Field help:
10. Wages for multiple calendar years, compensation, e.g. severance payments
Enter the amount from number 10 on your income tax statement here:
"Wages for several calendar years, compensation, e.g. severance payments (included in 3, excluding 9)"
Compensation primarily includes severance payments made when an employment relationship is terminated. Proof can be provided to the tax office, such as the employment contract, termination letter, or a termination agreement.
Wages for several calendar years include, for example, anniversary bonuses, subsequent bonuses, or late wage payments for several years, such as due to unlawful withholding by the employer.
Such extraordinary income can be tax-advantaged under certain conditions according to the so-called fifth rule in accordance with § 34 EStG. The condition is that the payment is made in a lump sum in one calendar year, resulting in a progression effect – meaning the income in the payment year is significantly higher than in the previous year.
Income-related expenses directly related to compensation received or wages for several years – such as legal or tax advice costs or legal expenses – can also be claimed for tax purposes. These expenses should be separately recorded as income-related expenses in the tax return to ensure full tax consideration.
