Tax return: mandatory or voluntary? Who can, who must and what consequences threaten

Every year it hovers over your own household accounting like the sword of Damocles: the tax return. And even if you can get yourself to pick up the necessary papers, all you can understand is the train station, given all the bureaucracy and the complicated questions asked. But do you even have to file a tax return?

This is regulated by law in Germany. Most employees are lucky. Since the employer already deducts the income tax from the wages every month, you don’t have to bother with the tax return. In the best case. As is often the case, there are various exceptions in this case.

Employees subject to tax return

As an employee, you may also be required to submit a tax return under certain circumstances. Let’s take a look at the cases in which you are obliged to submit a tax return as an employee.

Important: This information refers to tax returns for 2023 and may not include all special tax cases. If you are unsure whether you have to submit a tax return, if in doubt, ask your local tax office. Also keep in mind that the regulations for 2024 and subsequent years may change.

Spouses with certain tax brackets

Even a registered civil partnership has an impact on the tax obligation. If you, your spouse or both have tax class 4, 5 or 6, you are obliged to submit a tax return if you received either wages or a pension in the relevant year.

Recipients of income tax allowances

If you as an employee receive a wage tax allowance in the relevant year, submitting a tax return is also mandatory. Only tax allowances for disabled people as well as registered survivors and child allowances are excluded from this regulation.

Recipients of additional income

Do you earn money in other ways besides work? Are you also self-employed with another job or do you have additional rental income as a landlord? If such additional income exceeds 410 euros per year, you cannot avoid filing a tax return. The untaxed additional income is used for the assessment limit.

Recipients of replacement services

You are also obliged to file a tax return if you received wage replacement benefits worth more than 410 euros in the relevant year. These include, for example, unemployment, parental or sick pay, but also short-time work benefits. What doesn’t count are social benefits, such as citizens’ money.

Recipient of a special request

Even if you are an employee and none of the cases described apply to you, the tax office can request you to submit a tax return by post. In such exceptional cases, however, you will always be informed in writing. The reason for this may be the internal communication between the tax offices, in which attention is drawn to special returns.

Self-employed and pensioners

Of course, self-employed people and employers also have to file a tax return, often accompanied by an EÜR. For pensioners, it depends on how high their annual income is or whether it exceeds the basic allowance.

This changes from year to year and is 10,908 euros for the 2023 tax year. If the pension is higher, a tax return must be submitted. As a pensioner, you have the option of going to the tax office and being exempt from the tax obligation.

Officer

Things get a little complicated with civil servants. What matters here is the precautionary allowance that the civil servant receives. If this is higher than the nursing care and health insurance contributions paid for basic coverage, then he or she also has to file a tax return.

Commercial enterprises, agriculture and forestry

Those of you who receive income from agriculture, forestry or commercial enterprises are always required to file a tax return. For farmers and foresters, however, the submission deadline shifts depending on the harvest year.

investor

For investors, it depends on whether they subsequently have to pay church tax on their income. If yes, then a tax return must be filed. This is also the case if foreign income is taxable. Some types of interest income may also require tax returns. Due to the tricky exception regulations, we particularly advise investors to check with the tax office about any possible tax obligation.

Other special cases

Finally, we would like to point out two special cases. Divorced couples are also required to file a tax return if one of the separated couple remarries in the same year. Everyone involved is then obliged to submit.

The second special case concerns deceased people. If a family member who is obliged to file has died in the current year, the heirs must take care of filing the tax return for this person on time.

Consequences for those who don’t give up

If you are obliged to file a tax return but do not submit it on time, you will face consequences. This starts with late payment surcharges or additional costs for late submission. The next level is penalty payments or interest. In the worst case scenario, you may even face criminal proceedings, which can result in not only a high fine but also a prison sentence.

It can also happen that the tax office estimates your tax itself if you do not pay it despite repeated requests. Such an estimate is usually unfavorable for you because the tax office does not know about your expenses and therefore does not take them into account. Important to know: Even if you make an additional payment for such an estimate from the tax office, you are still obliged to submit the tax return.

In any case, you should not let the deadline pass. Normally the deadline for the tax year in question ends in September/October of the following year, but can be extended by several months if you consult a tax advisor. The exact submission date varies from year to year, which is why you should find out about the date yourself and in good time.

It is also worth knowing that under certain circumstances you will be granted an extension of the filing deadline, for example if you were unable to fill out the tax return due to health reasons or if you were abroad for a longer period of time.

Not obliged? The advantages of voluntary donation

If you are an employee and none of the above cases apply to you, you are fine. You then don’t have to file a tax return. However, you should still consider it, even if it involves effort. Why? Because otherwise you would be giving away cash.

Even if you are not required to file a tax return, it is worthwhile in many cases to file a tax return as this will allow you to claim tax refunds. You can expect high refunds if, for example, you are in a worse off income tax bracket or you had high expenses throughout the year.

As a rule, you can almost always claim a certain refund amount with a tax return. In very few cases it can happen exactly the other way around, so that you end up being able to pay back taxes.

Suddenly paying back taxes – what now?

However, this is not a problem as you can withdraw the tax return you have submitted by appealing. Unlike mandatory tax returns, voluntary tax returns are not subject to an annual filing deadline, but can also be submitted four years retroactively.

If you want to be on the safe side, you can do your tax return using tax software. Almost all of these programs offer you a calculation tool for the expected tax refund. They also offer many practical functions to make it easier for you to prepare your tax return.

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