Income-related expenses for employees

Contents:

• What are income-related expenses?

• Principles for the deduction of income-related expenses

• Overview of typical income-related expenses

• Special cases: Home office, commuter allowance & more

• Standard tax-free allowance for income-related expenses 2023/2024

• Tips for your income tax return

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What are income-related expenses for employees?

Werbungskosten (income-related expenses) generally have nothing to do with classic "advertising" but are rather all expenses that you incur in connection with your profession. The EStG (§ 9 Abs. 1 Satz 1 EStG (Income Tax Act)) defines income-related expenses as expenditures for the acquisition, securing and maintenance of your income – in this case, from non-self-employed work.

In short: everything you need for your job and which is not reimbursed can, in principle, be declared as income-related expenses in your income tax return.

Basic requirements for income-related expenses

For the Finanzamt to recognise your professional expenditures – i.e., income-related expenses – the following conditions must be met:

• Professional context: The costs must be objectively related to your professional activity.

• Own payment: You must have borne the expenses yourself.

• No reimbursement: If you have received a tax-free reimbursement from your employer, you can still declare this in your income tax return; however, you must offset this reimbursement so that this deduction usually has no tax refund effect.

The employee lump sum (Arbeitnehmer-Pauschbetrag)

Every employee automatically receives an income-related expenses lump sum of 1,230 € per year (from 2023). You do not need to submit any proof for this. However, this also means that if you, for example, purchase a mobile phone or computer, you must first exceed this lump sum for it to have any effect. Generally, the average amount is set in such a way that a large number of taxpayers see no effect from it.

But: If your actual income-related expenses are higher, it pays to collect receipts – and save more tax!

The most common income-related expenses – what counts?

Here is an overview of typical deductible income-related expenses:

Travel to work

• Distance allowance (Entfernungspauschale): 0.30 €/km (from the 21st kilometre: 0.38 €)

• Maximum 4,500 € per year (exception: use of your own vehicle)

Home office allowance

• Applies even if no separate study (Arbeitszimmer) is available

Work equipment

• Technical books, laptop, desk lamp, software etc.

• Up to 800 € net can be deducted immediately (limit for low-value assets – GWG)

Further education costs

• Seminars, workshops, language courses with a professional context

Business trips & subsistence

• Subsistence allowances depending on the duration of absence

• Travel costs, overnight stays, travel expenses

Double household management (Doppelte Haushaltsführung)

• Second home for professional reasons (e.g., in the event of a transfer)

• Can be claimed: rent, trips home, subsistence

Membership fees

• Fees for professional associations (e.g., IG Metall, Medical Association)

Special cases: What about mixed costs?

If an item or an expense is used both privately and professionally (e.g., mobile phone, internet), the professional proportion must be made plausible – usually through an estimate (e.g., 50% use for the office). However, proof can also be requested here.

Example: A laptop that is used 70% professionally can be deducted at 70% as an income-related expense.

Not deductible: These costs are not recognised by the Finanzamt

• Costs for typical everyday clothing (including business suits)

• Relocation costs without a professional reason

• Fines, penalty payments

• Travel for lunch

• Expenditures without proof

The right time for the deduction

Income-related expenses generally apply in the year of payment (§ 11 EStG). However, larger purchases (e.g., a desk over 800 € net) are depreciated over their useful life (AfA).

Use income-related expenses cleverly – with support from Lexo.Tax

As the Lexo.Tax e.V. Lohnsteuerhilfeverein, we support you in the optimal assertion of your income-related expenses. Whether simple cases or complex constellations such as double household management or mixed-use work equipment – we take care of the overview.

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Because every Euro counts, we are here for you.

Income-related expenses offer great potential for tax savings. Many employees do not exhaust the possible deduction because they are not familiar with the topic – or simply forget it.

Therefore, our tip: Collect receipts, we will give you individual tips so that you can deduct as much as possible – note down professionally induced expenses and use our income tax assistance – we are active throughout Germany – digitally savvy and reachable for you at any time!