Good news for short-time workers: the state is increasing payments and allowing more additional earnings. And those who do well can get even more out of it. The most important tips and tricks.
Due to the Corona crisis, the number of short-time working in Germany is reaching unprecedented levels. According to calculations by the Ifo Institute, 7.3 million employees were on short-time work in May – and other companies have registered short-time work for June. The previous negative record after the financial crisis in 2009 is 1.44 million short-time workers .
In order to mitigate the financial consequences for affected employees, the Bundestag and Bundesrat have decided to increase the short-time allowance . Those who are on short-time work at least 50 percent receive more money: From the fourth month onwards, the state pays short-time workers 70 percent instead of 60 percent of the lost net wage, from the seventh month onwards it is 80 percent. Parents even receive 77 percent (instead of 67 percent) from the fourth month and 87 percent from the seventh month. In addition, the regulations on additional earnings were relaxed.
The improved regulations should be a blessing for many. However, there are also some tax issues that need to be considered. Here are the most important tips and tricks:
Tip 1: be prepared for additional tax payments
So that short-time workers do not experience any nasty surprises later when you submit your tax return, you should know how the payments affect your taxation. First of all, the good news: The short-time work allowance is paid tax-free, so no taxes are deducted directly from the sum itself . However, the short-time work allowance is included in the calculation of the tax that you have to pay on your remaining taxable income. In order to determine the tax rate for this, the tax office includes the short-time work allowance as a fictitious income.
This results in a higher tax rate due to the tax progression. Since this is not yet taken into account in the employer’s payroll (i.e. you pay less tax at first), this point can lead to an additional payment later in the tax return. Anyone who has received short-time work benefits of more than 410 euros per year is obliged to submit a tax return and enter the amount in Appendix N, as the United Wage Tax Aid Association (VLH) emphasizes.
Tip 2: change the tax class
Since the amount of the short-time allowance depends on the monthly net salary, a change of tax bracket can be worthwhile for couples. “It is best if the recipient of the money chooses the tax class with the highest monthly net income, ie III or at least IV”, advises Stiftung Warentest . In this way, you receive more short-time work benefits, while tax disadvantages due to the less favorable tax bracket are compensated for in your tax return anyway. Practical: Since the beginning of 2020, married people and life partners have even been able to change their tax class several times a year.
Tip 3: enter the child allowance
In order to receive the increased short-time work allowance for parents, a child allowance of at least 0.5 must be entered on the electronic income tax card. This is usually the case automatically. There are exceptions, however: parents for children over 18 who are still in vocational training continue to be entitled to the tax exemption up to their 25th birthday – but they must actively apply for it.
In addition, Stiftung Warentest would like to point out that even for married mothers and fathers with tax class V, the child allowance is not automatically taken into account, as this is entered in the partner with tax class III. Therefore, an Elstam printout with the partner’s wage tax deduction features is required as proof for the higher short-time work allowance.
Tip 4: top up with a mini job
Collecting short-time work benefits and keeping the full money from a part-time job is now easier. Up until now, additional earnings were restricted to systemically important areas, which will no longer apply with Social Protection Package II. According to the federal government, the following applies from May 1 to December 31, 2020: “Anyone who takes up employment during short-time work can earn up to the full amount of their previous monthly income. The earnings earned are not offset against short-time work benefits.”