Arbeitnehmer, Corona und die Steuererklärung

Employees, coronavirus and tax returns: anyone who receives wage compensation must file a tax return

Christoph H. was caught cold by the coronavirus pandemic in spring 2020: his employer specializes in the production and distribution of printed advertising materials. In the course of the first crisis panic, even regular customers canceled orders en masse, and new ones did not follow – as a product manager, Christoph suddenly had hardly anything to do. The company reacted quickly and sent the majority of its employees, from printers and secretaries to management level, on short-time working.

Short-time working allowance: a blessing for many employees

After the initial shock, Christoph coped well with the situation, he was able to work from home for a few hours a week and the short-time working allowance was high enough to enable him to continue paying his debts with ease. To be honest, he even enjoyed the extra free time.

Over the course of the year, the company’s order situation picked up again, so that Christoph’s biggest concern, that his employer might have to file for insolvency, quickly evaporated.

How do the short-time working allowance and other coronavirus aid affect taxes?

The short-time working allowance is tax-free – Christoph knew that. That’s why he would never have thought that he would have to file a tax return for 2020 because he received it. Normally, he is not obliged to invest.

However, this is now changing with the receipt of short-time working allowance, as this is one of the so-called wage replacement benefits – just like sick pay, maternity pay, parental allowance or unemployment benefit I, for example.

The insolvency money that Christoph would have received if his employer had had to file for insolvency also counts as wage replacement benefits. The same applies to any compensation for loss of earnings under the Infection Protection Act that Christoph would have received if the health authority or another competent body had sent him into quarantine or banned him from working.

Wage replacement benefits change the tax rate – that’s why they should be included in the tax return

All wage replacement benefits are income that is subject to the so-called progression proviso: Unlike “normal” income (i.e. wages or profits from commercial or self-employed activities), they do not count towards taxable income – but they do affect the tax rate.

As is well known, the amount of this is very individual in Germany: only income that exceeds the basic tax-free allowance (in 2020 it was €9,408 for single people and €18,816 for married couples) is taxed at all. And the more you earn, the higher your personal tax rate. From an income of € 270,501 (€ 541,002 for married couples, values for 2020), you pay a top tax rate of 45%. In addition, there may be church tax and the solidarity contribution, which will only be abolished from 2021 – but again not for the highest earners.

There is a perfectly logical reason why Christoph has to declare the wage replacement benefits he receives in his tax return: the offices that pay them do not know how much Christoph’s other income was, so the total tax cannot be withheld directly as is the case with wages.

Remember your compulsory tax assessment, otherwise you may have to make additional payments!

Because Christoph didn’t know this, he almost unknowingly evaded taxes. The tax office does not automatically write to everyone who is obliged to make an assessment this time to make them aware of this. However, as it can be assumed that the offices communicate with each other, he would have to make additional payments later.

Short-time working allowance: a blessing for many employees

If you have also received wage replacement benefits, whether due to corona or for other reasons, please contact us by telephone on (02738/6888713) or write to us so that we can resolve the matter in the best possible way for all parties involved. We are also happy to accept receipts digitally for you.

Any questions? Talk to us!

Not sure whether an online tax advisor is right for you or whether you have the technical know-how to handle your taxes digitally in future? You don’t know exactly how your professional dreams can be realized financially or have questions about tax law? We are at your disposal for a non-binding consultation.