Involving grandparents in childcare can lead to tax deductions.

Involving grandparents in childcare can lead to tax deductions.

If you claim childcare expenses in your tax return, you'll pay less tax. This applies not only to childminders, daycare centers, or babysitters but also to grandparents taking care of their grandchildren in exchange for payment. The German Taxpayers' Association explains the rules.

Here's what you need to know:

Not limited to professionals:

Grandparents looking after grandchildren can also reduce your tax burden. If they receive money for it, the costs can be deducted under the "Child" section of your tax return. The crucial factor is that they don't live in your household. The children must belong to your household and be either your first-degree children or foster children. They mustn't be older than 14, unless they're disabled, in which case they can be under 25.

Draw up a contract:

Draw up a care contract with the grandparents, similar to one you'd create with a stranger. This agreement should include their name, address, hourly wage, and the duration of the care. Both parties should sign it.

Prove your payments:

You need to prove the payments to the tax office. This is because undocumented childcare costs may be rejected. You can make this easier by transferring the money with an appropriate reference.

Cover your travel costs:

Grandparents look after the child free of charge? No problem! You can pay them travel expenses. These are tax-deductible, too. However, if they're reimbursed, they should issue a receipt. Alternatively, you can apply a flat rate of 30 cents per kilometer. In this case, the shortest possible outward and return journey applies.

Keep an eye on the limit:

Only two-thirds of childcare costs and a maximum of 4000 euros per year and child get taken into account for tax purposes. So, only the sum of all childcare costs up to this limit lowers your tax liability.

Read also:

• This will change in December
• Dikes withstand water masses so far - Scholz holds out the prospect of help
• Fireworks and parties ring in 2024 - turn of the year overshadowed by conflicts
• Attacks on ships in the Red Sea: shipping companies avoid important trade route

1. Consulting an advisor from the Taxpayers' Association can help clarify any legal issues regarding tax deductions for grandparents' childcare.
2. The Judgments of the tax office are crucial in determining the validity of tax deductions related to parental allowance, child benefit, and childcare allowance.
3. The Family's financial situation can significantly benefit from tax deductions on childcare expenses, whether provided by professionals or grandparents.
4. Members of the Taxpayers' Association advocate for fair and equal tax policies concerning fathers' rights to claim tax deductions for childcare expenses.
5. Parents should be aware of the legal issues involved in claiming tax deductions for childcare expenses during the preparation of their tax return.
6. The Tax office requires documented proof of payments made to grandparents for childcare to ensure that taxpayers comply with the regulations on childcare allowance.
7. Mothers and fathers should consider involving extended family members, such as grandparents, in childcare and the potential tax benefits associated with these arrangements.

Source: www.ntv.de