As a rule, parents cannot claim maintenance costs up to the amount of the BAföG.
(Photo: dpa)
Berlin Studying is expensive. So it’s almost impossible for many students to earn some extra money. This also applies if they receive training aid such as Bafög. It is all the better if the parents can also lend a hand with financial support.
It is understandable, however, if they want to claim their payments for tax purposes. However, a couple of parents whose case was recently decided by the Federal Fiscal Court (Az. VI R 45/20) had to learn that there are limits to be observed.
During her studies, the daughter lived at the place of study in an apartment that belonged to her parents. In addition to Bafög payments of 4020 euros, the student earned wages of 1830 euros in 2017. In her own tax return, however, she claimed income-related expenses of 2180 euros, resulting in 1830 minus 2180 = 350 euros as negative income.
At the same time, the parents claimed maintenance payments of 9,920 euros in their income tax return for 2017. These consist of a maximum of 8,820 euros for benefits in kind, such as the provision of the apartment and support with food, clothing and household items, as well as 1,100 euros for covering the costs of health and nursing care insurance. They did not reduce their expenses by the Bafög payments received from their daughter and justified this with the higher costs incurred.
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The responsible tax office did not recognize the estimated maintenance costs. Instead, the clerk only deducted a flat rate of 180 euros from the Bafög benefits received and offset the remaining amount of 4020 minus 180 = 3840 euros with the maintenance payments. In their tax return, the parents could only claim the amount of around 9920 minus 3840 = 6080 euros.
Bafög must be charged
The parents appealed the decision to the Rhineland-Palatinate Finance Court. There they initially achieved a partial success. The daughter’s negative income was offset against the Bafög, which increased the tax-deductible maintenance accordingly. This means that the negative income of 350 euros was taken into account instead of the flat-rate fee of 180 euros, so the deductible amount for the parents was 6250 euros.
>> Read here: What changes with the Bafög reform for the winter semester
However, the Federal Fiscal Court assessed the case differently. Accordingly, the negative income of 350 euros does not reduce the subsidies from the student loans to be offset against the maintenance payments, so that the deductible maintenance remained at 6080 euros.
While in principle the total income must also be determined in connection with maintenance payments and losses must be offset, this does not apply to training grants. Because income tax law distinguishes between income and benefits on the one hand and training grants on the other.
In contrast to income and emoluments, subsidies for training are to be taken into account in full. In this way, double government funding is avoided. This would arise if the state provided aid such as student loans and at the same time recognized these amounts as tax relief for the parents. This is exactly what the parents tried to do when they wanted to claim their original expenses of 9920 euros.
The Federal Fiscal Court had already made a similar decision in 2011 and thus already provided a kind of guideline for the current case. The judgment at that time dealt with the consideration of the training allowance. Here, too, the judges had ruled out offsetting against negative income and remuneration.
Practical tip: Useful information about student loans and taxes during your studies
Bafög is tax-free, as this subsidy is intended to help finance living expenses during training and is not a wage-like payment. For students, this means that the amount received does not have to be listed in the income tax return.
However, they can also not claim the repayment due after graduation as income-related expenses or extraordinary burden. This is because only interest payments on loans have a corresponding tax effect. However, the 50 percent share that has to be repaid by the Bafög is interest-free.
>> Read here: Students can save money on their tax return with these tips
The extent to which study costs can be claimed for tax purposes depends on whether it is a first or second degree. While students can fully assess their costs in the second degree and, in the case of negative income, can also register a loss carryforward, the expenses in the first degree can only be assessed as special expenses up to an amount of 6000 euros. Possible losses cannot be carried forward to subsequent years.
Are you interested in this tax tip? You can find more articles at our cooperation partner Haufe.de.
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