If the child allowance results in higher tax savings than the sum of the child benefit, “the tax office applies the child allowance and you get the tax advantage,” says financial expert Hermann-Josef Tenhagen. “Since you have already received the child benefit, only the excess part of the tax savings from the child allowance is paid out with the annual wage tax adjustment,” he explains.
The lower price test is carried out individually for each child. “The total payments of child benefits are compared with the total tax allowances,” says the financial expert. According to the Federal Ministry of Finance, “all families for whom the child benefit for all children is cheaper than the relief from the tax allowances for children without a child bonus” benefit in full. On the other hand, parents “for whom the relief from the child allowance for all children is greater than the sum of child benefit and child bonus” would go away empty-handed.
All families for whom the child benefit for all children is cheaper without the child bonus than the relief from the tax allowances for children benefit in full from the child bonus.
In the case of parents living separately, both parents are each assigned half of the child benefit, the child bonus and the child allowance for the common child.
According to the Federal Finance Ministry, single people with an annual income of up to 34,905 euros can enjoy the full child bonus for all children. Above this limit, the child bonus is “gradually melted away”.
The one-off payment will be fully offset against the child allowances within the income tax assessment for the year 2022 for one child with an income of EUR 37,794 or more, for two children at EUR 41,988 and for three children at EUR 48,247.
The limit for jointly assessed parents with one to three children is EUR 69,810, up to which the child bonus is distributed for all children without deductions. If the annual income exceeds this, the child bonus is gradually reduced here as well.
The one-off payment will be fully offset against the child allowances within the income tax assessment for the year 2022 for one child from EUR 75,588, for two children from EUR 83,976 and for three children from EUR 96,494.