Extraordinary expenses from the private sector
In the private sector , there is talk of extraordinary burdens that can be deducted from tax under certain circumstances. These are expenses that are not part of your normal expenses. Inevitable are expenses that affect yourself or your family. You can claim the following examples as extraordinary costs according to § 33a EStG (Income Tax Act ):
- Various medical costs, such as expenses for hearing aids, glasses, alternative treatments or various medications, are considered extraordinary costs according to Section 33 of the Income Tax Act.
- You can also deduct expenses for artificial insemination from tax if the method used is approved in Germany and complies with the German Embryo Protection Act.
- Additional payments for necessary spa stays are recognized by the tax office as extraordinary expenses from the private sector as well as the tasks for alternative healing methods.
- If you are not affected yourself but have to care for a relative , you can deduct a flat-rate care amount of 924 euros (Section 33 (6) EStG). The care costs for accommodation in a corresponding home are also to be regarded as extraordinary expenses.
- If an apartment renovation is necessary because you or a family member suffers from a congenital or accident-related disability, these costs are also deductible.
- If you have children, you can have the corresponding support and special needs for their education (e.g. school supplies) credited with a corresponding lump sum per year.
Other expenses that are considered to be extraordinary costs under the Income Tax Act are funeral costs, replacement costs, the lump sum for survivors and various lump sums for people with disabilities.
Can you deduct private extraordinary expenses in your tax return?
You are allowed to state some of the extraordinary expenses that you incurred privately in your tax return . It is important that these costs were inevitable and necessary, for example to improve your health. When deducting, it is important that you take into account the maximum amount stipulated by the state.
Where are extraordinary expenses shown?
According to the regulations of the Commercial Code, you must state extraordinary expenses in the notes to your annual financial statements . Both the type of expenditure and the amount of the costs must be mentioned.
The normal extraordinary expenses, such as theft, natural disasters and business liquidations , must be listed in the SKR03 within the accounts 2000 to 2005 . If you use the SKR04 procedure, you post them in the account classes 7500 to 7550 .
Since 2016, extraordinary income and expenses are not shown separately in the income statement . The Accounting Directive Implementation Act (in short: BilRUG) only provides for a listing of the corresponding income or costs in the area of “other operating expenses” or “other operating income”. You must also state the exact amount in the attachment. Together, these two items result in what is known as the “extraordinary result”.
What are Extraordinary Income?
The term extraordinary income is understood to mean income that does not occur regularly or in connection with your normal business activities. The rules for this you find in the IV HGB § 277 . If you look at the applicable laws regarding cost accounting, you will find that extraordinary income is treated as part of neutral income.
For a better understanding, you will find various examples of the different types of yield at this point :
- Extraordinary or non-operating income: These income are unrelated to your normal business activities. The sale of securities can be booked as non-operating income. The sale of parts of the business is also one of the extraordinary income.
- Operating income: This includes all income that has to do with normal business operations. At a manufacturer of office supplies, for example, this is the income from the sale of the goods produced. In the case of a carpentry business, this is the income from the furniture items sold.
You must explain extraordinary income in more detail in the notes to your annual financial statements. Both the type of income and the amount must be listed.
Extraordinary expenses are expenses that you incur in connection with the production or service, but are nevertheless unusual for your company. The procurement of material for the repair of machines or the repair of your operating facility can be viewed as an extraordinary cost or expense. You have to enter these items separately in the accounting to avoid falsifying the annual financial statements. You can also claim private special expenses in your tax return under certain conditions. The amount as well as the origin and use must be specified in the notes to the annual financial statements. Extraordinary expenses and extraordinary income together produce the extraordinary result. The regulations for this can be found in § 33 EStG .
Summary: Frequently asked questions about extraordinary expenses
What are extraordinary items?
The term extraordinary items or extraordinary expenses is understood to mean all costs that arise in connection with your business operations , but are rather unusual in comparison with the usual expenses . Which expenses can be booked as extraordinary items depends largely on the type of your business.
What are extraordinary expenses and income?
Exceptional expenses and income stand out from the normal income and expenses of your business. These are costs that arise in connection with your business operations, but are rather unusual and therefore clearly stand out.
What are other operating expenses?
According to Whicheverhealth, the other operating expenses are items in the income statement according to Section 275 of the German Commercial Code (HGB) . If you use the total cost method , it is a matter of all normal expenses that do not belong to material costs, personnel expenses, depreciation or expenses of the financial result or taxes (according to § 275 II HGB).
If you also use the cost of sales method , the other operating expenses include all normal costs that are not added to the expenses of the order, operation, financing or general administration.
What is a neutral effort?
The neutral effort is not a cost-producing expense . These can be external expenses that do not serve the operational purpose, or extraordinary expenses that only appear once. Expenses not related to the accounting period as well as expenses related to valuation or price determination also count as neutral expenses.