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 likely to be incurred in the calendar year can also be taken into account in advance as an allowance in the wage tax deduction procedure. By creating an allowance in the ELStAM(electronic wage tax deductioncharacteristics), the wage tax that the employer must withhold from your wages is reduced.
Note
The characteristics relevant for the wage tax deduction procedure, such as tax class, factor if applicable, number of child allowances, other allowances, church tax characteristics or the amount of monthly contributions
for private health insurance and compulsory private long-term care insurance are stored by the tax authorities in a central database for all employees. The tax authorities use this data to provide employers with the income tax deduction details for electronic retrieval. Further information on this can be found at www.elster.de
You can apply to the tax office for allowances if you have certain expenses or are entitled to lump sums. However, an allowance is not created in all cases in which there are expenses to be taken into account for tax purposes. The tax-free allowance can also be applied for electronically at "My Elster" (www.elster.de).