Tax Return Setup: What to Do Before Filing

Why does timing matter so much for German tax return setup?

Filing a German tax return is not primarily a form-filling exercise. It is a document collection and verification exercise with a hard deadline attached. Most people who miss refund opportunities or file late do not fail at the filing itself — they fail at preparation: the ELSTER account was not active in time, the Lohnsteuerbescheinigung was not requested, or they could not find their insurance certificates in the right format.

The implication is simple: treat January as the start of your tax year preparation, not the date when you "think about starting." The deadline for most voluntary filers is seven months after the end of the tax year. That sounds generous. It is not, once you account for gathering documents, verifying figures, and allowing time if you decide to use an advisor.

The complete document checklist

Collect every item on this list before you open any filing software. Missing one document mid-process causes interruptions and errors that are easier to prevent than fix.

Core income documents

• Lohnsteuerbescheinigung — your annual wage tax statement from your employer. This is the foundation of your return. It is usually available in January through your employer's HR or payroll portal. Do not file without it. Verify that the tax identification number (Steuer-ID) printed on it matches your actual Steuer-ID, because mismatches cause processing delays at the Finanzamt.
• Steuer-ID (IdNr) — your permanent 11-digit tax identification number. This is required for ELSTER registration and must appear correctly on your Lohnsteuerbescheinigung. If you do not have it, request it from the Federal Central Tax Office (BZSt) by post.

Insurance and social security documents

• Health insurance certificate — statutory health insurers issue an annual contribution statement. Required if you want to deduct contributions as Sonderausgaben (special expenses). Private insurance (PKV) holders should request their annual statement from their insurer.
• Pension insurance (Rentenversicherung) contribution certificate — typically included in your Lohnsteuerbescheinigung totals, but worth verifying separately if you have additional voluntary contributions.
• Additional insurance certificates — this includes Riester or Rürup pension products if you hold them, and Berufsunfähigkeitsversicherung (occupational disability) premiums if you want to claim them.

Work-related expense documents

• Commute records for calculating the Entfernungspauschale (see below).
• Home office days log if you worked from home and want to claim the home office flat rate (Homeoffice-Pauschale, currently EUR 6 per day, up to 210 days per year, capped at EUR 1,260 annually).
• Work equipment receipts — computer, desk, ergonomic chair, phone if used for work. Keep originals and digital copies.
• Professional development costs — training, courses, books, professional association fees.
• Double household costs (doppelte Haushaltsführung) — if you maintain a second residence for work reasons and meet the legal criteria.

Other deductible items

• Charitable donation receipts (Spendenquittungen) — for donations above EUR 300, a formal receipt is required; below EUR 300, a bank statement is sufficient.
• Childcare cost receipts (Kinderbetreuungskosten) — up to two-thirds of costs, capped at EUR 4,000 per child per year.
• Bank statements for Kapitalertragsteuer (withholding tax) — if you received investment income taxed at the flat 25% rate and your personal tax rate is lower, you can apply for a partial refund via the Günstigerprüfung.

Get your ELSTER account active in January

January is the single best month to complete your ELSTER registration. As covered in the ELSTER guide, the portal sends an activation letter by post — a process that takes two to four weeks. If you start in March or April when you "feel ready to file," you will spend the first month waiting for a letter instead of filing.

If your ELSTER account is already active from a prior year, check that your certificate file is still accessible and the login works. Do not assume last year's setup is still intact without testing it.

Do I have to file a tax return in Germany?

Many employees in Germany are not legally required to file a tax return (freiwillige Abgabe, not Pflichtabgabe). But filing voluntarily is often worth it, because the German wage tax (Lohnsteuer) system systematically over-deducts for most employment scenarios, particularly for:

• employees with deductible commuting costs above the standard Arbeitnehmer-Pauschbetrag
• employees who changed jobs or had multiple income sources during the year
• employees with significant work-from-home periods
• employees with children and unclaimed Kinderfreibeträge
• employees with deductible health, pension, or disability insurance premiums
• anyone who made charitable donations or had unusual medical expenses

If you file voluntarily, the relevant deadline is four years after the tax year ends (Festsetzungsverjährung) — which gives you a long window. However, if you are obligated to file (Pflichtveranlagung), the deadline is seven months after year end, and lateness triggers interest charges and late filing surcharges.

Common triggers for mandatory filing include: income from multiple employers simultaneously (not sequentially), investment income where insufficient withholding tax was paid, freelance income above minor-income thresholds, certain benefit payments (Kurzarbeitergeld, Elterngeld above thresholds), or a tax reduction (Lohnsteuerermäßigung) applied during the year.

If you are unsure, the conservative approach is always to file. The downside of an unnecessary filing is minimal. The downside of missing a mandatory one is not.

Self-file vs software vs advisor: choosing the right path

For most employed expats with a single employer, no rental income, and basic investment activity, tax software is the correct choice. The guided question flows in Taxfix or WISO Steuer catch most deductible items without requiring deep knowledge of German tax forms.

If you have freelance income, rental income, foreign assets, or a tax situation involving two countries, use a Steuerberater. The fee is itself tax-deductible as a Werbungskosten or Betriebsausgabe.

Commute deduction math: the Entfernungspauschale in practice

The Entfernungspauschale (commute flat rate) is one of the most consistently valuable deductions for employees. It operates as follows:

• You deduct EUR 0.30 per kilometre for the first 20 km of one-way commute distance (one direction only, not the full round trip).
• From kilometre 21 onward, the rate increases to EUR 0.38 per km (as of the 2022 reform, maintained since).
• The maximum annual deduction via this route is EUR 4,500 unless you use a private car, in which case there is no cap.

Example calculation:

• One-way commute distance: 35 km
• Working days per year: 220
• Calculation: (20 km × EUR 0.30) + (15 km × EUR 0.38) = EUR 6.00 + EUR 5.70 = EUR 11.70 per day
• Annual total: 220 × EUR 11.70 = EUR 2,574

This amount is added to your Werbungskosten (income-related expenses). The standard flat rate (Arbeitnehmer-Pauschbetrag) is EUR 1,230 per year. If your total Werbungskosten — including commute, home office, work equipment, and professional development — exceed EUR 1,230, every euro above that reduces your taxable income directly.

For remote workers with few commute days, the home office flat rate (Homeoffice-Pauschale) may outperform the commute deduction in some years. Track actual days worked from home vs days commuted and run both calculations.

Pre-filing checklist table

Use this table to confirm you are ready before opening any software or the ELSTER portal:

Do not start filing until every row in this table is checked. Stopping mid-filing to locate documents is a common source of errors and abandoned drafts.

Connecting to the rest of your tax workflow

• ELSTER guide — account creation, certificate backup, phishing warnings.
• Tax Return Deadlines — exact dates for each year.
• Tax ID (Steuer-ID) — getting your ID before anything else.

For salary, tax bracket, and net income estimates, use /en/tools.