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Pension: who has to pay taxes, why and how much?

2022-03-28T03:19:59.650Z


Pension: who has to pay taxes, why and how much? Created: 2022-03-28 04:51 Taxes are a complex issue that more and more retirees are now having to deal with. © Felix Kästle/dpa Taxes are becoming an issue for more and more retirees. This raises a few questions. An overview. Munich - Year after year, more pensioners are subject to tax - and there is great uncertainty as to when the tax authorit


Pension: who has to pay taxes, why and how much?

Created: 2022-03-28 04:51

Taxes are a complex issue that more and more retirees are now having to deal with.

© Felix Kästle/dpa

Taxes are becoming an issue for more and more retirees.

This raises a few questions.

An overview.

Munich - Year after year, more pensioners are subject to tax - and there is great uncertainty as to when the tax authorities will strike.

Maike Backhaus, tax expert at Steuertipps.de, explains exactly under what circumstances pensioners have to pay taxes.

Which pensioners are taxable?

Pensioners are obliged to submit an annual income tax return if the taxable income exceeds the annual basic allowance.

Income includes all pension income as well as income from company pensions and pensions, interest and dividends, renting and leasing.

The basic allowance for 2021 is 9744 euros for single people and 9984 euros for 2022.

This allowance doubles for married couples, i.e. 19,488 or 19,968 euros.

But: Depending on when you retire, part of the statutory pension remains tax-free!

Why are more and more retirees becoming taxpayers?

For each new retirement year, less remains tax-free.

By 2040, 100 percent taxation of “new pensioners” should be achieved.

For new pensioners born in 2021, the taxable portion of their retirement benefits is 81 percent, which means: 19 percent of the pension is tax-free.

For new pensioners in 2022, the taxable portion increases to 82 percent (18 percent tax-free).

For those who became pensioners by 2005, 50 percent of the 2005 pension is tax-free.

Because pensions are constantly rising, you have to check every year whether an annual statement from the tax office is necessary.

The annual pension increase is 100 percent taxable, there is no tax-free portion.

So it can happen that you slip into tax liability even as a pensioner who was previously exempt from tax.

Even due to the small pension increase in July 2021 (0.72 percent in the east, in the west there was no pension increase in 2021), more pensioners have to pay taxes for the first time.

How many pensioners are affected?

More than a third of all pensioners in Germany have to pay taxes: For the tax year 2021, the federal government assumes that the approximately 7 million people affected will together pay almost 43 billion euros in income tax.

How do I calculate the taxable part of the pension?

The new pensioner with a taxable pension portion of 81 percent must deduct 19 percent from his gross pension amount for 2021.

He must add his other income (company pension, rental income, etc.) to the amount calculated in this way.

He then deducts his contributions to health and nursing care insurance and the special expenses flat rate of 36 (or 72) euros from this.

If the result is below the basic allowance of EUR 9,744 (EUR 19,488 for married couples), the pensioner does not have to pay any taxes.

How high the gross pension was is stated in the "Notification for submission to the tax office".

When and how do you get a non-assessment certificate?

If it is expected that you will not be assessed for income tax because your total income is below the basic allowance (single: 9744 euros; couples: 19 488 euros), you can be exempted from the obligation to submit a tax return by means of a non-assessment certificate.

In addition, pensioners who are not subject to taxation and tax assessment can save on capital gains tax (withholding tax) by presenting this certificate.

This means that interest and dividends are paid gross without any tax being withheld.

Is there still a chance to stop the pension tax?

Yes, at least in cases where double taxation is possible.

There was a model lawsuit before the Federal Fiscal Court.

It was not about the taxation of pensions after the transition phase from upstream to downstream taxation, i.e. taxation from 2040. It was only about taxation during the transition phase and the question of whether double taxation would occur.

The judgments were published at the end of May 2021: The BFH still considers the transitional arrangement to be constitutional.

However, the subject is not yet closed, as both plaintiffs have now lodged a constitutional complaint with the Federal Constitutional Court (Az.2BvR 1143/21 and 2 BvR 1140/21).

According to experts from Stiftung Warentest, it is hardly worth applying for a double taxation check for formerly employed pensioners.

Those who were previously self-employed are more likely to be affected.

Source: merkur

All news articles on 2022-03-28

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