Combining Voluntary Work with Mini-Jobs for Tax-Free Income
Anyone who does voluntary work outside of their primary job may be eligible for a tax break under certain circumstances. However, your voluntary work can't take up more time than your main job.
Do you get a lump sum payment for expenses related to your unpaid work or as a trainer? In certain cases, you may not need to pay taxes or social security contributions on this money. But there are some conditions to meet in order to be exempt from taxes. Whether you have a full-time or part-time job in addition to your voluntary work doesn't make much of a difference, according to the Taxpayers' Association.
Volunteers can receive up to 840 euros annually free of tax and social security contributions for their volunteer activities. Activities such as coaching soccer, leading a choir, or working with a fire brigade are considered part-time jobs that qualify for the "exercise leader allowance." This allowance exempts you from paying taxes and social security contributions up to 3,000 euros. The catch? Your voluntary work has to serve charitable, benevolent, or ecclesiastical purposes, or be done on behalf of the public sector. Plus, it can't occupy more than one-third of your main job's schedule.
For those who work little hours in their main job, this last point could be challenging. However, combining a mini-job with claiming the exercise leader lump sum is possible, says Daniela Karbe-Geßler from the Taxpayers' Association.
But you have to report it in your tax return
An interesting note is that even though taxpayers can claim both the voluntary work lump sum and the exercise leader lump sum in the same year, they can't have one payment cover both categories for the same activity. However, there's a loophole if you're also earning money from a mini-job. An employer can pay you both a mini-job salary and a trainer's lump sum for the same activity, as long as you meet the other conditions.
An example: If a person works part-time as a teacher in a non-profit organization and gets a monthly salary of 750 euros for this work, their employer can transfer 250 euros per month as a trainer's lump sum and the remaining 500 euros as a mini-job salary.
Even though the lump sums for voluntary work and exercise leaders are tax-exempt, you still need to declare these amounts in your tax return. Karbe-Geßler advises entering them in Annex N of your return. Any extra amounts above the lump sums that haven't been taxed yet also need to be noted in Annex N, but as taxable wages without any income tax deduction.
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- Considering the tax implications, an advisor at the Taxpayers' Association suggested that individuals can combine their mini-jobs with claiming the exercise leader allowance for tax-free income, ensuring they report the earnings correctly in their tax returns.
- The Taxpayers' Association also pointed out that while insurances for employees in regular jobs are mandatory, those working mini-jobs might not need to have them as the income falls below the threshold for mandatory insurance coverage.
- As a professional, if you are leading voluntary activities, such as coaching soccer or working with a fire brigade, you should be aware that your tax office may audit your tax return to ensure you are correctly declaring your tax-exempt lump sum related to your voluntary work.
Source: www.ntv.de
