@Monte1541
Its first going to determine what class of tax payer you are, the classes are based on single, married, children (in so much as there is a single parent, which doesnt apply to you) and what the pay disparity is between you and your spouse. Essentially you need to determine if you are going to claim your corporate job income and if you do if its more or less than your IT spouse. To make things uncomplicated Ill assume your spouse files as class 3 meaning married with a spouse that has no income. Based on that you would be well within the second bracket at the 14% rate, in addition youd have solidarity tax of 5.%. For a total of about 20%, There is a church tax (8%-9%) as well but you can avoid it by not registering. In addition youd be eligible for a child deduction of about €1824 and a work travel allowance. So 20% of €50K gives you a net salary of €40K.
This model is pretty simple, but two things it doesnt account for is 1) Not including your income and 2) That your tuition waiver and other benefits are taxable compensation. These are important because the threshold for the the next tax bracket is only €52K/person (€2K more than you stated), and the next tax bracket is taxed at 42%. Considering that the average tuition fee waiver is €10K that and any number of small benefits such as relocation (flights, shipping/shopping/landing allowances, etc.) to something as innocuous as a PD allowance can easily push you pass that threshold. Using 42% plus the solidarity tax puts you at 47.5% which gives you a take home of about €26K.
Germany tax questions
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Thames Pirate
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Re: Germany tax questions
42% would be about the highest you would pay.
The math is pretty much correct. PsyGuy can google. He's pretty good at it.
Again, much of this amount can be reclaimed if you are less than 2 years and even if you stay longer, a fair bit of it can be claimed either 2 years after departure (less than 5 years' stay) or upon reaching retirement age (more than 5 years' stay).
Hope that helps.
The math is pretty much correct. PsyGuy can google. He's pretty good at it.
Again, much of this amount can be reclaimed if you are less than 2 years and even if you stay longer, a fair bit of it can be claimed either 2 years after departure (less than 5 years' stay) or upon reaching retirement age (more than 5 years' stay).
Hope that helps.
Re: Germany tax questions
I'll make more than she does. Does SOFA status effect any of this?
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Thames Pirate
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Re: Germany tax questions
That I can't say, sorry. This is where your employer and the school will have to advise you. It is likely you will need to file a German return, so your German tax consultant will help you.
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wrldtrvlr123
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Re: Germany tax questions
Monte1541 wrote:
> I'll make more than she does. Does SOFA status effect any of this?
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SOFA status will have some impact along the way since it implies that you would be working for the US gov't or a contractor with a contract with the US gov't whie in Germany. So your income would likely be taxed and have the usual deductions taken out by your employer/the gov't and you generally don't get much/any choice in the matter.
As for your wife and any income she makes on the economy it could be complicated. At least initially you might want to get some expert advice (real experts in the real world) to make sure you start off on the right track. It may be that you can exclude her income with the foreign income exclusion, it may be that it is easier/better to pay Germany taxes on her income and then be able to deduct that from any US taxes she owed.
On the other hand, SOFA status might also have some clause that no one on your orders (presuming you are on them) can make use of local benefits (e.g. medical care etc on the economy) in which case she would be paying a potentially higher tax rate without being able to claim any of the benefits (at least without having to apply for her own visa).
In any case, it could be complicated and I don't claim to be an expert so you should seek non-googled expertise on your exact situation.
> I'll make more than she does. Does SOFA status effect any of this?
================
SOFA status will have some impact along the way since it implies that you would be working for the US gov't or a contractor with a contract with the US gov't whie in Germany. So your income would likely be taxed and have the usual deductions taken out by your employer/the gov't and you generally don't get much/any choice in the matter.
As for your wife and any income she makes on the economy it could be complicated. At least initially you might want to get some expert advice (real experts in the real world) to make sure you start off on the right track. It may be that you can exclude her income with the foreign income exclusion, it may be that it is easier/better to pay Germany taxes on her income and then be able to deduct that from any US taxes she owed.
On the other hand, SOFA status might also have some clause that no one on your orders (presuming you are on them) can make use of local benefits (e.g. medical care etc on the economy) in which case she would be paying a potentially higher tax rate without being able to claim any of the benefits (at least without having to apply for her own visa).
In any case, it could be complicated and I don't claim to be an expert so you should seek non-googled expertise on your exact situation.
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@Thames Pirate
I only post for experience and reliable trusted resources.
@Monte1541
This is actually pretty easy, under SOFA you cant pay German taxes (even if you wanted to), and your income doesnt count, but your spouse cant claim you as part of a family unit. Your spouse would have to file as either class 1 (single) or as class 5, which is the more difficult class (you can still do it yourself), but its a headache (most dependent spouses on SOFA just arent employed).
You could elect to pay the church tax, but it would be difficult since its a percentage of income you cant claim, at that point your just better off tithing and getting a receipt.
The other issue that wasnt discussed is that in Germany (like most of the EU) while the above are tax rates (that pay for schools and roads, and libraries and parks, and provide infrastructure), there is a social insurance scheme with Pension/UI at about 11% and Medical/Health at about 8% so thats about another 19%-20%, so your total pre-net contributions are about 40% in total contributions, which puts your net income at about €30K/year, with a very fine line between that and the next tax bracket of 42% plus contributions, though the work travel allowance can offset that to about €4K/year, plus the child deduction of €1800, so you some wider income flexibility (with income padding of about €6K), you could just maybe barely get under the bar with a €10K placement waiver.
I only post for experience and reliable trusted resources.
@Monte1541
This is actually pretty easy, under SOFA you cant pay German taxes (even if you wanted to), and your income doesnt count, but your spouse cant claim you as part of a family unit. Your spouse would have to file as either class 1 (single) or as class 5, which is the more difficult class (you can still do it yourself), but its a headache (most dependent spouses on SOFA just arent employed).
You could elect to pay the church tax, but it would be difficult since its a percentage of income you cant claim, at that point your just better off tithing and getting a receipt.
The other issue that wasnt discussed is that in Germany (like most of the EU) while the above are tax rates (that pay for schools and roads, and libraries and parks, and provide infrastructure), there is a social insurance scheme with Pension/UI at about 11% and Medical/Health at about 8% so thats about another 19%-20%, so your total pre-net contributions are about 40% in total contributions, which puts your net income at about €30K/year, with a very fine line between that and the next tax bracket of 42% plus contributions, though the work travel allowance can offset that to about €4K/year, plus the child deduction of €1800, so you some wider income flexibility (with income padding of about €6K), you could just maybe barely get under the bar with a €10K placement waiver.
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Thames Pirate
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Re: Germany tax questions
Oh, so you missed the part where I mentioned pensions as part of the total tax rate?
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@Thames Pirate
I missed it because you made no such claim or statement:
"42% would be about the highest you would pay.
The math is pretty much correct. PsyGuy can google. He's pretty good at it.
Again, much of this amount can be reclaimed if you are less than 2 years and even if you stay longer, a fair bit of it can be claimed either 2 years after departure (less than 5 years' stay) or upon reaching retirement age (more than 5 years' stay).
Hope that helps."
I missed it because you made no such claim or statement:
"42% would be about the highest you would pay.
The math is pretty much correct. PsyGuy can google. He's pretty good at it.
Again, much of this amount can be reclaimed if you are less than 2 years and even if you stay longer, a fair bit of it can be claimed either 2 years after departure (less than 5 years' stay) or upon reaching retirement age (more than 5 years' stay).
Hope that helps."
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Thames Pirate
- Posts: 1150
- Joined: Fri Jul 05, 2013 8:06 am
Re: Germany tax questions
Yes, and I pointed out it was the pension that could be reclaimed.
At any rate, OP, your best bet is to talk to your HR, your wife's school HR, and to tax advisors in Germany and possibly the US.
At any rate, OP, your best bet is to talk to your HR, your wife's school HR, and to tax advisors in Germany and possibly the US.
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@Thames Pirate
Citing the social insurance scheme as reclaimable is not assumed that it is neither part of or separate from taxes. Nor did I disagree with you that the social insurance contributions (specifically the pension) couldnt be reclaimed.
Citing the social insurance scheme as reclaimable is not assumed that it is neither part of or separate from taxes. Nor did I disagree with you that the social insurance contributions (specifically the pension) couldnt be reclaimed.
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Thames Pirate
- Posts: 1150
- Joined: Fri Jul 05, 2013 8:06 am
Re: Germany tax questions
wow.
good luck o.p.
good luck o.p.