How to submit backdated tax returns (Steuererklärung rückwirkend abgeben)

Many people dread the idea of doing their own tax returns, believing that the task is always associated with bureaucratic German officialdom and endless paperwork. However, the reality is very different. The entire process can be completed in no time and is very straightforward.

What many also do not know is that it is even possible to repay taxes from previous years. Those who are not obliged to pay can do this for up to four years with retroactive effect. Anyone wishing to claim tax loss carry-forwards can even have up to seven years to do so. There are plenty of reasons, therefore, to take a closer look at the facts.

Eligible or not?

In principle, taxpayers can only submit the tax return 4 years retroactively if they are not obliged to pay. In such cases, a compulsory assessment is applicable. Such an assessment takes place, for example, when the income is composed entirely or only partially of non-independent work.

You can submit 4 years retroactively

For example, if you would like to file a tax return in 2019, you would be able to do so for the calendar years 2018, 2017, 2016 and 2014. As a rule, employees are not required to pay and have significantly more time. Of course, the prerequisite is that no tax return has been received for the respective years.

The best part of the whole thing is that even interest on the overpaid taxes is incurred. However, these are only due after 15 months. It is also important that the interest must be taxed. As a result, the withholding tax may also be due under certain circumstances.

Did you know that it is even possible to backdate tax loss carry-forward (Verlustvortrag) up to 7 years?

Trainees and students, in particular, should be aware of something known as a loss carryforward (Verlustvortrag). They should inform the tax office of all study costs (= losses) by the tax return. The tax office remembers the indicated expenses and as soon as taxes are paid the first time, the losses carried forward are offset against tax. This means for employees that the study costs will be reimbursed in the form of a tax rebate. For self-employed, the amount of the tax to be paid is correspondingly reduced.

All students who have completed a second degree (Master or Bachelor with previous professional training) can claim their education and professional expenses as income tax expenses. In the case of first-year students, the tax office currently only recognises the study costs as special expenses, so that it is not possible to carry forward a loss.

Tax loss (Verlustvortrag): If less revenue than expenditure is recorded, a tax loss arises. This loss is automatically noted by the tax office as a kind of tax credit that will be redeemed as soon as taxes are paid.

No loss carryforward (kein Verlustvortrag): If more revenue than expenditure is recorded and taxes are paid on the revenue, the costs stated in the tax return can be fully offset against tax and a loss carryforward is not necessary. There is an immediate tax refund.

Note: In 2015, the Federal Finance Court decided that the unequal treatment of first and second-year students was unconstitutional. Now, the Federal Constitutional Court has to judge as a last resort whether people in initial training can claim loss carry-forwards in the future.