Voluntary submission: tax return can increase the basic pension

With the basic pension, long-term insured persons receive a surcharge on their mini-pensions. If you submit a tax return, you may be able to increase the surcharge. How does it work?

The basic pension law has been in force since January 1, 2021. Pensioners who have worked for many years and earned below average are entitled to the basic pension supplement.

In order to receive the basic pension supplement, a separate application does not have to be made, because the German pension insurance automatically checks all existing pensions. If there is an entitlement to the basic pension supplement, it will be paid out retrospectively at the beginning of the year. Since the basic pension is only to be paid as required, your own income and the income of the spouse or partner of a registered civil partnership are taken into account.

“Among other things, data from the income tax assessment, in particular the so-called taxable income, are used to determine this income,” explains Erich Nöll, managing director of the Federal Association of Wage Tax Assistance Associations in Berlin.

Known earnings are important

If the pensioner in question has not submitted an income tax return, the income that is known to the pension insurer is used. These are, for example, the pension income of the statutory pension insurance institutions, pension payments, compensation, official allowances, transitional payments and benefits from old-age provision contracts, pension funds, pension funds and direct insurance. Flat-rate deductions are then made from this.

“Since there is the possibility of deducting various expenses in the context of the income tax return, a lower taxable income can be shown than the income with the flat-rate deductions,” explains Nöll. This can lead to a reduction in the crediting of the income and thus ultimately to a higher basic pension.

Tax return is not a requirement

In particular, the deduction of insurance contributions as special expenses, but also medical costs or costs of the nursing home, which can be deducted as extraordinary burdens, reduce the taxable income and thus the income offset against the basic pension. “However, submitting tax returns is not a prerequisite for receiving a basic pension,” Nöll clarifies. “But it can be beneficial,” he adds.

more on the subject

A voluntary submission of the tax return is possible four years retrospectively. For the tax year 2017, the deadline will finally expire at the end of 2021. Submitting an income tax return is worthwhile, for example, if there are high advertising costs or other tax-reducing expenses.

Anyone who has already received their basic pension notification can only file an objection within a period of one month. Once this period has passed, changes can no longer be made.

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