Advance tax payments: who has to pay?

Advance tax payments: who has to pay?

Advance payments may be necessary if a high tax back payment is expected. The tax office can request an initial installment payment in the current tax year. This is intended to ensure that no further high additional payment is due as soon as the annual tax assessment arrives. Self-employed people and business owners are often particularly affected by this regulation, as they do not automatically pay income tax like salaried employees. Certain married couples in tax classes three and five may also be affected due to tax law changes brought about by the Citizens' Relief Act.

The amount of advance payments is determined based on income and must be made quarterly, without any specific payment requests. Objections to advance payments are possible, especially if unexpected special payments affect the tax situation. If your income changes during the year, it is advisable to submit an informal application for a reduction in advance payments to the tax office. These adjustments should be well justified, for example by specifying a change in tax class or one-off bonus payments.

Payments that have to be made will be automatically taken into account and offset on the next tax return. If overpayment is made, a refund will be made, while in the opposite case, outstanding taxes will have to be paid. In general, it is advisable that, despite advance payments, there is a balance between the amounts paid and the actual tax liability at the end of the tax year.