Calculating parental allowance: information and tips

Basic calculation of parental allowance

The parental benefit is intended to replace part of the income that you can no longer earn from the birth and care of your child. To put it simply: the higher your previous income, the more parental allowance you will receive – but there is no more than the maximum amount of 1,800 euros. By the way, even if you have not worked, you can claim the minimum amount of 300 euros.

Most applicants receive an individually calculated rate between the minimum amount of 300 euros and the maximum amount of 1,800 euros. But how does the parental allowance calculation work at the parental allowance office, how does it find out how much parental allowance you are entitled to?

Depending on the level of income, parental allowance usually accounts for 65 to 67 percent of the previous “adjusted” net income. In the case of low earners, the parental allowance can be gradually increased to 100 percent of the previous salary. You can find detailed information on the amount of the parental allowance in our article “ Parental allowance – amount of the payment? “.

Since January 1, 2013, new regulations have come into effect here and the “adjusted” net income is calculated differently at the parental allowance offices. For parents who had a child before 2013, the starting point is the average net wage after all actual social security contributions, income tax and other deductions (such as income-related expenses and church tax). For parents who are expecting children from 2013, the gross wage will be minus a flat rate at the starting point21 percent for social security contributions. Income tax and other taxes are of course also deducted here. The lump sum is a little higher than the current contribution rates for health, pension and unemployment insurance and is only slightly noticeable when it comes to parental allowance. Annoying for applicants: Due to the fact that gross – not net – counts, allowances on the wage tax card can no longer be taken into account. In the past, for example, high income-related expenses as a wage tax allowance meant that the net wage and, accordingly, the parental allowance were higher.

Parental allowance: Deductions in the calculation

By “income” the responsible authorities mean the pure earned income , for example no money flowing into your account from rental income or capital investments. This makes sense because these sources of income usually remain with you after the birth of the child and do not have to be compensated by the parental allowance. Rental income and capital investments cannot increase the amount of parental allowance.

It is similar with advertising costs . Income-related expenses are expenses that you incur as a result of your job, such as work clothes or specialist literature, and which you can deduct from your taxes. To simplify the process, you can state a lump sum of 1,000 euros in your tax return. This is the so-called advertising expenses lump sum. The legislator assumes that you use your flat-rate amount for advertising expenses every year. Therefore, when calculating parental allowance – regardless of whether you actually have income-related expenses and deduct them for tax purposes – EUR 1,000 will be deducted from your annual income or around EUR 83 from your monthly income. This “theoretical” 83 euros less wages also reduce the parental allowance accordingly.

Tip: If you are married to your partner, it may be worth changing your tax class. Married couples can either both be assessed in tax class IV or a combination of tax class III and V. In the comparatively favorable tax class III, less wage tax is deducted at the parental allowance office, so the “adjusted” net wage and thus the parental allowance amount is higher. Although this trick is not welcomed by the parental allowance office, it is absolutely fine by law. Since January 1st, 2013 you have to give at least seven months before the birth of the childswitch to the new tax class (changes are only entered on the wage tax card in the following month). Because the parental allowance offices only calculate according to the new tax class if it predominates in the 12 months before the birth of the child or became effective halfway through. So remember to switch in good time if you want to benefit from this regulation.

In addition to regulations that affect all employees, there are some special features that apply specifically to self-employed and non-self-employed people. We present a few of these special features for the respective professional group.

Parental allowance: Calculation for non-self-employed persons

• One- time payments , such as Christmas bonuses, supplements for special working hours or salary bonuses, are not taken into account by the parental allowance office. They do not count as a regular salary that you lose due to the care time after the birth.
  Tip: Discuss with your employer in good time whether one-off payments can be redistributed to the monthly salary. In this way, bonuses and the like increase parental benefit amounts.
• If you pay into a company pension plan, this amount is not counted as income. According to the judgment of the Federal Social Court, all tax-free income – including company pension schemes – is not to be taken into account when calculating parental allowance.
  Tip: Consider suspending this additional payment twelve months before the birth of the child.

Parental allowance: Calculation for the self-employed

• Proof of income: Employees and civil servants provide proof of their income with copies of their payslips. As a self-employed person, you have to prove your income with the tax assessment for the last completed assessment period. Here, too, a new rule has been in effect since 2013: the calendar year – not the exact 12 months – before the birth of the child is the assessment period. If the current assessment is not yet available, you can also submit older tax assessments, provided you have worked continuously. Otherwise, an exact balance sheet or income surplus calculation is sufficient as evidence. But then remember to submit all missing documents as soon as possible.
• Reduced working hours: Regardless of whether they are employees or bosses in their own company – all applicants must reduce their working hours, but may continue to work up to 30 hours a week while receiving parental allowance. In the case of employees, the reduced working hours can be documented by written agreements with the employer. Of course, the self-employed do not have this option, but they can submit evidence of an additional assistant or a reduced order situation.
  Tip: The weekly hour limit is extrapolated to the whole month. So you can distribute the permitted 120 hours per month individually over the individual weeks.
• Income in addition to parental allowance: Part-time work or a part-time job are therefore not a problem even while you are receiving parental allowance, provided that the 30-hour limit is observed. What you earn is offset against the parental allowance and reduces the monthly amounts. The self-employed usually continue to have income, even if they withdraw completely from the business, de facto not earning any money themselves. Nevertheless, this income must be taken into account when calculating parental allowance.
  An example:You own a company where you employ a few people. Before the birth you earn an average of 2,300 euros per month. After the birth, you apply for parental allowance and withdraw completely from the company. Since your employees continue to process orders for you, you will receive 1,000 euros from your company in addition to the parental allowance. 1,000 euros must therefore be deducted from the average salary of 2,300 euros. The parental allowance would therefore be 67 percent of 1,300 euros for this salary level.
  New since 2013: A flat rate of 25 percent will be deducted from your income during parental leave for operating expenses. So you no longer need to submit an income surplus statement, unless your expenses are higher than the flat rate.
• Compulsory contributions: You may also pay compulsory contributions to social insurance when you are self-employed. As with employees, these contributions will be deducted from the profit when you calculate your parental allowance.

With a little time and patience, you will soon have all the important information you need to calculate parental allowance. We also have lots of helpful answers on the subject of parental allowance , for example in which cases you can claim parental allowance .
By the way: The Federal Ministry for Family Affairs, Senior Citizens, Women and Youth offers an online parental allowance calculator on its website , which gives most families a good overview.