Cracking Parental Allowance: Earning Over 175,000 Euros? Here's Your Game Plan!
- by Nina Ponath
- 6 Min
"Earning Over 175,000 Euros: Guidance on Claiming Parental Benefits" - High earners still eligible for parental benefits, surpassing 175,000 euros income threshold.
Baffled by the question, "Will our income surpass 175,000 euros?" More and more tax consultants, like Kim Knopf from the 'TaxItSmart' in Bad Schöönborn, are hearing this query.
- Parental Allowance
- Gross Income
- Earnings Cap
- Income Taxation
Worried your income might bust the 175,000 euros mark? Fret not! Although the Parental Allowance usually worries folks when the combined family's net income spikes north of this figure, there's some good news: the eligibility isn't solely based on net income. Instead, it takes the gross income into account.
The Parental Allowance is a life-saver for families, covering a percentage of their income, ranging from 65% to 67%[2]. However, there's a cap on the amount. Here's the lowdown on the critical aspects:
- Gross Income Limit: The eligibility hinges on the gross income before tax, set at 175,000 euros per year for both parents[1].
- Percentage of Earnings: The allowance is calculated as a percentage of the income earned, ensuring higher earners don't rake in a full percentage of their income[2].
- Tax Credits and Perks: Though the Parental Allowance might seem out of reach for families bringing in big bucks, Germany throws lifelines in the form of other benefits, such as the Child Allowance (Kinderfreibetrag) and Child Benefit, which can be claimed irrespective of income level[5].
If your income or your partner's takes your combined family income over the 175,000 euros mark, you might not qualify for the Parental Allowance. But that's not all grim! You can still claim other benefits like the child allowance and child benefit, which don't share the same income threshold. For crystal-clear eligibility, it's wise to consult a financial advisor or tax professional in Germany.
- The institutional framework of Germany's financial system provides benefits for families, such as the Parental Allowance, which is a crucial support system even for high-earning families with a combined gross income of up to 175,000 euros per year.
- Seeking expert advice, particularly from a wealth-management institution or a financial advisor specializing in business and personal finance, can help families navigate the institutional framework to claim other alternatives like the Child Allowance and Child Benefit, even if they surpass the Parental Allowance's earnings cap.
