In principle, expenses that can be claimed as tax-reducing are taken into account retrospectively as part of the income tax assessment. However, certain expenses that are expected to be incurred in the calendar year can also be taken into account in advance as an allowance in the wage tax deduction procedure. The creation of an allowance in the ELStAM(Elektronische LohnSteuerAbzugsMerkmale) reduces the wage tax that the employer must withhold from your wages.
The characteristics relevant for the wage tax deduction procedure, such as tax class, factor if applicable, number of child allowances, other allowances, but also the church tax characteristic are stored by the tax authorities for all employees in a central database. On the basis of this data, the tax authorities make the wage tax deduction characteristics available to employers for electronic retrieval. Further information on this can be found at www.elster.de
You can apply to the tax office for tax-free allowances if you have certain expenses or if you are entitled to lump sums. However, a tax-free allowance is not created in all cases where there are expenses to be taken into account for tax purposes. You can also apply for an allowance electronically at "My Elster" (www.elster.de).