits (Kindergeld)
The German government wants to reward parents with benefits. This grant will be introduced further below.
How are children treated for tax purposes? Are there any special benefits or deductions for children? How high is the amount?
There are child benefits for kids and children tax-free amounts (€ 2,730 p.a.). You can take either the child benefits or the exemption. The first two children entitle you to € 219 a month on child benefits, the third child € 225 and the fourth and any further child entitle you to € 250 per month (§36 VI EStG). This benefit is granted if you have a minor child, or a child under 25 still in school, university, vocational training, internship, or serving voluntary service. In case your child is unemployed, child benefits are only granted until the age of 21. The Finanzamt (tax authority) will not automatically grant you the most profitable benefit. Therefore, you will have to calculate yourself what works best for you. As a rule of thumb, consider collecting child benefits (Kindergeld). The tax relief per parent for the care and upbringing or training needs amounts to 1,464 euros, so a total of 2,928 euros for a child.
Who will actually receive the child benefits – the mother, the father, child, all three?
The benefit is granted per child. The person who has child custody will receive it. If there is more than one person who has custody, they can decide who gets the benefit, as long as they are both employed. The wife collects the benefit, if her husband does not work. If her husband is working, however, they jointly decide who collects the benefit.
Where do I apply for child benefits?
You have to apply for these benefits at the Agency for Labor in your vicinity. To find this office best will be to either ask a neighbor or check out www.ArbeitsAgentur.de. The Federal Agency for Labor offers all relevant forms on its website.
I heard from friends that they got a relief premium for their child. I want one, too. How do I get it?
Only those with a low income will receive this extra premium and only if they do not receive Arbeitslosengeld II, or social money or any other kind of welfare. It will be paid for at most three years and only until the child is of age. To accurately determine who is entitled to this extra subsidy is very complicated. Generally, you can say that couples having an income of up to € 1,300 or singles with an income up to € 900 will be eligible.
I have children living permanently abroad. How are they treated for taxation? Could I also qualify for child benefits?
Generally, you still can obtain these premiums. However, all premiums and child care costs and the corresponding income limits or assessment limits will be cut by either ¼, 2/4 or ¾ – depending on the country where the child is residing.