First of all, it is important for you to know whether you need to file a tax return before hiring a tax preparation service. For this purpose, the Income Tax Act differentiates between compulsory assessments and application assessments.
Do I Need to File a Tax Return – Do I Need to File Taxes?
You are only legally obliged to submit an income tax return (compulsory assessment ) if your other income (all income except wage income, e.g. income from freelance or self-employed work, dividends, renting, pensions, etc.) exceeds a certain limit (so-called basic tax allowance), or if you, as an employee, have entered wage tax deduction criteria or have significant income outside of wage income.
If this is not the case, the tax office does not expect a tax return from you. Nevertheless, you can of course submit a voluntary tax return (application assessment). This is done informally by simply filling out the relevant forms (similar to the mandatory assessment) and submitting them to the tax office. You have 4 years to submit a voluntary tax return.
Your income as an employee is taxed directly. That means: Your employer withholds the individually calculated wage tax from your salary every month and pays it directly to the tax office. In the past, these deductions were noted on the income tax card, today they are reported directly to the tax authorities using a paperless electronic procedure for collecting income tax. Therefore, as an employee, you only have to submit a tax return if you have significant additional income – or if you have entered corresponding deduction criteria.
As an employee, you are not obliged to submit a tax return unless:
- The total of your additional income (investment income, rental, pensions, small business, etc.) is more than EUR 410 per year.
- You have received a parental allowance or other state benefits (e.g. unemployment benefit, short-time work allowance, sick pay, etc.) of more than EUR 410 per year.
- You have worked for several employers in a regular employment relationship (no flat-rate taxed mini-job or temporary job) at the same time.
- You are married, both spouses are employees, and have chosen tax class combination III and V.
- You have registered an allowance with the tax office (using the so-called wage tax reduction procedure).
In these cases, you are obliged to submit a tax return, as this could result in an additional tax payment that the tax office is not happy to miss. Most people who meet one of the above conditions are registered with the tax office and receive a written request to submit an income tax return around the turn of the year. The tax office expects your tax return by July 31st. of the following year.
If you fail to meet this deadline, you will face penalties such as late payment surcharges, penalties, tax assessments, and interest. An extension of the deadline, which was previously usually possible without great effort, is unfortunately no longer so easy to achieve. You need a valid reason (e.g. long illness) and should submit the application in writing.
However, if you commission a tax advisor or income tax aid association to prepare your tax return, the submission deadline can be extended to the last day of February of the year after next.