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Final boss: tax return! 😈 (all half as wild 😇)
The year is over, the raclette from New Year's Eve is heavy on the stomach and the booming headache isn't all the fault of the firecrackers. 🥂
You check your broker and realize that they have sent you the tax certificate 📑 for the previous year. You greedily click through the mailbox and, after downloading it eagerly, you discover good news: investment income: €4,200.00!
But what is that? Savers' lump sum? Capital gains tax? And then it happens: you start thinking about the next tax return!
😖
Fortunately, the raclette in you doesn't decide to spontaneously rally against the direction of travel 🤢as you know quite calmly that you've read the following post! 😅
According to § 32d EStG, capital gains are generally subject to a separate tax rate. This is 25% for taxpayers who are not subject to church tax. The capital gains tax is a so-called "withholding tax"as the tax is withheld and paid at source (simplified: by your bank). 💡
Every taxpayer is entitled to an "allowance", the so-called "saver's lump sum" of currently € 1,000, which covers all costs in connection with income from capital assets in the tax return. 📊
There are two ways to use this allowance:
Option 1 🔵
Tax return at the end of the year.
In your tax return, you enter all investment income, capital gains tax and solidarity surcharges from the tax certificate for the past assessment period. When calculating your income tax, the tax-free amount of 1,000 is then taken into account, which reduces your tax liability.
Variant 2 🔴
Send an exemption order to the bank.
Banks are generally obliged to withhold tax at source. You can inform your bank with an exemption order from this obligation! 😲 But be careful! The amount of this exemption order is limited to the amount of the saver's lump sum (i.e. 1,000) across all your building society savings contracts, custodian banks, etc.! So make sure that you never give your bank too high an exemption order! As soon as you have earned capital gains from which no tax has been withheld due to the exemption order, you are obligedto declare this investment income (or distribute exemption orders) in your tax return! 🛑
Okay! I'm sure you've understood all that so far. But now you're thinking: That's totally unfair! As a student with a mini-job and a few thousand euros in capital gains, I have the same tax rate as a top earner! 😪
✨✨ Section 32d para. 6 EStG - favorable tax treatment! ✨✨
With the income tax return, every taxpayer can apply for a favorable tax assessment! And the best thing is: this is even calculated by the tax office! 🤝
It first calculates how high your personal income tax rate is. 📈 Thanks to the progressive income tax rate, the personal income tax rate (average tax rate) for taxable income up to around 38,000 is less than 25%! 😄 If this is the case, your investment income will be subject to your personal tax rate, which is below 25%!
Calculation example: 🤓
Student, 22 years young, mini-job in a bar and €2,500 investment income. Exemption order was not issued, so that the full 25% capital gains tax (€625) and 5.5% solidarity surcharge (€34.37) were withheld.
The basic tax-free allowance according to §32a EStG is 10 908 in 2023 (up to this amount no taxes are due). The personal tax rate for our student is therefore 0%! 😯
So if our student does not submit a tax return for 2023 he will lose a whole 659.37! 😥 Don't be that student! 😏
Do you want more calculation examples? For example, with a higher income and a partial exemption order?
🏁🏁🏁🏁 End of post! 🏁🏁🏁
I'm sure this isn't news to many of the readers. But if I've been able to help a handful of people a little further with this, I'm already happy!
I look forward to your reactions!
👍 - I already know everything!
🦍 - Roughly knew, but still learned something!
🆘 - Huh?! That's possible?
🚀 - I evade everything anyway!
