It’s tax season!
Or maybe it’s not. Whenever you read this post though, chances are you are looking for some information on doing German taxes.
If you’re an American doing taxes in Germany, it’s extra fun, so read on.
I have no idea where to start.
It’s important to note that while filing taxes isn’t a legal requirement per se, it’s still a really good idea as most people will see a little money back. The tax free income levels are between 9,000-10,000 € and this number will change a bit each year. You need to file once you’ve broken this barrier. After that level is reached, each income bracket is taxed progressively on a scale. There is a 4 year grace period for filing, and you can submit multiple years in one go if you need to catch up. So if you’ve gone over the tax free income level, submit your tax declaration, and if you’ve done it multiple years in a row and haven’t submitted, file them all together.
None of the below is legal advice, as I am neither an accountant nor a tax consultant. This information comes from various sources I put together to make it easier to read and understand, plus my own experiences. If you would like professional advice, I have a recommendation at the bottom of this page.
A note on what taxes are in Germany for Americans: we often hear “countries with socialist-based governments have high taxation and rely on redistribution of wealth” which, in general is true. However some of German taxation is misunderstood by Americans, as what we would normally call “benefits”, in Germany they are classified as “social contributions” (and lumped in with paying taxes). The important distinction here is the difference between paying into a social system to benefit everyone, thus lifting everyone up (and maybe one day yourself!) vs paying into a system meant to benefit only yourself, the drawback being should this system fail, there’s no social net to fall into. Of course this could get quite political so I’ll leave that distinction here.
numbers and papers everywhere
Before you can file, you need a Steueridentifikationsnummer and, if you have it, the Steuernummer. You should have received your SteuerID by mail after you registered, about four weeks later, but if you didn’t (I didn’t) you can fill out this form to have a new one sent to you*. This number is important because your employer will need it to pay you. This number will also never change.
The Steuernummer will come once you fill out the Fragebogen zur steuerlichen Erfassung (Questionnaire for tax declarations or “Long Confusing Form”), if you don’t already have one. If you are new to Germany, you definitely don’t have one. If you have registered a business or yourself as a freelancer, you have one. It is ok to file your taxes without this number, even though every page on the Fragebogen has a blank for it, causing anxiety levels to rise each time you go past it.
*Make sure your name is on your mailbox!
how classy am i?
Don’t ever let anyone tell you you don’t have class, Germany has plenty of class opportunities for everyone!
There are 6 Lohnsteuerklasse: most single people will fall into I or II, married people either III, IV or V.
class I = single
class II = single parent
class III = married and and spouse has no income or lower income (see V below) (both spouses cannot be III)
class IV = married and similar income to spouse
class V = opposite of class III; in other words this is the class your lower-earning spouse is, if you are III (both spouses cannot be V)
class VI = for a second job
source: Wikipedia
I'm still not sure how much class I have
“I am single, or divorced, nothing else special” – you are class I
“I am unmarried, or divorced, not in a legal life-partnership of any kind, and have a mini-me” – you are class II and you need this for the Kindergeld
“I am married and my spouse does not work, or has a significantly lower income than mine” – you are class III, your spouse is class V
“I am married and we make approximately the same amount of money” – you are both class IV
“I am married, my spouse is class III” – you are class V
“I am married, I am class III” – your spouse is class V
“I have several jobs” – you are class VI
Expats: your spouse needs to be in Germany with you to claim anything other than I. Same with children.
i will do my german taxes by myself
The federal government has the ELSTER system available. This site is not available in English, the Google Translate extension does not work well here and the forms themselves are just as difficult to translate. In order to use ELSTER, there are several verifications steps you must go through first, including downloading a secure certificate to your computer (meaning you can only use ELSTER on that computer) or purchasing a special card reader or other TAN device.
I really did try this one year, my first year filing. Honestly it was frustrating, not intuitive, and caused me a lot of stress. In the end, I filed, and as I had hardly made any money that first year I do not think I was a big audit risk if I had done it wrong. I received a letter in the mail stating I owed a small amount, I paid it, and heard nothing back.
If I ever attempt it by myself again, I will document and report back if it goes better the second time.
The other option is to use a tax assistance program, similar to TurboTax. I have not used these, however the most popular version I have heard of is the Aldi product, available in (and only in) all Aldi grocery stores (but they sell out quickly once stocked). This program comes with a connection to ELSTER so you are able to digitally file once all finished. Like TurboTax, if you have used the program in past years you can copy relevant data over instead of starting from scratch. This also only costs 4,99 € so I am hoping to feel confident one day enough to use it myself.
help! I need an adult!
The second year of filing taxes, both German and American, I hired someone. Two someones. In particular, a Steuerberater who specialized in freelance/self-employed work. This is an important distinction to make because not all Steuerberater are licensed to prepare and file taxes on behalf of the self-employed. The second someone was an H&R block representative here in Wiesbaden who specializes in American taxes in Germany.
If you too would like to email someone all your documents, wait for them to email you back a form to sign and then never worry again (for another 11 months), you should look up Steuerberater in your area.
Plug in these search terms into Google:
“Steuerberater für Freiberufler Wiesbaden” – for those of you who are freelancers or self-employed in Wiesbaden
“Steuerberater Wiesbaden empfehlung” – for a list of review websites of tax consultants in Wiesbaden
Since then I’ve used Felix1, a service that honestly took away so much stress I was telling everybody about them, even people who don’t live in Germany and do not care about the German filing process. I cannot recommend them enough; everything is done digitally in their online portal or via email, they have friendly staff and they are most willing to speak English (especially if you will try a little German with them!). There is also a secure identification process involving a webcam and your passport, which took me maybe 10 minutes to complete.
Dear Americans, do not forget to file your tax return in America as well. This is required every year, regardless if you owe tax or not.
Where do I go in Wiesbaden?
The Finanzamt in Wiesbaden do take appointments and can offer some advice in terms of what forms you need, the class status for you and your spouse and assist with identification numbers. They do not, however, offer tax advice, as this would be like asking the IRS for tax advice and that is not the function of either office. If you are setting up a business I would recommend visiting their office to straighten out all your tax needs.