C. Tax deductions in case of low income (refunds of tax deductions, social security refund and additional child allowance)

If you have no or only a low income, you may receive a tax refund in the form of “negative tax” or a social security refund in the following cases:

If an income tax below zero results, the single-earner tax credit or single-parent tax credit will be refunded. Income that is tax-exempt based on bilateral (double taxation agreements) or international-law agreements (e.g. UNIDO, IAEA) is considered taxable income for the purpose of computing the refund.

If entitlement to the transportation deduction exists and an income tax below zero results, 55% of the social security contributions but not more than € 463 annually will be refunded (social security refund), in case of entitlement to a lump sum for commuters not exceeding € 579. If you are entitled to the surcharge on the transportation deduction, the maximum social security refund also increases by up to € 752.

Where a claim for the pensioner deduction exists and an income tax below zero results, 80% of the social security contributions but no more than € 637 will be refunded annually (social security refund). The reimbursement is reduced by tax-exempt compensation or supplementary allowances. The refund will be made in the course of the assessment and is limited to the income tax below zero.

Additional child allowance

Persons who earn no or low income receive an additional child allowance under certain conditions in the employee tax assessment for 2024. The following requirements must be met:

1. Income or childcare benefits, maternity allowance or caregiver leave benefits
   At least
   – 30 days of taxable income from business or employment must have been earned in 2024 or
   – only benefits under the Childcare Benefits Act, maternity allowance or caregiver leave benefits must have been received throughout 2024.

2. No or low income
   In addition, the income (and the resulting income tax) must not have exceeded a certain limit. The income limit depends on the number of children for which family allowance was paid to you or your spouse/partner for more than six months in 2024. It is:
   – Approximately € 16,316 (income tax less than € 700)* for one child
   – Approximately € 19,816 (income tax less than € 1,400)* for two children
   – Approximately € 22,483 (income tax less than € 2,100)* for three children
   – Approximately € 24,817 (income tax less than € 2,800)* for four children
   * before tax deductions
   – For more children, the income limit increases accordingly: an increase in income tax of € 700 must be taken into account for each child

3. Sole earner / single parent or low income of (spouse) partner
   If you meet the requirements under items 1 and 2, you are entitled to the additional child allowance if
   – you are entitled to the single-earner tax credit or the single-parent tax credit (see page 33) oder
   – your spouse/partner also has no or low income. For the income limit for your spouse/partner, the limits listed under item 2 apply. In this case only the person who received family allowance for the child is entitled to the additional child allowance.

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Please note: In order for the additional child allowance to be taken into account in the tax assessment, you must confirm in the tax return that the requirements are met. Item 5.2 in Form L 1 and item 4.2 in Form E 1 are available for this purpose.

If the additional child allowance is due, it will be automatically calculated and taken into account.