That time of the yearwhen you have to file your tax returns is fast approaching . Some people complete these tax returns on their own while others need help. One can get assistance from a tax accountant (Steuerberater) whose cost goes up to 1000€. The question arises if one really needs a tax accountant. With a little patience you can save yourself this fee by getting help from tax associations (Lohnsteuerhilfe) or computer programs, which are cheaper.
Compiling tax returns every year is a challenge for most people even those who have been doing their tax returns for years: heaps of receipts, forms, a calculator and a copy of the previous years tax return to be used as a template and an input of many
man-hours accompanied by the queasy feeling that you may have forgotten something important for the tax relief. Others complain and curse this complicated German tax system. However, there is help in form of tax accountants, lawyers and social clubs, which for a fee can aid you with your tax returns. Special computer software for tax returns is available from 15€.
In January 2012 fees for the services of Tax Advisors were increased by 5% for the first time in 14 years. A standard tax return can easily cost 700€ and one can claim a tax refund on this sum. One can check whether it is worth engaging a tax advisor by looking at the tax consultant fee schedule, which sets minimum and maximum fees.
The amount chargeable rises with the positive earnings – i.e. not with the amount of after tax reached repayment. Minimum fees are applicable to clients whose workload of compiling their tax return is small and also if their tax consultant is based in the countryside. In cities where office overheads are higher, the law provides that tax consultants should charge their clients a middle fee that should be between the set minimum and maximum fees as shown in the tax consultant fee schedule.
A customer can reduce costs if he helps the consultant reduce work to be done by making sure that all documents needed for preparing tax returns are complete. The documents should be sorted for example by capital income, expenses for the child/ children, households etc. Bank statements should also be readily available because making inquiries at bank cost the tax consultant’s time and for this wasted time his client can be billed. Nevertheless the tax consultant should not charge less than the set minimum fee. Initially one cannot know how much tax return will end up costing the customer and the amount mentioned at the beginning is only an estimate.
Tax associations clubs are cheaper
To avoid high costs a tax accountant one can opt for payroll tax associations (Lohnsteuerhilfe Vereine) that are much cheaper. These clubs charge their fees per hour. For consultations prior to moving abroad or for checking of tax assessments for half an hour can cost 36€-83€. A lawyer can give you tax advise and then demand the same fees as the tax advisor.
Eligibility and fees
People who can use these services are employees, civil servants and apprentices as well as retirees but not freelancers and tradespeople. For one to use these services income from renting and leasing, investment income and other income may not exceed 13,000€ here (26,000€ for married couples). Everyone can use these services and salary earned is not limited. Whoever wants to use the services of a tax return clubs must only pay a small one-time registration fee and then an annual membership fee, which is depends on your total income including income from rental property and investments. These fees amount to a maximum of 300€. One of the biggest tax-assistance clubs Steuerring, says for a yearly income of 50,000€ a fee of 155€ is charged. A tax consultant would take at least 180€ as a middle fee but could charge 1000€.
Tax association’s work with trained professionals such as former financial officers, accountants or tax specialists. Their employees must have had at least 16 hours per week experience in the area of income tax in the last three years. The clubs can aid in tax returns for private individuals income, rental income and domestic capital income.
These associations may reach their boundaries when they encounter special cases such as cross-border workers in Switzerland or foreign capital income. However most tax consultants also need to do more research for these areas.
Value for your money
In addition to the tax return they also file appeals in a court of law and up to Federal Constitutional Court with good prospects of success. For example in 2008 an association successfully fought the reorganization of the commuter tax relief. In addition members may also simply ask advice. All these services are available to their members without an extra cost in contrast to the tax accountant who would charge you for extra services offered.
The clubs can be found in any big and medium-sized cities. There are around 800 tax associations with approximately four million members in the whole of Germany and 10% of all tax returns are done by these clubs. There are mini -clubs with a customer service employees who operate from their living rooms to nationwide large organizations such as Steuerring with approximately 1,000 customer service centres and 240,000 members. The smaller the club the more someone have to pay attention to whether sufficient quality is guaranteed.
However it is not a must to take up the services of a tax association for a simple tax return. The explanations that have been provided by tax authorities on the forms and Internet is mostly sufficient. One can still buy one of the many tax computer programs which cost between 15€-40€ for example t @ x, Wiso- Steuersparbuch, Steuereeasy and Steuer- Spar. These programs guide you through the different areas of the tax return and ask for again and again whether each bit has been filled in correctly and if there is something that needs to be declared. This way the user almost never misses an important tip for tax relief, although small mistakes can always creep in.
Tax accountant or computer programs?
Tax accountants and tax associations can barely give much better advice. Their value lies in to their ability relieve customers of the work involved in preparing tax returns. In they are responsible for misinformation as opposed to the computer programs. Tax consultants also have an advantage of time because they can use recent court judgements for the benefit of their clients as opposed to computer programs.
Using the tax software is worth it especially when it is used every year and data can be stored and updated in the coming year. Completed tax returns can be sent directly or electronically via the Elster program to the tax authority and on receipt these tax returns will then be processed faster than those that arrive by post.
Conclusion: A tax consultant/ accountant is useful for someone who is self-employed. Workers and pensioners can use the tax associations for their tax returns. In both cases it is sufficient for tax return to be submitted by the end of the year. For those who are doing their tax returns on their own, using a computer program, it must be completed by end of May. Computer program is the cheapest option which is really hard when using it for the first time. However, if you invest a few hours time it can save you a lot of money.