ABOE Baby&Family

Navigating the complexities of parenthood can be an overwhelming task, especially when it comes to financial planning. In Germany, a country known for its robust social support system, parental allowance (Elterngeld) plays a crucial role in providing financial assistance to parents during the early stages of their child’s life. However, calculate Elterngeld can be a daunting task, with various factors and some calculations involved. In this article, you can find the intricacies of parental allowance in Germany, shedding light on the main factors when calculating the Elterngeld. Just wanted to emphasize that this article is about the Elterngeld and not the Mutterschaftsgeld. Disclaimer You receive Mutterschaftsgeld during the Mutterschutzfrist, which usually begins six weeks before the due date and ends eight weeks after the birth. And if you would like to know more information about the Mutterschutz / maternity leave and Mutterschaftsgeld /Maternity pay don’t forget to check my video about it, right here: The Elternzeit or parental allowance, which starts after the Mutterschutzfrist for the birthing mother, but in some cases and for the other parent, may start directly after the child was born. And during that time you can get Elterngeld (Parental allowance). You can chose the extension and the type of allowance you prefer, with some rules and limitations. What is Elterngeld? If you want to get an overview about the Elterngeld in Germany check this video here: Types of Alterngeld And this other video if you want to know more details about the 3 different types of Elterngeld you can get in Germany and how to combine them: The information of this video is for parents whose children were born after the 31st of August 2021. If your child was born before 1 September 2021, different rules apply to you in some cases. Calculate Elterngeld To calculate Elterngeld, the amount of your Parental Allowance depends on the following questions: Depending on your income, you will receive Basic Parental Allowance of between EUR 300 and EUR 1,800 a month, and Parental Allowance Plus of between EUR 150 and EUR 900 a month. This amount might be higher if you already have children or if you are expecting twins, triplets or other multiples. You can also receive the minimum amount of EUR 300 in Basic Parental Allowance or EUR 150 in Parental Allowance Plus, even if you previously had no income or if your income after the child’s birth is the same as before (for example, because you are continuing to work part-time). For a non-binding estimate of the Parental Allowance you can expect to receive, use the Parental Allowance / Elterngeld Calculator at www.familienportal.de. Basic Parental Allowance / Basiselterngeld calculation Basic Parental Allowance normally consists of 65% of the net income you received before the child’s birth which you will no longer be receiving after the child’s birth. This means, Basic Parental Allowance in Germany in the months in which you receive no income amounts to 65% of your net income before the child’s birth. When you calculate Elterngeld the Basic Parental Allowance in the months in which you do receive an income is 65% of the difference between your net income before the child’s birth and your net income after the child’s birth. !Note: The net income used to calculate Parental Allowance might differ somewhat from your actual net income! Calculate Elterngeld – Example 1 for Basic Parental allowance / Basiselterngeld calculation The mother had an income of EUR 2,000 a month before the child’s birth. After the child’s birth, she stays at home and has no income. She claims Basic Parental Allowance. Net income before the child’s birth EUR 2,000 Net income after the child’s birth EUR 0 Difference EUR 2,000 Basic Parental Allowance (65 per cent of the difference) EUR 2,000 x 0.65 = EUR 1,300 per month Calculate Elterngeld – Example 2 for Basic Parental allowance / Basiselterngeld calculation The mother returns to work after six months, initially on a part-time basis. She earns EUR 500 a month. This changes the amount of Basic Parental Allowance she receives: Net income before the child’s birth EUR 2,000 Net income after the child’s birth EUR 500 Difference EUR 1,500 Basic Parental Allowance (65 per cent of the difference) EUR 975 per month together with her net income This means that after returning to work the mother receives a total income of EUR 500 + EUR 975 = EUR 1,475 per month Minimum and maximum amounts Basic Parental Allowance is at least EUR 300 and no more than EUR 1,800. This means your Basic Parental Allowance will be at least EUR 300 even if you had no income before the child’s birth or lost no income after the child’s birth due to the fact that you are still working in the same part-time job. If you had an income before the child’s birth and when you calculate Elterngeld shows up less than EUR 300, you will still receive the minimum amount. Parental Allowance Plus / Elterngeldplus and Partnership Bonus / Partnershaftsbonus calculation Parental Allowance Plus is calculated in the same way as the Basic Parental Allowance. However, the amount of Parental Allowance Plus is limited to half of what you would theoretically receive as Basic Parental Allowance if you had no income after the child’s birth. To make up for this, you receive Parental Allowance Plus for twice as long as Basic Parental Allowance. The Partnership Bonus is calculated in the same way as Parental Allowance Plus. If you have no income after the child’s birth, Parental Allowance Plus is only half the amount of the Basic Parental Allowance. You can choose Parental Allowance Plus to extend the period in which you receive Parental Allowance. This does not reduce the Parental Allowance you are able to claim, it is simply spread over a longer period. Example on how to calculate Elterngeldplus / Parental Allowance Plus without income Net income before the child’s birth EUR 2,000 Net income after the child’s birth EUR 0 Difference EUR 2,000 Basic Parental Allowance (65 per cent of the difference) EUR 1,300 per month Half of this amount = cap EUR 650 Parental Allowance Plus EUR 650 per month Total Basis Parental Allowance for 12 months: 12 x EUR 1,300 = EUR 15,600 Total Parental Allowance Plus for 24 months: 24 x EUR 650 = EUR 15,600 It is particularly worth claiming Parental Allowance Plus if you have an income after the child’s birth, for example from working part-time. In this case, Parental Allowance Plus can end up being the same as your Basic Parental Allowance with your income. Even so, you can still receive Parental Allowance Plus for twice as long as Basic Parental Allowance. First example on how to calculate Elterngeldplus / Parental Allowance Plus with an income Net income before the child’s birth EUR 2,000 Net income after the child’s birth EUR 1,200 Difference EUR 800 Basic Parental Allowance (65 per cent of the difference) EUR 520 per month Theoretical Basic Parental Allowance without income after the child’s birth (65 per cent of EUR 2,000) EUR 1,300 Half of which = cap EUR 650 Parental Allowance Plus EUR 520 per month In this example, the cap does not reduce the Parental Allowance Plus. This is because the cap is more than 65 per cent of the difference in income divided per 2. As a result, the Parental Allowance Plus is the same amount as the potential Basic Parental Allowance with income. Even so, you can receive it for twice as long. This means that the parents will ultimately receive twice as much Parental Allowance in total: Total Basic Parental Allowance for 12 months: 12 x EUR 520 = EUR 6,240 Total Parental Allowance Plus for 24 months: 24 x EUR 520 = EUR 12,480 Second example on how to calculate Elterngeldplus / Parental Allowance Plus with an income Net income before the child’s birth EUR 2,000 Net income after the child’s birth EUR 500 Difference EUR 1,500 Basic Parental Allowance (65 per cent of the difference) EUR 975 per month Theoretical Basic Parental Allowance without income after the child’s birth (65 per cent of EUR 2,000) EUR 1,300 Half of which = cap EUR 650 Parental Allowance Plus EUR 650 per month In this case, the cap reduces the Parental Allowance Plus. This is because 65% of the difference in income is more than the cap. However, since parents can claim Parental Allowance Plus for twice as long, they still end up receiving more Parental Allowance if they opt for Parental Allowance Plus: Total Basic Parental Allowance for 12 months: 12 x EUR 975 = EUR 11,700 Total Parental Allowance Plus for 24 months: 24 x EUR 650 = EUR 15,600 Minimum and maximum amounts Parental Allowance Plus and the Partnership Bonus are EUR 150 and EUR 900. Low income earners Low-income earners receive more Parent Allowance. If your net income before your child’s birth was less than EUR 1,240 there is an increase in the percentage of income difference that you receive as Parental Allowance. The lower your net income, the higher this percentage will be. It can be a bit confusing to calculate Elterngeld for low income earners, so here is an explanation: Example on how to calculate Basic Parental Allowance for low-income earners Net income before the child’s birth EUR 700 Net income after the child’s birth EUR 50 Difference EUR 650 The net income before the child’s birth was EUR 700. For Every 2 €at the income falls below EUR 1,000, the percentage rises by 0.1 per cent. EUR 700 equals EUR 1,000 minus EUR 300. EUR 300 equals EUR 2 times 150. Therefore, the percentage rises from 67 per cent by 150 x 0.1 per cent, that is to say by 15 per cent. The result is 67 per cent + 15 per cent = 82 per cent. The calculation at a glance: EUR 1,000 – EUR 700 = EUR 300 EUR  300 divided by EUR 2 = 150 150 x 0.1 per cent = 15 % 67 % + 15 % = 82 % The Basic Parental Allowance is 82 % of EUR 650 = EUR 533 Higher Parental Allowance for twins and other multiples If you have twins, you only receive Parental Allowance for them once, but there is an increase in the amount of Parental Allowance you receive as a bonus: This bonus is twice as high for triplets (EUR 600 or EUR 300), three times as high for quadruplets (EUR 900 or EUR 450), etc. This bonus is called the “Multiples Bonus” or Mehrlingszuschlag in German and is very relevant to calculate Elterngeld. The “Multiples Bonus” also increases the minimum and maximum Parental Allowance you are able to claim: the minimum Basic Parental Allowance for twins is EUR 600 and the maximum is EUR 2,100, while Parental Allowance Plus is at least EUR 300 and can be as much as EUR 1,050. Higher Parental Allowance for more than one child For biological children If you have other children living in your household you can claim a Parental Allowance bonus known as the “Siblings Bonus”, Geschwisterbonus in German. This increases your Parental Allowance by 10%, or at least EUR 75 a month in the case of Basic Parental Allowance, and EUR 37.50 in the case of Parental Allowance Plus. You can claim the Siblings Bonus if there is at least: For adopted children There is also a Geschwisterbonus, or the “Siblings Bonus”. But for adopted children it is calculated not according to the child’s age but to the time that has passed since the day on which the child joined your household. This also applies if the adoption process is still ongoing, during the adoptive care phase. There is no “Siblings Bonus” for adopted children aged 14 or over. The Siblings Bonus also increases the minimum and maximum Parental Allowance: with the Siblings Bonus, Basic Parental Allowance is at least EUR 375 and can be as much as EUR 1,980 whereas Parental Allowance Plus is at least EUR 187.50 and can be as much as EUR 990. Example of a Basic Parental Allowance with Siblings Bonus The mother receives Basic Parental Allowance during the first 12 months of the child’s life. The child for whom she receives the Parental Allowance has an older sister. The younger child’s sister turns 3 when the younger child is seven months old. Net income before the child’s birth EUR 2,000 Net income after the child’s birth EUR 0 Difference EUR 2,000 Basic Parental Allowance (65 per cent of the difference) without...