Tax return as a student: This is how it pays off!

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Tax returns are only for professionals – right? No, even as a student you can and should send a tax return to the tax office. In this article we explain why this is important for your finances and what you have to consider when filing your tax return.

Please note: We are not tax advisors and would like to point out that this article is not intended as tax advice, but as a first impulse and food for thought on the topic of tax returns. Please contact a qualified tax advisor for tax advice.

Tax return as a student: Is it worth it?

Short answer: yes!

More detailed answer: It is worth it, because you can claim your study costs to the tax office. In this way, you can reclaim overpaid taxes from the state as a student. Particularly interesting for students are the items special expenses deduction for first education costs and income-related expenses for second education.

First education vs. second education

An initial education is, for example, your first degree, such as a bachelor’s degree.
Note: Initial education is always your first vocational training, not your first degree. If, for example, you have only completed an apprenticeship and then begin a course of study, this is then your first course of study, but your second vocational training.

If you continue with a second course of study (e.g. another bachelor’s or master’s degree) after your first course of study (bachelor’s degree), this second course of study is also your second vocational training.

Article tip: These costs you have as a student

The second education means the professional education that you pursue after your first professional education. It is irrelevant whether the first vocational training was an apprenticeship or a course of study.

Tip: An interrupted apprenticeship or study does not count as initial training. If, for example, you drop out of a course of study and start a new course of study, the new course of study remains initial training.

Tax return for first degree

In your first degree program (if it is also your first professional training), you can only claim special expenses for each tax year in your tax return. Special expenses are clearly defined by the legislator and are more narrowly defined compared to income-related expenses (which you cannot claim in your first degree program). In other words: special expenses are not the same as income-related expenses, but a different category for the tax office. You can deduct up to 6,000 euros of special expenses per year.

Typical examples of special expenses are:

Tuition fees (e.g. semester fees)
Donations to charitable organizations
Pension expenses (insurances)
Church tax
Alimony payments to divorced spouses
Childcare expenses

Make a list of your special expenses and enter them on your tax return. Usually these are not many expenses, but they are better than nothing. In the second degree program, the deductions for study expenses on your tax return are already much larger.

Tax return for second studies

For a second study or the study as a second professional training, you can claim in the tax return income-related expenses without limitation amount to the tax office. Income-related expenses are all costs that you incur to ensure that you can pursue your studies.

Typical business expenses are:

Electronics such as laptop, printer, keyboard, mouse
Software such as document and spreadsheet creation software
Work materials such as pens, notepads, binders
Office furniture such as office chair and desk
Technical literature such as books and trade journals
Workroom

Be careful with the last point: You can only claim a workroom in your tax return if it is a separate room that you use exclusively for your studies. Unfortunately, this is not the case with Staytoo apartments. However, you can claim the other costs mentioned above, which is also worthwhile.

Attention: Income-related expenses will not be paid out to you by the tax office in the form of a tax refund while you are studying. Instead, there is the so-called loss carry-forward.

Loss carry-forward: What is it and how can you use it?

The loss carry-forward can only be entered in the tax return for a second degree program or a dual degree program, as you have operating expenses here. In the case of a first degree program, you can only claim special expenses as study costs.

There are two possibilities how your income and expenses relate to each other:

1. Your income is higher than your expenses

In this case, you have made a profit, which must be taxed and therefore declared in the tax return. The state takes its share of this profit in the form of taxes. The study costs are offset here, and you may receive a tax refund.

2. Your expenses are higher than your income

Thus you have a loss. In this case you can claim it as a loss carried forward in your tax return, which will be credited in the form of tax-free profits for the next year. A loss carry-forward can be claimed retroactively for up to 7 years. Sounds complicated? Let’s explain it with an example involving tuition costs.

Example: This is how the loss carry-forward works

Let’s say you studied in 2019, 2020, and 2021.

In these years, you had study costs of 2,000 euros per year. You did not earn any income during this time. Thus, you have a total loss of 6,000 euros. Every year you make a tax return, so that the tax office can note the 2,000 euros of study costs per year.

Now, in 2022, you have started to work. When the year is over, you will make another tax return. Let’s assume that in 2022 you received a gross annual salary of 38,000 euros in your job. The tax office initially takes this 38,000 euros as taxable income.

With the loss carry-forward, however, your actual taxable income is reduced retroactively to 32,000 euros, i.e. you have paid too much tax. As a result, the tax office transfers the overpaid taxes to your account.

Important: The loss carry-forward is a kind of tax bonus from the tax office, i.e. you only get it offset as soon as you earn income and file another tax return.

Depending on the amount of expenses, the loss carry-forward can amount to several thousand euros, which is why you should definitely check with yourself whether such a loss carry-forward exists.

Tip: Ideally, you should start your first job at the beginning of a new year, so that the full annual salary can be offset against the loss carry-forward. The higher the income, the higher the taxes to be paid and the more effective the loss carry-forward.

What happens to my loss carry-forward if I am unemployed?

If you don’t immediately earn an income after graduation that you can offset against the loss carry-forward – don’t panic! The loss carry-forward does not simply expire, but is valid until it is used up, i.e. until it is offset against income.

11 golden tips for the tax return

Use a tool for the tax return. There are numerous on the market, the costs are affordable and the effort for tax returns is significantly lower as a result.
The tax declaration is not obligatory for students, except if you are self-employed and have income above the annual basic allowance (9,000 euros / as of 2022).
However, it is always worthwhile to make a tax declaration as a student – regardless of whether you earn money or not, so that you can deduct study costs.
Keep all receipts for your costs. The tax office may request them after you file your tax return.
If your income-related expenses do not exceed the standard amount of 1,000 euros per year, you do not have to provide the tax office with proof of these costs.
You can make a tax declaration retroactively for up to four years, i.e. back to 2018.
BAföG is generally tax-free and can therefore not be deducted in the tax return.
Travel costs are tax deductible (30 cents per kilometer for a one-way trip), so be sure to include them in your tax return.
For particularly long stays, you can deduct accommodation costs and additional meal expenses in your tax declaration (e.g. for excursions).
For student loans, you can deduct the student loan interest that accrues upon repayment.
Your income as a working student is subject to income tax if it exceeds the marginal earnings threshold (450 euros per month).