Who has to file a tax return and when?

Published on 10.01.2019 from Anke Telle

Every year in spring, many employees ask themselves when they have to send their income tax return to the tax office. For taxpayers, the deadline is the end of July of the year following the tax year if you write your tax return yourself. However, if you seek the help of a tax advisor or tax assistance association, you are given until the end of February of the year after next. However, not all citizens are obliged to submit a tax return. In many cases, an income tax return is voluntary, particularly if your total income is low or you have no income from self-employment. However, it is still worthwhile for most people, as it results in a substantial tax refund on average.

Do I have to file a tax return? When is filing an income tax return voluntary? And when do I have time to do it? In this guide you will find information on the most frequently asked questions about tax returns.

Who has to file a tax return?

Section 25 of the Income Tax Act defines a general obligation to file a tax return for the same assessment period at the end of each calendar year. However, subsequent paragraphs list a number of exceptions that turn the general obligation to file a tax return into a voluntary option. For example, Section 26 describes the assessment of married couples, for whom the preparation of a joint tax return eliminates the obligation to file separate returns. And Section 46 of the Income Tax Act describes how the assessment of income from employment is handled. If you are employed, you only have to file an income tax return if you meet at least one of the criteria listed in this paragraph. [1-3]

The deadlines for submitting tax returns are precisely regulated in the Tax Code, AO § 149. In most cases, paragraph 2 applies, according to which the tax return must be submitted seven months after the end of the assessment period. The assessment period here is the tax year, which ends in December, so the income tax return must be submitted by the end of July at the latest.

Why do you need to prepare a tax return?

The tax return that many citizens have to submit to the tax office every year is an income tax return: this is a list of all income. This includes both wages from an employment relationship and profits from self-employed entrepreneurial or freelance work, as well as state benefits such as unemployment benefit, parental allowance or insurance benefits. This is offset against expenses that can reduce the personal tax burden, such as business expenses or pension contributions.

In employment relationships, the income tax to be paid is deducted and paid to the tax office before the salary is paid. However, because the actual tax rate to be applied can only be calculated after the end of the year when the total income is known, the tax return is used to determine and balance the difference between taxes paid in advance and the amount actually owed.

After submitting a tax return, the tax office may either come to the conclusion that more taxes were paid in advance than was actually necessary; the difference will then be refunded to you as a tax refund. Or you may have received several taxable incomes from self-employment for which no income tax has yet been withheld. This must then be transferred to the tax office in the form of a tax surcharge.

Who is obliged to file a tax return?

The obligation to submit an income tax return applies to all self-employed people, business owners and freelancers. Employees are also required to submit a tax return in many cases. If, for example, you are employed by several employers, the obligation applies; the same applies if you claim an allowance when calculating your income tax, while your income as a single person exceeds EUR 11,000 or as a couple exceeds EUR 20,900.

You must also file a tax return if you have received additional income of more than 410 euros, for example from rental income or interest and dividends, or if you receive tax-free wage replacement benefits of more than 410 euros, such as parental allowance or unemployment and sickness benefit.

If you are married, you must submit a tax return if you have opted for tax classes 3 and 5 or if you use the factor method for the tax class combination 4 and 4. You must also submit a tax return if you have divorced and you or your partner have remarried in the same calendar year, as you must inform the tax office whether and with which partner you wish to be taxed jointly.

Who can optionally file a tax return?

If you are employed by only one employer and the income tax is calculated according to tax class 1 or 4, you can voluntarily file a tax return. This assumes that you do not have any additional income from part-time self-employment and that no allowances are used in the advance calculation of the income tax.

Filing a tax return is also voluntary for low earners: if your income is below the basic allowance, you do not have to pay any income tax. Any excess tax deducted will be refunded to you later. For 2018, the basic allowance for singles is 9,000 euros, and double that for couples.

Even if you are not required to file an income tax return, you should still do so: on average, in about 85% of all cases, filing a tax return results in a tax refund, according to the Federal Statistical Office. On average, taxpayers were able to get a large amount of around 935 euros back. [6] If filing a tax return is voluntary for you, it can be assumed that the amount will be lower because you probably received less taxable income overall, but you can also count on a refund.

When must the tax return be submitted?

If you are required to submit a tax return, it must reach the tax office by the end of July of the following year. For example, the tax return for 2018 must be submitted by July 31, 2019. An exception is if you commission a tax advisor to prepare your tax return or use the services of a tax assistance association. In these cases, the return is not due until the end of February of the year after next, for example, the end of February 2020 for the 2018 tax year.

However, if you would like to submit a tax return on a voluntary basis, you have up to four years to do so. For example, you can submit voluntary tax returns for the years 2018, 2017, 2016 and 2015 up until December 31, 2019.

Who helps with the tax return?

Going to a tax advisor can not only make sense in order to benefit from the late deadlines for submitting your tax return. In more complicated tax matters, you can potentially save more taxes with professional support than you could achieve by writing your own tax return. The general rule is: for tradespeople and the self-employed, a tax advisor makes more sense the larger the company is. For private individuals, a small tax office is sufficient, and if you are only employed and do not receive any income from self-employment, you can also become a member of a tax assistance association that you can commission to prepare your tax return.

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