Pension expenses – dependent child

In addition to their own pension expenses, such as contributions to health and long-term care insurance, parents can also claim corresponding contributions incurred by their dependent child as special expenses, e.g. if the expenses do not affect the child due to low income. However, “double” consideration is excluded.

The Federal Fiscal Court has now ruled that pension expenses can only be taken into account for parents if they have paid the contributions directly or by way of cash maintenance.

In case of dispute

the child was undergoing vocational training. As part of his training relationship, the employer withheld health and long-term care insurance contributions from the training remuneration. The parents fulfilled their maintenance obligation through so-called maintenance in kind, e.g. by having their child live with them free of charge.

The court

did not recognize the special expenses deduction for the parents. The payment or reimbursement of the child’s pension expenses is only possible in the form of cash maintenance. This means that the contributions must actually be paid to the child; maintenance in kind, e.g. through free housing, is not sufficient thereafter.

In order to ensure that the parents are taken into account for tax purposes, cash maintenance should be paid in comparable cases, at least to the extent that the child is able to cover the pension expenses from this.

(For further comments and information, please see our Information Letter 12/2018).