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Have you already thought about your tax return? Most people tend to postpone the topic of taxes, and admittedly, dealing with tax issues is generally not very enjoyable. However, if you are caring for a relative, it is advisable to address the subject of taxes - and do so as early as possible in the year. Nadège Dupont, a tax consultant in Düsseldorf and advisor for famPLUS, explains why this is important and what matters.
What tax benefits are available for caregivers?
Family caregivers can declare various care expenses as extraordinary burdens in their tax returns. "The topic of taxes is very broad and must always be considered on a case-by-case basis," says tax consultant Nadège Dupont.
Basically, there are two options: as an individual proof within the framework of the so-called extraordinary burden or as a lump sum, the so-called care allowance. Both are tax benefits, meaning: "The amount is deducted from the total income of the taxpayer. This accordingly reduces the taxable income and the tax burden," explains Dupont.
What are the requirements to be eligible for the care allowance?
Certain conditions must be met for relatives to use the flat-rate care allowance. "Care must generally be provided free of charge, personally, and in a home environment. The flat-rate care allowance can also be used for care in a nursing home under certain conditions," explains Nadège Dupont. Caregiving relatives can use the flat-rate allowance provided they do not receive any money for the care. The care can take place in their own home or the home of the person in need of care. "Basically, family members can use the flat-rate allowance," says the expert. However, if a close relationship and caregiving activity exist, for example, among friends or long-term neighbors, the flat-rate care allowance may also be granted under certain circumstances.
Another requirement: The person in need of care must have a care level of 2 or higher. The need for care must therefore be recognized by the care insurance fund. In the case of a disability, a degree of at least 20 must be determined for the lump sum to be used.
What is the flat-rate care allowance?
The amount of the lump sum depends on the degree of disability or the care level of the person. The following care lump sums apply:
- For care level 2: 600 euros
- For care level 3: 1100 euros
- For care level 4 or 5: 1800 euros
A flat rate of 384 euros is granted for a degree of disability of 20. The flat rate increases by ten points each time, up to 2,840 euros at 100 percent. Here you will find an overview.
The care allowance is an annual amount. It can be used in full even if the care started only in December. Tip from the tax advisor: Those who care for two people, such as a mother and father, can apply for the care allowance twice.
How is the flat-rate care allowance applied for?
Important to know: The care lump sum is not automatically granted. "Caregivers must declare the care lump sum in their tax return, specifically in the section for extraordinary burdens," explains the tax advisor. Name, date of birth, address, tax identification number, and degree of relationship of the person in need of care must be provided.
In addition, all necessary documents should be recorded there:
- a certificate of the level of care
- Disability ID Card
Tip from the tax expert: If the level of care or the degree of disability changes during the year, be sure to state the higher level. "The higher level applies for the entire year," says Dupont.
Can multiple people also use the care flat-rate amount?
The care lump sum is basically related to one person and is used by the main caregiver. If several family members share care and support, the lump sum can also be applied for by several people. However, the amount must then be divided. Example: With care level 4, the 1800 euros care lump sum can be fully claimed by one family member.
If two relatives provide care, each can use 900 euros. If three relatives provide care, the amount of 1800 euros will be divided by three, meaning: each person can use a care flat rate of 600 euros. "This must be indicated and explained accordingly in the tax return," says expert Dupont.
Nadège Dupont recommends always looking at the individual situation and agreeing on whether and how the care lump sum should be divided. "Here, tax advice can be helpful in finding the best option for tax relief," says Dupont.
Which care costs count as extraordinary burdens?
If the care costs are higher than the lump sum, it may be worthwhile to specify them individually in the tax return. Care costs include:
- Care by outpatient services
- Care aids, for example, incontinence pads, care bed, disposable gloves
- Travel expenses for care
- Modifications in the house or apartment, such as a barrier-free bathroom (only if the costs were not covered by the care insurance fund)
Important: Everything must be supported by invoices and listed individually - specifically under extraordinary burdens. From these, a so-called reasonable personal burden is deducted, which does not have a tax effect. The costs are therefore reduced by a certain percentage.
Care costs as household-related services - what applies?
Certain care costs are not considered extraordinary burdens because they are not caused by the need for care. Example: "If a household help is employed without the presence of illness or need for care, in the so-called age-related care, this is not considered an extraordinary burden," explains Nadège Dupont. However, such care costs can still be declared in the tax return and deducted from taxes - as household-related services. These include:
- Household help (also from the nursing service)
- Everyday Assistance
- Home emergency call system
However, the following applies: For income tax, not all costs are credited, but only 20 percent. In addition, there is a maximum amount of 4000 euros per year. "It is important that an invoice is available. The costs should be paid cashless, i.e., by transfer," explains the expert. The invoices are not submitted with the tax return, but keep them to be able to provide proof if there are any queries.
Can the costs for the nursing home also be deducted from taxes?
When care in a nursing home is necessary due to care needs or illness, nursing home costs can also be considered for tax purposes," says tax consultant Dupont. However, the costs are not fully covered; instead, the amount is calculated individually. "The amount is determined by the income of the caregiving relative and the number of children, after deducting the reasonable personal contribution," the expert explains. You do not have to calculate this yourself; it will be calculated accordingly when preparing the tax return. Tip from the tax consultant: With tax software, you can already calculate how high the nursing home costs are that you can deduct.
What mistakes should caregiving relatives avoid?
Admittedly, it's not easy to deal with the subject of taxes. "I can only encourage caregivers to inform themselves and seek advice," says tax expert Nadège Dupont.
A common mistake is when caregivers do not apply the lump sum or do not file a tax return at all - thereby practically giving away money. You can find advice from a tax consultant or a wage tax assistance association. Digital tax tools can also provide an initial insight. "Ideally, you should seek advice early in the year because you can then better optimize the tax relief," explains Dupont. Example: A renovation is planned. The costs exceed the amount of deductible costs. It may then be more tax-efficient to divide the renovation into two phases so that the maximum amount is not exceeded.
Tip from the tax advisor: Keep everything that happens during the year that is related to care in any form, and decide at the end of the year whether to use the care costs as a lump sum or as individual services.
Sources:
https://www.gesetze-im-internet.de/estg/__33b.html
https://bvkm.de/ratgeber/steuermerkblatt/
