The state supports fathers and mothers with parental allowance (Elterngeld) so that they have a good start as a family. However, parental allowance also has an impact on your tax. We explain the background and show you how to enter it correctly in the Taxfix app.
What is parental allowance (Elterngeld)?
Parental allowance compensates for the loss of a parent's salary after the birth of a child. It is intended to enable parents to raise and care for their child at home themselves.
You can receive parental allowance in three variants that can be combined with each other:
As basic parental allowance (Basiselterngeld)
Parental allowance plus (ElterngeldPlus)
As a partnership bonus (Partnerschaftsbonus)
The length of time you receive parental allowance depends on the variant you choose:
The standard basic parental allowance is paid to mothers and fathers for a maximum of 14 months. One parent can claim parental allowance for a maximum of 12 months - for the two additional months, parental allowance is only paid if the second parent also participates in the care of the child. Single parents, on the other hand, are in principle entitled to 14 months of parental allowance.
With ElterngeldPlus and the partnership bonus, the duration can be extended, for example if both parents work part-time at the same time. In this case, the amount of parental allowance received per month is reduced. You can find out more about these options online, for example on the family portal of the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth (Familienportal des Bundesministeriums für Familie, Senioren, Frauen und Jugend).
In special cases, such as serious illness, disability or death of the parents, other relatives up to the third degree can receive parental allowance and raise the children. These can be siblings or grandparents, for example.
How much do I get as parental allowance?
The amount of parental allowance you receive depends on the average net income of the parent caring for the child in the year before the birth. You are entitled to a minimum of 300 euros and a maximum of 1,800 euros per month. In the case of ElterngeldPlus, the monthly amounts are halved, as this is granted over twice the period.
If you had a monthly previous income of 1,000 euros to 1,200 euros, you receive 67% of the initial income per month in parental allowance. A previous income of 1,220 euros per month is paid at 66% and if the monthly income is 1,240 euros or more, 65% of the previous income is paid.
If the monthly previous income is less than 1,000 euros, the rate increases gradually up to 100%. The rule is: the lower the income, the higher the parental allowance.
Applying for parental allowance
You can apply for parental allowance at the parental allowance office of the youth welfare office in your district (Elterngeldstelle des Jugendamts). Each parent can apply for parental allowance once. You can change your application at any time up to the end of the period for which you receive parental allowance.
You do not have to apply for parental allowance immediately after the birth, but it is best to do so within the first 3 months. Retrospective payments are only made for the last 3 months.
What are the tax implications of parental allowance?
Parental allowance is a so-called wage replacement benefit and is tax-free, i.e. it is not taxed itself. However, it is subject to the progression clause. This increases the tax rate on your taxable income and thus also your tax burden.
Because of the progression clause, many young families often have to pay back tax at the end of the year. In our article on wage replacement benefits, we have explained in more detail how these benefits can affect your tax.
Am I obliged to file a tax return with parental allowance?
Since parental allowance as a wage replacement benefit is subject to the progression clause, you are obliged to file a tax return if your total annual income from wage replacement benefits exceeds 410 euros. So if you have received more than 410 euros in parental allowance, you must file a tax return.
You will receive a certificate from the parental allowance office stating the amount of parental allowance you have received, which you can submit to the tax office if necessary. On the certificate you will also find the necessary information for your tax return.
How do I declare parental allowance in the Taxfix app?
In our app, you can indicate that you were on "parental leave / maternity leave" in the category "Intro questions". Please note that this selection is only necessary if you have received an annual payslip with entries in the corresponding tax year. If this is not the case, you can indicate that you "did not work".
You can then enter the parental allowance received in the "Income" category.
If you were exclusively on maternity leave or parental leave during the year, you can also answer the question about your place of work with "This commute was not used this year" in the category "Work", if applicable.