Your guide to tax deductions for 2020

Filing your tax return in Germany? Find out here which expenses are tax deductible. Plus, learn about our partner offer designed to make filing your 2020 tax return a breeze.

6 min read

Zoom meetings in sweatpants, power naps after lunch, a daily commute from your bed to your desk—despite the challenges, working from home certainly has its benefits. And now, you can even add tax benefits to the list of home-office perks. Thanks to some recent changes in the tax code, employees who work from home can now benefit from brand new tax deductions. Read on and find out what you can claim for 2020 and which tools will help you file with confidence this year.

Why should I file a tax return? 

Let’s be honest—filing your taxes can be a pain. Many put it off, and because it isn’t compulsory for most employees in Germany, some don’t even bother to file at all. However, employees can deduct a variety of expenses from their taxes, and by doing so, could qualify for a hefty tax refund. According to the Federal Statistical Office, 87,59% of all unlimited income taxpayers who filed a tax return received a refund. And it’s worth doing—the average refund last year added up to €1,027!

And, thanks to brand new tax deductions, your refund could be even higher this year. There’s never been a better reason to roll up your sleeves and start adding up your expenses. You still have time—the filing deadline is August 2, 2021.

What can I deduct from my taxes? 

From paper clips to the account maintenance charge—here’s a handy list of deductions you might be able to claim:

  • Work-related deductions: You’ll be able to declare any work-related expenses on your tax return, as long as you weren’t reimbursed by your employer. These include work equipment such as office supplies and work-related books or literature, expenses related to job applications such as postage and photocopies, as well as training courses, language classes, travel expenses, or professional relocation costs. You can also deduct bank account maintenance fees from your taxes—a lump sum of €16 per year can be claimed, regardless in which month you opened your account.

  • Home office costs: Work-related expenses also include expenses for your home office. For example, you’re allowed to deduct a portion of your rental, telephone, and internet costs. Note that there were some changes here for 2020, which we’ll explain in more detail below.

  • Household-related services: Did you hire a plumber or electrician? Do you employ a house cleaner? If so, you can deduct these costs from your taxes—provided you were provided invoices and paid via bank transfer.

  • Insurance costs: When filing your tax return, you can declare both your and your employer’s share of all expenses of a provident nature—this umbrella term includes your health, long-term care, unemployment, and pension insurance. In addition, you can also declare a proportion of your private liability insurance.

  • Childcare expenses: Do you have children? If so, you can claim childcare costs of up to €4,000 per child—provided you were issued invoices and paid via bank transfer.

For work-related expenses, a lump sum of €1,000 applied before 2020, meaning you could deduct work-related expenses of up to €1,000 from your taxes without providing any proof. In 2020, with so many employees working from home, this was raised to €1,250. However, you can only benefit from this tax reduction if you have a separate home office and your employer has explicitly instructed you to work from home. This means that a desk in your living room, bedroom, or guest room unfortunately doesn’t count as a home office. Your work space must be a separate area with a door that can be closed—and private use must be kept to a minimum.

If your workplace at home does not meet these requirements, don’t fret—there’s another tax deduction just for you. With the new “Home Office Lump Sum” credit, you can claim €5 for every day you work from home—for 2020, for a maximum of 120 days. You can even claim this deduction if you chose to work from home voluntarily without receiving instructions from your employer to do so. You can collect both the “Home Office Lump Sum” credit and deductions for work expenses, but if your work expenses don’t exceed €1,000, your “Home Office Lump Sum” will simply be added to your work expenses, preventing you from receiving any extra tax credit. This means it’s all the more important that you go through our checklist carefully in order to really take into account all relevant expenses. Need help? Read on to discover how N26 partner Taxfix can help you file your tax return the easy way. 

Filing your tax return with Taxfix and N26

When it comes to filing your taxes, you can now say goodbye to paper returns for good. Starting in 2013, tax return electronic filing got simpler than ever with Elster—a government-run online tax-filing system. However, this system isn’t designed to help you maximize your refund—and that’s where Taxfix comes in. Their app guides you step-by-step through your tax declaration, asking relevant questions every step of the way so that you get the full refund you deserve.

Taxfix helps you do your taxes the fast and simple way for a one-time fee of €39.99. However, for N26 customers, it's even cheaper—N26 Standard customers enjoy a discount of 30%, and premium customers benefit from 50% off. To get started, simply open your N26 app and tap Explore from the bottom menu. Under Partner offers, select Taxfix and to claim your discount.

Want to save on more than just taxes? As an N26 customer, you’ll regularly receive new and exciting offers from partner brands and a wide selection of ever-changing perks—all suited to your lifestyle. With N26 Perks, you can get up to 200 GB of storage space from Dropbox, rent electronic products from Grover at a discount, or get up to 50% off the digital insurance package that’s right for you with Clark.

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Your money at N26

Whether it’s tax season or not, N26 is here to support you in managing your finances. Our Statistics feature gives you a practical automated overview of your monthly expenses. Add hashtags such as #workcommute, #officesupplies, or #insurance to categorize your work-related expenses effortlessly—making it even easier to spot your deductions when tax time comes around.

Planning a trip or want to save money for a big purchase? Our N26 Spaces feature allows you to create up to 10 sub-accounts and to assign a savings target to each of them. With Rules, you can automatically transfer the amount you want to save each month. And once your tax refund arrives, you can immediately drag and drop it to a designated space—has saving ever been easier? Check out all our N26 bank accounts today and choose the one that suits you best.

By N26

The Mobile Bank

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