Even if you receive unemployment benefit 2, it may make sense in some cases to file a tax return. We explain when it is worthwhile.
If you receive unemployment benefit 2 (II), also known as ALG 2 (II) or Hartz 4 (IV), you do not pay any taxes on it. Also, this so-called basic security benefit is not subject to the progression proviso, such as ALG 1 (1) or maternity pay. Conclusion: If you only receive Hartz 4 in one year because you have not found a suitable job, you do not need to file a tax return.
Nevertheless, under certain circumstances it can be useful for Hartz 4 recipients to make a tax return. Here are two examples of when it may be worth filing a tax return:
1. Not the whole year unemployed
If you didn’t receive unemployment benefit 2 for the entire year, but only for a few months and otherwise had a regular job, you probably paid payroll taxes. This happens automatically and is on your monthly pay slip. You can get back some of this tax paid if you file a tax return. Because the tax office deducts from your income everything that you are allowed to deduct and only on the rest you have to pay taxes. This means: as a rule, you get a tax refund if you did not have to live on Hartz 4 for the entire year, but also worked regularly. This applies especially to single persons who are in tax class I (1) or II (2).
Collect all receipts for your professional expenses and enter the total as income-related expenses in Annex N of your tax return. This includes, for example, application costs, training costs, expenses for stationery or travel costs to work. In addition, you should consider in your Tax return, Annex N at "Information and reasons for non-employment" enter from when to when you have received Hartz 4: Unemployment benefit II from XX.XX.-XX.XX. This saves you having to deal with queries from the tax office.
2. Married and in tax class IV
You are married and have opted for tax class IV (4) with your spouse. If one of you has received Hartz 4 for the whole year and the other has worked, it is very likely that you will receive a tax refund – provided, of course, that you file a tax return. The reason: As a rule, too much income tax has been deducted from the income of the working spouse.
Normally it makes sense for you and your spouse to change your tax class combination to III (3) and V (5) as soon as one of you is threatened with unemployment and initially receives unemployment benefit 1. The same applies if you receive Hartz 4 directly because you are not entitled to ALG 1. It is important here already in the apron to become active. Subsequent changes in tax class are often a problem, because the employment agency must agree to the tax class change.
You should therefore seek advice in advance from an income tax assistance association or tax consultant and also clarify the question of whether it makes sense to submit a joint tax return in your case. For example, there are about 3.000 VLH advice centers nationwide. You are sure to find one near you: Advisor search.
Caution: Reimbursement is credited to Hartz 4
If you get a tax refund and receive Hartz 4 at the same time, the money will be deducted from your ALG 2 benefits. There is even a ruling by the Federal Constitutional Court that confirms that this practice is not unconstitutional. In this case, it depends on the time when the refund arrived in your account and not when you receive the tax assessment by mail. For this reason, timing is quite important here.
If possible, you should try to get the tax refund into your account in a month in which you did not receive Hartz IV benefits. It is important to know that it usually takes five to eight weeks from the submission of the tax return to the notification and reimbursement.
Background info: Social assistance or Hartz 4
Since the social assistance law was reformed with the Agenda 2010, a strict distinction is made between those who are capable of working and those who are not. Unemployment benefit II is the wage replacement benefit for those capable of working and is therefore not considered a social benefit in the sense of SGB XII. On the other hand, one is entitled to social assistance if one is not (any longer) capable of working and in need of help. This also means that recipients of Hartz 4 are generally not entitled to social assistance. One gets thus either Hartz 4 or social welfare and never both together.