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Prepayments for taxes: who has to pay and how can you object?
Find out when advance payments are threatened and how you can take action against them. Expert Laura Hindelang explains the most important steps. Tax office, taxes, objection.
Prepayments for taxes: who has to pay and how can you object?
Prepayments represent a financial obligation that you may face if a large additional payment is due. You will be asked to pay money in the current tax year to avoid possible back taxes. This measure is intended to ensure that you are not confronted with unexpectedly high tax claims when the annual tax assessment arrives.
As a rule, self-employed people and businesses are affected by advance payments because they do not have automatic payroll tax deductions like employees. Employees can also receive advance payments in certain cases, especially married couples in tax classes three and five due to the Citizens' Relief Act. The pension allowance is taken into account in the income tax deduction process, while the actual insurance contributions are relevant for the tax return.
The exact amount of the advance payments depends on your income and is due quarterly. Advance payments can be objected to, especially if income circumstances change over the course of the year. This requires an informal application to the tax office with appropriate justification, such as a decrease in income due to a change in tax class or one-off bonus payments.
If you have to make advance payments despite an objection, these will be offset against the next tax return. Amounts paid in excess will be refunded, while amounts missing will have to be paid back. A constant income situation should ideally mean that your advance payments are balanced.