American Expat Money in the Euro Zone

German tax forms for the employed / angestellte

noreply@blogger.com (Unknown) — Sat, 30 May 2009 11:50:00 +0000

Here are the two forms the tax office / Finanzamt on Mehringdamm told me I needed to fill out as a full-time employee without any other income:

The general tax information form
Anlage N

The general tax information form, 2008ESt1A, has 4 pages.

The Anlage N, 2008AnIN, is only 3 pages. And since I didn't have anything to write-off: no car, no business trips, no home office, no double households, I really just filled out half of the first page.

I found the Anlage N quite easy to fill out. To make things simple, Anlage N refers to specific lines on your tax statement / Lohnsteuerbescheinigung, which is the equivalent of the American W-2 form.

German Tax Vocabulary Glossary

noreply@blogger.com (Unknown) — Sun, 05 Apr 2009 14:36:00 +0000

Verdienstabrechnung = salary statement

Bruttogehalt = gross salary

Gesamtbrutto = gross total
Steuerbrutto, laufende Bezuege = gross tax / regular pay
Lohnsteuer aus monatlichen Bezuegen = monthly salary tax
Solidaritaetszuschlag = solidarity charges for rebuilding East Germany
Rentenversicherungsbrutto = gross pension insurance; amount of your salary that is used for the rest of the calculations related to your insurance
Rentenversicherung = pension insurance fund
Arbeitslosenversicherung = unemployment insurance

Freiwillige Krankenversicherung = health insurance
Freiwillige Pflegeversicherung = longterm care insurance

Auszahlungsbetrag = what you put in your pocket

Anlage AUS = tax form for foreign income declaration

Anlage N = salary income in Germany

German Tax Help

noreply@blogger.com (Unknown) — Sat, 04 Apr 2009 14:16:00 +0000

People have told me to go to the Finanzamt in my district and ask for help filling out all the forms. I only wish that ELSTER, the German e-filing site, was available in English.

But in case they don't help me, I plan to ask for help at two local tax help groups: the Lohnsteuer-Beratung Berlin or the Lohnsteuerhilfe Berlin-Brandenburg.

The Lohnsteuer-Beratung Berlin has online information in English and, according to Toytown's boards, has English-speaking tax preparers. The flat cost is 92.33 € a year and 12.67 € entrance fee for the first year, so the total for this year's tax return would be 105 €.

The Lohnsteuerhilfe Berlin-Brandenburg only has information in German on its website, but the cost seems to be on an attractively-priced sliding scale. Since I only worked in Germany since August, my 2008 taxable income is quite low, and the cost for me would be 56 euros + 8 euros for the entrance fee, so the total would be 64 euros...unless they include the money I made in the US for 2008...

After my visit to the Finanzamt, I will first try ELSTER with an online translation tool before asking for professional help.

American Taxes Filed!

noreply@blogger.com (Unknown) — Sat, 04 Apr 2009 12:23:00 +0000

Hooray!

Today I finally filed my taxes after two weeks of research and playing around with Turbo Tax. After this, I feel like I could be a tax preparer!

In my personal case, filing the the foreign tax credit, Form 1116, would have given me a tax liablity, whereas filing the foreign income exclusion, Form 2555, I got a small refund. So try it both ways! Even though the general wisdom I have seen is that the foreign income exclusion usually lessens your tax liability than the foreign tax credit.

I found a great great article from a professional tax expert about the Foreign Tax Credit. He explains the form in simple terms, using an example to fill it out. The site on which I found it is ACA, American Citizens Abroad, and they have a host of practical articles on taxes and other bureaucracy.

Now I just have to prepare my German taxes!

Paperwork for Renting an Apartment: the Mietschuldenfreiheitsbescheinigung

noreply@blogger.com (Unknown) — Tue, 17 Feb 2009 11:01:00 +0000

One of the documents you need to rent an apartment is the mietschuldenfreiheitsbescheinigung from your last landlord, proving that you paid your rent on time.

Instead of buying a standard form from a stationery store (as shown above), ask your landlord to copy my example below and fill in the blanks as they apply to your case:

Landlord's name
Landlord's address

City, date

Betreff: Bescheinigung zur Mietschuldenfreiheit

Sehr geehrte Damen und Herren,

hiermit bestätige ich, dass your name ab dem day. month year an der o.g. Adresse gewohnt hat und regelmäßig pünktlich den Mietzins vollständig entrichtet hat.

Mit freundlichen Grüßen,

Landlord's signature

Landlord's name

Comdirect Changed their Mind!

noreply@blogger.com (Unknown) — Wed, 11 Feb 2009 14:47:00 +0000

Someone called me from Comdirect on Monday and told me that they will open my account as soon as I send them the W-9 from the IRS, the Request for Taxpayer Identification Number and Certification. Because I have the possibility of opening a securities account with Comdirect, they may have to report my earnings to the IRS.

Yes, German bureaucracy, I will fill it out!

They will open my account immediately, and I should receive my cards and passwords in the mail in a week. So opening an online checking account with Comdirect has taken me approximately a month and a half. Of course, it took me a while to gather all my documents to fax them. But still, it was not as easy as applying for an America-based online checking account, which takes all of 20 minutes.

Hopefully, everything goes well, and I still get my sign-up bonus!

More Findings on American Taxes

noreply@blogger.com (Unknown) — Mon, 09 Feb 2009 16:24:00 +0000

Even if I qualified for the Foreign Earned Income Exclusion, my investment income would not be excluded. I have to report income, earned or through investment, made anywhere in the world. If my investment income is greater than $1500, then I need to file Schedule B.

If the German tax I pay is more than the American tax I should have paid, then that excess could be credited back against my American tax payment (for example, when I move back to the States).
If I were single and had gross income of less than $8200, then I am not required to file, no matter where I lived.

Unfortunately, I make a bit more than that. So I should file the 1040, then claim a credit / deduction for my German income tax paid via the foreign tax credit form. I think.

To get more clarity, I ordered Publication 54, Tax Guide for US Citizens and Resident Aliens Abroad, from the IRS. Free delivery to Germany!

German Taxes

noreply@blogger.com (Unknown) — Mon, 09 Feb 2009 15:56:00 +0000

Now that I am organizing my American tax papers, I briefly researched German taxes.

Once an employee has worked or lived in Germany for more than six months, they are considered a resident for tax purposes. But I wonder if this means for the tax year or year-to-date. For example, I moved to Germany in August, so for tax year 2008, I was not a resident in Germany. But in a matter of days is my six-month anniversary of living in Germany.

One can get tax forms from the Finanzamt or get them sent to your work (!?). The easiest way would be to file online via Elster, which has information in English, videos, and a hotline. Unfortunately, the hotline is ,14 centimes a minute.

If you have deductions, you file also an Anlage N. Apparently, if you contribute to social security in your home country, you can deduct this so that you are not paying twice the amount of 'social' taxes.

After you file, you will receive a notification whether you owe more taxes or get a refund. In German, this is a Bescheid über Einkommensteuer.

The deadline for filing the 2008 German tax return is May 31, 2009.

Speaking about taxes, if one leaves Germany permanently before living here for five years, you may get your contribution to the German pension system back. You must wait until you have lived two years away from the EU to claim reimbursement.

Paying American Taxes from Germany

noreply@blogger.com (Unknown) — Wed, 04 Feb 2009 17:18:00 +0000

It is almost tax filing time for 2008.

Unfortunately, I cannot file IRS Form 2555 for Foreign Earned Income Exclusion because I did not spend 330 days in Germany last year. If I were able to file this, only anything above $80,000 will be taxable. This will be taxed as ordinary income.

I may get to deduct all the costs necessary to maintain a residence abroad for work purposes. Not sure if I can do this even if I cannot file Form 2555.

No matter what, I get to file Foreign Tax Credit From 1116 for taxes already paid in Germany.

If I had any bank accounts with more than $10,000 at any time outside of the US, I have to file the Treasury Department From TDF 90-22.1, Report of Foreign Bank and Financial Accounts.

Since I moved this year, I should file Form 3903 for Moving Expenses. I have to use a separate form for each move to report transportation, storage, travel, lodgings, and more. I cannot deduct moving expenses reimbursed by an employer.

Since the Foreign Earned Income Exclusion only apply to federal taxes, this month I will register to vote in Texas, renew my driver's license in Texas, and open a checking and savings account in Texas so that my legal domicile is Texas, where there are no state taxes.

Fortunately (or unfortunately), I did not convert my 401k rollover into my Roth IRA in 2008. Otherwise, I would have had to file IRS Form 8606 to pay taxes for my Roth IRA conversion. I would have been taxed on my contribution and earnings as ordinary income.

I will do it in 2009, because this will be a low tax year for me. And I will try to max out at the 15% tax bracket.

Should I get an accountant? Or go TurboTax?

Comdirect Changed Their Mind about my Checking Account!

noreply@blogger.com (Unknown) — Mon, 02 Feb 2009 11:50:00 +0000

After getting my rejection letter from Comdirect, I emailed them asking if I could provide more information, such as my American credit report and payslips, to prove my suitability for the checking account.

Surprisingly, a human tried to call me, emailed back and said yes! What great customer service! A super plus in my book.

He explained that they work with standardized procedures to open accounts. These procedures enable them to achieve savings, which they pass on to their customers. But this process does not fully take into account the individuality of the applicant.

I took a while to email him my TransUnion credit report and my last few pay slips, because I could not access my free credit reports online. They would not allow me to access the site from Germany. I assume this is to discourage identity thieves, but for Americans abroad, this poses a huge problem. First, I tried to request a credit report by phone. I had to leave a message, but they garbled my first and last name. Machine ineffiency! Next, I asked my sister to pretend to me to access the information in the US. During this process, she discovered that I had a TransUnion account from the last time I requested a credit report. This allowed me to access my TransUnion credit report from Germany, but otherwise, my sister would have had to print, scan, then email my 6-page credit report. A lot of unnecessary work...

BVG U- and S- bahn tickets

noreply@blogger.com (Unknown) — Tue, 27 Jan 2009 15:58:00 +0000

Sometimes it really pays to read the directions. For example, I just found out this past weekend that the BVG allows unlimited transfers within two hours on their single tickets for €2,10. Since August, I had assumed that they worked like New York's subway tickets in which one ticket = one ride. Of course, in New York, they allow bus-to-subway transfers and vice versa, but I hardly ever took the bus.

But if you plan carefully in Berlin, this is a good way to run a few errands on one ticket, especially since the ticket is valid on all the systems: trams, S-bahn, U-bahn, bus. Within the two-hour window, the only thing once can't do is go back the way one came.

So, for example, I wanted to go to St. George's bookstore and get a haircut, both in Prinzlauerberg. Since St. George's was closer to my house, I stopped at St. George's first for an hour to sell some used books and to browse. Then I hopped on the tram again to continue to the hairdresser, always going in the same direction.

To make good use of the single ticket, just be sure to make your final destination the farthest-away from you and make a stop or two in between, depending on how long you need to stop. For example, I would like to go to the S-bahn stop Westend to finally shop at Centro Italia, but it is too far away for me to bike and spending 4 euros just to shop just seems wasteful. So I could combine a visit to Centro Italia with some errands in Mitte or anywhere else I only need to spend an hour or less.

But the real lesson here is to read everything so that you optimize its use. All those wasted train tickets...

Rejected by comdirect for a checking account

noreply@blogger.com (Unknown) — Sun, 18 Jan 2009 14:04:00 +0000

I finally received word from comdirect. On a letter dated January 12, they told me that they examined many criteria for my application, such as my job situation and credit information, and chose to reject my application. Comdirect assured me that rejection is not based on a single criterion but the result of an overall approach.

I have never been rejected by a bank for a checking account application before. In the US, they are so easy to open. Since I only moved here in mid-August, I assume my credit information is non-existent. But could that be the only reason for rejection? I have over 4000 euros in my Deutsche Bank checking account right now!

According to Toytown Germany's boards, comdirect only offers this account to employees with net salaries over 2000 or 2500 euros per month, for which I do not qualify. Isn't this discriminatory? Nowhere does it stipulate this on their site about the account.

I wasted time completing their online application and going to the post office to identify myself. Also, I volunteered lots of personal information to them for my application.

In any case, Toytown recommends that I apply for only a savings account with them and then try again after I live in Germany for a year. Off to open a new checking account...

PostIdent : Identifying Myself at the Post Office to Open a Girokonto with Comdirect

noreply@blogger.com (Unknown) — Mon, 15 Dec 2008 13:06:00 +0000

After printing out my application for a checking account at Comdirect, I reviewed and signed then. Then I went to the post office with only my passport, but that was not enough.

I went back a second time with my address registration at the Bezirksamt. So despite what the directions from Comdirect say, you need more than a passport if you are a foreigner.

The process itself was easy: I handed over the papers from Comdirect, my passport, and the address registration. The postal worker entered all my information into her computer, printed out a form for me to sign with my information, photocopied my passport, and sent it off.

So hopefully I will hear from Comdirect in the next few days about whether my account is open. I can’t wait to get my pens in the mail!

Opening a Girokonto bank account with Comdirect

noreply@blogger.com (Unknown) — Fri, 12 Dec 2008 13:01:00 +0000

According to Comdirect’s website, there are four steps to opening an account.

Fill out the online application and submit it. This should only take seven minutes.
Print out the application and sign it.
Take the application and a photo ID with you to the post office for identification verification, what is called PostIdent in German.
Comdirect will inform you in writing their decision.

Opening Process

The opening process went very smoothly. I filled out the application and accepted almost all the default options except that I unchecked for opening a ‘Depot’ / securities account.

Interestingly, they also asked me if I wanted to donate my 1 euro per month to my choice among three charities. With this economy, I need that one euro for myself. And I choose to support different not-for-profit groups.

After I submitted the application online, I received notice that if I were to complete the account opening within three weeks, I would get a set of two nice pens for free.

All in all, pretty easy.

Next up: identifying myself at the post office….

Comparing Checking and VISA bank accounts at Comdirect and DKB

noreply@blogger.com (Unknown) — Wed, 10 Dec 2008 15:38:00 +0000

Comparing Checking and VISA bank accounts at Comdirect and DKB

So much for all the work in digging through Comdirect’s website! Someone already did all the hard work in German, summarizing all the different checking accounts out there! And it was updated December 10, 2008. Here is the chart after it has been machine translated in English.

First, choose whether you have a ‘salary or private account’ or if you are a trainee or student. Next, choose how much your income is every month. Lastly, choose which positions you want to see.

Obviously, ratings 1-6 are the better banks. Out of curiosity, I checked to see how Deutsche Bank stacked up and found it at number 28 out of 30! Time to switch banks!

My personal situation: choosing between comdirect and DKB

For my personal situation, which is a monthly salary between 1,200 to 1,499 euros, comdirect and Deutsche Kreditbank (DKB) come up as the two top-rated banks.

The main differences are in the ATM usage and interest rates.

ATM

For DKB, all ATM withdrawals from the VISA account are free worldwide.

For comdirect, ATM withdrawals from the VISA account are free abroad whereas in Germany they are only free within the Cash Group, which includes Commerzbank, Deutsche Bank, Dresdner Bank, HypoVereinsbank, Postbank and its subsidiaries.

Interest Rates

For DKB, the VISA account earns 3,8 %.

For comdirect, the VISA account earns 4,5 % for the first six months, up to 30,000. Afterwards, the rate is 3,75 %.

Other differences

There are two other differences between DKB and Comdirect that matter to me.

Since DKB is an online-only bank, I cannot deposit cash into it. Comdirect is also an online bank, but they are affiliated with Commerzbank, so I can deposit cash there.

Lastly, Comdirect will give me 1 euro per month and currently has a sign-up bonus of 75 euros.

Conclusion

Since interest rates are liable to change, the only pro of DKB for me is free ATM withdrawals within Germany.

The pros of Comdirect for me are the possibility of cash deposits and 75 euros + 1 euro each month.

Since I find it hard to argue with hard, cold cash, Comdirect wins.

Comdirect’s Checking Account, the ‘Girokonto’

noreply@blogger.com (Unknown) — Mon, 01 Dec 2008 21:53:00 +0000

The basics

If you open an account before the end of the year, 75 euro opening bonus.
The account is free with a monthly deposit of at least 1,250 euros. Otherwise, the account is 4,90 Euros per month.
For new bank clients, comdirect bank will give you 1 euro each month in your account.
5.0% interest rate for money in the VISA account for new customers only, for six months only, up to 30,000 euros

Features

GeldKarte

On the ec-/Maestro- card is a golden chip which identifies you as legal to buy cigarettes from tobacco vending machines.

FREE ec-/Maestro- and VISA debit card

The ec (Electronic Cash) card is like a debit card, in that money comes directly from your account. In Germany, most places do not accept Visa and accept only the ec card. The Visa card is a credit card, and every month you will have a statement have have to pay it.

From my internet research, it seems as though I will get two cards, one ec-/Maestro card and one VISA debit card. Online you will apparently see two different acounts too. In the VISA acount, you will get 5% interest for a balance of up to 30,000 euros for the first six months. My understanding is that you keep most of your money on the VISA side and some money in your Giro site, which is attached to the ec-/Maestro card. From the ec-/Maestro card, you will pay rent, buy groceries, receive your direct deposits, etc.

Within Germany, access your cash for free at over 7,000 ATMs in the Cash Group, which includes Commerzbank, Deutsche Bank, Dresdner Bank, HypoVereinsbank, Postbank and its subsidiaries. You can also use the ATMs of Deutsche Bank in Italy and Spain use free of charge. Search for ATMs here, because if you use your ec-/Maestro-card with other banks, it is 3,98 euros per withdrawal.

However, using the VISA card abroad to withdraw money from ATMs is free. Using the VISA to pay for purchases, they will charge you 3% or at least 5,11 euros.

Tomorrow I will look into the fees in their fee schedule.

Comdirect ‘Depot’ Account

noreply@blogger.com (Unknown) — Mon, 01 Dec 2008 10:07:00 +0000

So, I made a mistake. The comdirect account I mentioned in my last post is an online brokerage account, not a checking account. But opening it still gives you 7,500 topbonus miles with Air Berlin.

Here are the details I found on comdirect:

* Free for at least 1 year
* Three free trades at the German stock exchanges and in OTC trading
* Cost for custody transfer to comdirect

The custodian fee waiver is only available in conjunction with the activation of Postbox, an electronic mailbox for order slips and other communications.

Since I am looking for a new checking account, I will not look any more into this program.

But while looking at this account, I saw that comdirect will give you 12 euros a year to have Girokonto account with them. In my next post, I will tell you what I learned about the GiroKonto.

Free AirBerlin miles with comdirect Bank Account

noreply@blogger.com (Unknown) — Wed, 26 Nov 2008 12:39:00 +0000

According to AirBerlin's website,

All existing and new customers will get 7,500 bonus miles in AirBerlin's mileage program topbonus at the opening of comdirect bank accounts.

Included in the AirBerlin bank account: comdirect bank carries out the first three transactions at the German stock exchange for free, charges no fees for one year, and assumes all the costs for a custody transfer from another bank.

Your advantages as a topbonus Client: 7,500 bonus miles gets you a free flight within Germany, although you still have to pay taxes and fuel surcharges.

I would only apply for this if I already wanted to have a comdirect bank account. My next post will review the features of a comdirect bank account.

Deutsche Bank AktivKonto Checking Account Review: Opening Process and Features

noreply@blogger.com (Unknown) — Tue, 25 Nov 2008 16:57:00 +0000

Here in Berlin, I opened up a checking account at Deutsche Bank because they offered an online banking interface in English as well as free ATM withdrawals at Bank of America in the US. I chose the most basic account offered at Deutsche Bank, the AktivKonto. If you are a student 30 or below, the Student Account—the StudentenVorteilsKonto--is even better because it is free.

The other two kinds of checking accounts they offer are the PlusKonto and the BestKonto. The PlusKonto offers a second ATM card for free, among other services, which is great if you share the account with someone. The BeskKonto gives you a gold Mastercard or Visa credit card, which is unnecessary since I already have so many credit cards.

Here are my experiences so far as well as some first impressions of this checking account:

Opening Process

The opening process went very smoothly. I went to the Deutsche Bank branch at Potsdamer Platz and requested to open an account with an English-speaking banker.

I only needed my passport, no opening deposit needed. I don’t think he checked my credit. I signed a lot of papers and received my ATM card, ATM password, online banking password, and TAN numbers (more on these later) in the mail a few days later. Even though the online bank is in English, all the documents they sent me were in English.

Account Features, Transfers and Usability

For the basic fee of 4,49 euros per month, you get a checking account with no minimum balances. Since I was starting a new job, I asked to have the 50% career beginner bonus. This saves me half of the monthly basic fee. This applies to accounts opened during the first year of employment for one year and requires regular salary deposits for customers up to 31 years of age. Now I pay only 2,24 euros per month for the AktivKonto.

Features

Included in this account is an ATM and Electronic Cash card, which is the German version of a debit card. You can withdraw for free at Deutsche Bank ATMS or the ATMs of the Cash Group banks in Germany or abroad: Commerzbank, Dresdner Bank, HypoVereinsbank, and Postbank. Deutsche Bank’s international partners are Bank of America in the US, Barclays in the UK, BNP Paribas in France, Scotiabank in Canada and Mexico, and Westpac in Australia and New Zealand. If you withdraw from any other ATM, it is a whopping 5 euros per withdrawal!

Beware: the monthly statements are free, but they deduct postage from your account! You may print them for free at certain ATMs equipped with a printer.

In Germany, checks are dinosaurs—and you have to pay 1,50 euros per each check drawn and presented.

Transfers
All transfers are free online, and the transfer limit is 1000 euros per day. Receiving transfers from Germany, EU, and EEA countries are free as are issuing transfers via online banking. Transfers via remittance forms and telephone customer service cost 1,50 euros each as are repeating transfers set up, updated, or cancelled by telephone or at the bank branches.

Their online bank allows you to schedule transfers 60 days in advance and see the last 120 days of your account actions. For every transaction made online, such as online transfers or address change, you must enter a TAN number even after signing in with your password.

Transfers within Germany made via online banking up to 4p.m. will be executed the same day.

Standing orders is British for repeating payments. Updates or cancellations should be made at least 3 days before the date of execution.

Usability
The interface is very simple and utilitarian.

More Information

Customer Service: 0 18 18 – 10 00, open 24/7.
I have never called customer service, as the charge is 9,9 eurocents per minute.