What is njvpdi tax

When do I have to pay taxes as a pensioner? And how much?

Deutsche Rentenversicherung will pay more than 25.8 million pensions in 2019. The average monthly pension is 924 euros. This was determined by the Federal Ministry of Labor and Social Affairs in 2019.

But when do retirees have to pay taxes? What about the pension allowance and the old-age relief amount? What do pensioners have to consider when completing the tax return? We have the answers to the most important questions for you.

When do I have to file a tax return as a pensioner?

As a pensioner, you are generally obliged to submit a tax return if the taxable part of your annual gross pension exceeds the basic allowance. The basic tax-free allowance for single people is 9,744 euros per year in 2021. For married people the double value applies. How you can calculate the taxable part of your annual gross pension follows in the course of the article.

Important: Every pensioner has to submit a tax return when requested by the tax office. If you receive a corresponding request from the tax office, you should react quickly. Otherwise, the office will estimate your tax situation - and that can lead to sensitive tax back payments.

What is the downstream taxation of statutory pensions?

Since the Retirement Income Act came into force on January 1, 2005, pensions in Germany have been taxed afterwards. Pensions are therefore taxable in old age at the personal tax rate

The downstream taxation affects not only the statutory pension, but also pensions due to reduced earning capacity and survivors' pensions such as widow's or orphan's pensions. Bad news for private pensioners too: Both the Riester pension and Rürup pension as well as the company pension are fully taxable at retirement age and are taxed at the personal tax rate.

After all: the contributions that you pay into a private pension plan during your professional life can be deducted from tax as pension expenses.

By the way:

The Federal Finance Court (BFH) considers the taxation of statutory old-age pensions to be constitutional. In several judgments, the chief judges came to the conclusion that there is basically no unconstitutional double taxation due to pension taxation.

Pension allowance - what is it?

The pension exemption plays a central role in terms of pension taxation: it is the part of the pension that is not taxed. The year in which you retire is decisive for the pension allowance. Those who retire in 2021 are entitled to a pension allowance of 19 percent. This means: 19 percent of the pension remains tax-free, but 81 percent of the pension must be taxed. The pension allowance is a fixed euro amount that remains unchanged in subsequent years.

The tax-free part of the pension will become smaller and smaller in the coming years, until 2040 all pensions will have to be 100 percent taxed. Here is an overview of the development of the pension allowance in the coming years:

Year of retirementTaxation share in%Pension allowance in%
20197822
20208020
20218119
20228218
20238317
20248416

How do I calculate the tax-free part of the pension?

The basis for calculating the pension allowance is the full annual gross pension. Most pensioners, however, retire during the year, i.e. the pension is usually paid for less than twelve months in the first year. For this reason, the pension exemption is only determined in the second - and therefore full - year of pension payment.

An example:

Peter will retire on April 1, 2014. This means that he is entitled to a pension allowance of 32 percent. However, since he only received a pension for nine months in 2014, the pension allowance is only calculated from the full annual gross pension of the second year of pension receipt.

Peter's annual gross pension in 2015 was 12,000 euros. His pension allowance of 32 percent is thus 3,840 euros. The pension allowance once determined remains unchanged in the following years - even if the pension increases due to pension adjustments.

By the way:

The pension allowance is set individually for each pensioner at the beginning of the pension. The annual pension increases that follow in the course of the pension must be fully taxed.

Suddenly taxable thanks to pension adjustment - what now?

Every year on July 1, the federal government increases the pensions, this is called pension adjustment. On July 1, 2020, pensioners in the west could look forward to 3.45 percent more money, in the east the pension rose by 4.20 percent.

Around 30% of pensioners pay income tax

In December 2020, the Federal Statistical Office published new figures on pension taxation: In 2019, a total of 21.6 million people received benefits from statutory, private or company pensions. Pension taxation hit a total of 6.1 million people in 2016 - 29 percent at the time. No figures are yet available for 2019.

Year after year, some retirees fear that they will suddenly have to pay taxes as a result of the pension increase. But this concern is mostly unfounded. If taxes are due due to the pension adjustment, these are initially marginal.

An example:

Bernhard is single and lives in Mannheim. So far, the taxable part of his pension has remained below the basic allowance and has not had to pay any taxes.

In the summer of 2020, however, the pensions for the old federal states were increased by 3.45 percent. With the pension increase, Bernhard now receives more pension every month, the taxable part of his pension exceeds the basic allowance by 50 euros.

This means that he is initially obliged to submit a tax return. However, it does not necessarily mean that Bernhard also has to pay taxes, because he can now deduct medical expenses, craft costs, donations and even advertising expenses from his annual income. More on that later.

By the way:

You must enter the annual adjustment amount in your tax return. However, it is difficult to calculate the adjustment amount. It is easier if you get the "Annuity receipt for submission to the tax office" request. In this document you can easily read off the adjustment amount.

As a pensioner, what do I have to consider when filing my tax return?

In addition to the cover sheet, pensioners must also fill out Appendix R for "Pensions and other domestic benefits".

In addition, Annex R-AV / bAV for benefits from domestic pension contracts and from domestic company pension schemes, Annex R-AUS for pensions and other benefits from foreign insurance companies, foreign pension contracts and foreign company pension schemes as well as Annex KAP for investment income or Annex V. Rental and lease income.

By the way:

The two pension systems R-AV / bAV and AUS have only existed since 2020. Until 2019, all information on the pension was only to be given in Appendix R.

As a pensioner, what can I deduct from tax?

Anyone who has to submit a tax return can also claim certain expenses for tax purposes. This applies not only to employees, but also to retirees. As a pensioner, you can deduct these costs from tax:

Are there any other allowances specifically for retirees?

If you are a pensioner over 64 years old and still earn something or have income from investment income or rental, you can use the so-called retirement benefit. The amount of the old-age relief depends on your year of birth.

By the way:

If you are unsure how you as a pensioner can properly take advantage of all the tax advantages, come to us. Our advisors are happy to help you and prepare your tax return. You can find a counseling center near you here: Consultant search.

What does the pilot project “Simplified assessment of pensioners” mean?

At the end of April 2019, the states of Brandenburg, Bremen, Mecklenburg-Western Pomerania and Saxony started a pilot project with the support of the Federal Ministry of Finance. The aim: to simplify tax returns for retirees.

If the tax office already has tax-relevant information from third parties - such as pension income and health insurance contributions - pensioners only need to provide additional information on donations, church tax, extraordinary burdens, household-related services and craftsmen's services on a special form. The new form called "Declaration on the assessment of retirement income" can be submitted since May 2, 2019, but only in the above-mentioned federal states.

But be careful: If you have additional income, for example from renting or a business, you have to fill out and submit the tax return as usual.

As a pensioner, do I also pay church tax?

Yes, like all other taxpayers, they may pay eight to nine percent church tax on top of their income tax. If you don't have to pay income tax as a pensioner, you don't pay any solos or church tax.

As a pensioner, do I have to pay tax on additional income?

Yes, regardless of whether you are receiving a statutory old-age pension or other statutory pensions - taxes are due on additional income as soon as your income exceeds the basic tax-free allowance.

How high the taxes actually are also depends on the type of income. Income from self-employed or non-self-employed work, from renting and leasing, from private pensions or capital income are treated differently for tax purposes.

As a pensioner, can I earn something tax-free?

If you would like to earn a little extra as a pensioner in order to get by better or to fulfill a special wish, you should inform yourself in advance. Since the introduction of the so-called flexi pension, there have been different regulations, depending on whether you are an early or old-age pensioner. You will find many useful details on this in our article Flexirente: The most important regulations at a glance.

I am retiring abroad - what do I have to consider?

Whether Italy, Thailand or Spain: Anyone who retires under palm trees is subject to limited tax liability in Germany. This means that the taxable part of the pension must be taxed from the first euro. Our top topic of pension payments to and from abroad shows you the conditions under which you can apply for unlimited tax liability, where you have to send your tax return and how the topic of foreign pensions is regulated.

What is the pension discount?

If you retire before reaching the standard retirement age, you must expect a pension deduction, i.e. a reduction in the pension amount. The pension deduction is 0.3 percent per month of early use - but a maximum of 18 percent. Those who only retire when they reach retirement age do not have to worry about a pension deduction.

This is an editorial text from the VLH editorial team. There is no advice on topics that are outside the tax advisory powers of an income tax aid association. Consulting services in specific individual cases can only be provided within the framework of the establishment of a membership and exclusively within the advisory authority according to § 4 No. 11 StBerG.

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Pension stock statistics. Date 05/24/2019.