How can a retiree earn extra income

Additional earnings on pension: What taxes are there?

Many older people earn something in addition to their pension. However, taxes can become due with the income. Questions and answers about additional earnings and duties.

© dpa

If it's not enough in old age: some retirees have to improve their retirement with small jobs.

Some retirees need more money to secure their livelihood. Others just have a lot of fun working. However, retirees should not forget that their additional income may mean that they have to pay taxes. The most important questions and answers:

When are taxes due for retirees?

Taxes are only incurred if the sum of taxable pension income and possible other income exceeds the basic tax allowance. In 2016, this was 8,652 euros for single people. Uwe Rauhöft from the New Association of Wage Tax Associations recommends that anyone who has not had to pay taxes so far should check whether they will incur taxes in the future if they have new additional income.

How much can retirees earn?

Those who retire at the standard retirement age of 67 can in principle earn as much as they want. If pensions are drawn before this threshold, certain additional income limits must be observed. If this is exceeded, the pension payments are reduced proportionally.

Which additional earnings are tax-free for retirees?

Anyone who wants to earn something tax-free can take a mini job. The employer reports the employment and pays the taxes. "You have to clearly agree that you will do a mini job," emphasizes Isabel Klocke from the Taxpayers' Association. Two percent of the additional earnings are paid directly by the employer. "As a result, the income is no longer notifiable," explains Rauhöft. Without this lump-sum taxation, however, the wages are normally added to the pension. The result: taxes may apply.

When do retirees have to file a tax return?

Income from renting and leasing, but also self-employed activities, are subject to declaration. Provided that you earn more than 410 euros per year with it. "That does not automatically mean that taxes are also due," emphasizes Isabel Klocke. If the total income from the pension and the income remains below the basic allowance, no tax is due. Pensioners who are still in an employment relationship for which an electronic tax certificate is issued are regularly obliged to file a tax return. This can sometimes also pay off positively: With your income tax return you can then get some of your taxes back.

How much tax do you have to pay on the pension?

Pensions are taxed depending on the time of retirement. For example, those who retire in 2015 have to pay tax on 70 percent of their pension payments. 30 percent is the pension allowance. In 2005 the tax share was still 50 percent. In 2020 it will be 80 percent, and finally 100 percent in 2040. As a result, there is no longer any pension allowance for pensioners who then retire. Income tax increases progressively. That means: the more you earn, the more you have to pay, says Rauhöft. "Both in absolute terms and in relation to income." The tax rate increases gradually and reaches 42 percent from around 53,000 euros. The initial tax rate is set at 14 percent - this portion is at least deducted from the final taxable income.

How can retirees reduce the tax burden?

The tax burden also depends on which expenses are entered in the tax return. For example, additional payments for glasses, dentures or cures can be deducted from taxes. The tax office then calculates the tax to be paid from all income minus expenses.

What expenses can retirees deduct?

Like all taxpayers, pensioners can claim income-related expenses in their tax return. However, if you do not have any additional earnings, you will usually only be able to claim the lump sum of 102 euros, says Erich Nöll from the Federal Association of Income Tax Aid. In the case of special expenses, on the other hand, some items can sometimes be deducted from the tax - such as the personal contribution for health and long-term care insurance, payments for liability insurance, church tax or donations.

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Source: dpa

| Updated: Wednesday, August 17, 2016 10:32 am

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