Deduct maintenance payments: How to save taxes
Ex-Partner, relatives or parents: One can recover part of the money given financially to others when it comes to alimony payments. Here's how to claim alimony payments on tax returns.
When people think about alimony, most of them immediately think of their ex-partner. But that's only one side of the coin.
"It's worth considering the topic of alimony and support for close family members when filling out the tax return," says Isabell Pohlmann from the Stiftung Warentest.
Many situations are imaginable: For example, when a daughter contributes something to her mother's pension. Or when an adult son lives with his parents for some months. In such cases, it may be worth declaring these payments to the tax office.
For whom can I claim alimony?
Apart from alimony for ex-partners, alimony paid to relatives in a direct line can also be claimed. For example, to children and grandchildren or to parents and grandparents. "For persons for whom child benefit is paid, no alimony can be claimed," says Alfred Buchholz, advisory manager at the Vereinigte Lohnsteuerhilfe (VLH).
Under certain conditions, it may also be possible for the tax office to recognize payments to other relatives, such as siblings, as tax-reducing if they are in need. However, the tax office will examine the economic relationships very closely. Alimony payments to refugees are not tax-deductible.
How much alimony can I claim tax-deductible?
The tax office recognizes monetary and non-monetary benefits up to the amount of the tax-free allowance. That is 10,908 euros per year for 2023 or 11,604 euros for 2024. Anything that is paid in alimony up to this amount can be claimed in principle. In addition, basic contributions to health and long-term care insurance can be claimed, provided the payer has taken them over.
Important: The person receiving or the person receiving alimony must be genuinely in need. Child benefit may not continue to flow to the person being supported. Moreover, alimony recipients are initially obliged to earn their own living. If this so-called obligation to earn an income is violated, the tax office may not recognize alimony payments under certain circumstances.
Does the recipient or recipient's spouse have their own income - for example, in the form of pension, salary, BAfoG or social benefits -? The tax office must be informed about this. "The income and benefits reduce the tax-deductible alimony," says Buchholz - at least if certain deductible allowances are exceeded.
Can natural assets instead of money be considered as alimony?
Yes. In this case, parents can claim the full tax-free allowance, i.e., the maximum contribution of 10,908 euros (2023) or 11,604 euros (2024) tax-deductible. And that without having to provide proof of specific expenses. "You must convert this maximum amount if your child only lives with you for some months," says Buchholz. For this purpose, the maximum amount is first divided by 12 and then multiplied by the number of months that the child has lived with the parents again.
And of course the same applies here: The income and benefits of the person being supported have the highest taxable amount deducted.
Example: A 26-year-old student earned 325 Euro per month from a mini-job in 2023, amounting to 3900 Euro per year. She is 3276 Euro above the deductible allowance of 624 Euro. An additional 180 Euro can be deducted because the taxable income includes the tax-deductible income from benefits. This leaves 3096 Euro. This amount must then be deducted from the maximum allowable amount: For 2023, the parents could therefore claim 7812 Euro in maintenance, for 2024 8508 Euro.
And how are maintenance payments to ex-partners deducted - the term Realsplitting?
In maintenance payments to the ex-partner, the money does not flow directly to relatives. Therefore, there are different rules for the tax-deductibility of these maintenance payments. Ex-partners can opt for Realsplitting - they must agree on this.
Alternatively, the payer can claim these payments as exceptional expenses. For this, the consent of the ex-partner is not required, but in many cases the payments are not fully deductible.
With Realsplitting, the payer can claim up to 13,805 Euro in taxable income per year. In addition, contributions to health and long-term care insurance may also be taken into account. The advantage of Realsplitting is that there are no deductions, unlike with exceptional expenses - for example, if the recipient has their own income or if the payments do not yet exceed the allowable burden limit.
"If I pay 10,000 Euro in maintenance, I can also declare 10,000 Euro in my tax return," says Buchholz.
The recipient or recipients must declare the received maintenance as taxable income. "Normally, it is contractually agreed that the payer compensates for this tax disadvantage," says Buchholz. It is quite common to agree on this directly in the divorce settlement.
Which forms do I need for the tax return?
For Realsplitting, you must complete the Special Deductions form, as well as form U. With this, you apply for the consideration of maintenance payments to the ex-partner and, if applicable, contributions to health and long-term care insurance as special deductions. "The other party must agree in form U under section B of the tax assessment," says Isabell Pohlmann. The consent is valid unless revoked.
Maintenance payments within the family are declared in the Anlage Unterhalt. Here, you record not only the amount of your maintenance payments and insurance contributions, but also the income of the person being supported to demonstrate their need.
The Anlage Unterhalt is also required if the ex-partners cannot agree on Realsplitting and the maintenance payments are to be claimed as exceptional expenses.
- Mothers and fathers alike can recover part of the money they financially support their children as child benefit, as it cannot be claimed as alimony.
- Stiftung Warentest advises considering alimony and support for close family members when filling out tax returns.
- Family policy and social policy also extend to alimony payments to relatives in a direct line, such as children and grandchildren, or parents and grandparents.
- Tax tips for parents include declaring maintenance payments to the tax office, even if the payments are in the form of non-monetary benefits or natural assets.
- Fathers who pay maintenance to ex-partners can opt for the tax-deductible option of Realsplitting, provided both parties agree, or declare maintenance payments as exceptional expenses.
- Understanding the tax implications of alimony payments is crucial, especially for advisors helping families navigate family policy, social policy, and tax office requirements.
