Tax return: should you attach or detach your adult child from his tax household?

On paper, the rule is simple: “As they get older, your children are no longer automatically considered your relatives and become tax independent. They must then file a 2042 tax return in their name, ”Bercy explains. Nevertheless, it often happens that adult children are still dependent on their parents. In this case, the law (CGI. Art.6) allows taxpayers to attach their child to their tax household. The advantage is attractive: it makes it possible to achieve an increase in the number of shares of the family quotient if the child is in accordance or without maintenance, and a reduction if the child is married, in partnership or maintenance in a family (6,042 euros per attached person ). But sometimes it is financially more interesting to pay alimony to your child without attaching it to his tax household. Because this maintenance contribution is deductible in taxable income up to 6,042 euros. So there is a trade-off.

“We discuss this issue every year with our customers who are not necessarily aware of this issue,” emphasizes Erwan Grumellon, wealth engineer at SwissLife Banque Privée. In order to link his adult child to his tax household, the opportunity must be used every year on the occasion of the tax return. But beware, this option is subject to conditions: For the spring tax return (2022), the child should be under 21 on January 1, 2021, or under 25 on January 1, 2021, if it is in higher education. The only exception, “disabled children do not have an age requirement to be met in order to be attached to the tax household”, reminds the Directorate-General for Public Finance (DGFIP). “The size of the tax savings is limited to 1,592 euros per half share,” specifies Marie-Laure Decobert, wealth engineer at SwissLife Banque Privée. The third child is entitled to a full share (3,184 euros).

In practice, the option must be activated on the tax return. Online or via the paper form, complete Part D “Appendix in 2021 of Adults or Married Children”. Box J is used to indicate the number of adult children without children. Just below, box N refers to the number of children who are married, in PACS or with family. You must also state their marital status: surname, first name, date of birth and place of birth. Important point, the attached child must clearly express his choice on free paper. The sheet must be signed and kept in case of inspection a posteriori by the tax administration.

Payment of maintenance

Conversely, you can choose not to link your adult child to your tax household and pay child support. Be aware that the administration may ask you to prove that you have actually paid such a pension if your child’s income is not sufficient to live on. The deduction of alimony from your income tax is limited to 6,042 euros (for 2021 income stated in spring 2022). If you are hosting your child, you can withdraw up to 3,592 euros per person. child from without proof. Amounts that must be calculated in proportion to the number of months if you have only accommodated your child for part of the year. Finally, Bercy specifies “that unlike the affiliation, this deduction is possible even if the child is over 25 and is no longer a student”. Maintenance payments paid must be entered in the category “Deductible expenses”, box 6EL and the following. The child must, for his own part, state the amount received in his own tax return, in the category “Salary, salary, pensions, annuities”, in box 1AO.

To help you see clearly between attachment and detachment of your adult child, Capital has asked SwissLife Banque Privée to provide concrete examples. Four simulations are presented below: two cases concern a couple with two children; two other examples focus on a couple with three children. All the examples relate to the situation of the eldest child.

Example # 1

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  • In this first example, a couple with two children has 80,000 euros in taxable net income (after applying 10% reimbursement of business expenses).
  • By attaching the two children : the tax household shows 3 shares of the family quotient (2 for the parents and 1 – 2 x 0.5 – for the children). Children give a maximum tax benefit of 3,184 euros (1,592 x 2). The income tax due is 8,660 eurosafter application of tax benefit of 3,184 euros.
  • In case of posting of the eldest child: the couple chooses to pay him alimony of 6,042 euros. This reduces the tax base to 73,958 euros (80,000 – 6,042). From then on, the tax household has only 2.5 shares of family quotient. That is a maximum benefit from the second attached child of 1,592 euros. The income tax due is 8,439 eurosafter application of tax benefit of 1,592 euros.
  • The difference between the two situations (8,660 – 8,439) emphasizes that the family can save 221 euro income tax by detaching his adult child from the tax household.

Example 2

SwissLife Private Bank / Capital
  • In this second example, a family with two children has 200,000 euros in taxable net income (after applying 10% reimbursement of business expenses).
  • By attaching the two children : the tax household shows 3 shares of the family quotient (2 for the parents and 1 – 2 x 0.5 – for the children). Children give a maximum tax benefit of 3,184 euros (1,592 x 2). The income tax due is € 50,260after application of tax benefit of 3,184 euros.
  • In case of posting of the eldest child: the couple chooses to pay him alimony of 6,042 euros. This reduces the tax base to 193,958 euros (200,000 – 6,042). From then on, the tax household has only 2.5 shares of family quotient. That is a maximum benefit of 1,592 euros from the second child still attached. The income tax due is € 49,375after application of tax benefit of 1,592 euros.
  • The difference between the two situations (50,260 – 49,375) highlights that the family can save 885 euro income tax by detaching his adult child from the tax household.

Example # 3

SwissLife Private Bank / Capital
  • In this third example, a family with three children has 80,000 euros in taxable net income (after applying 10% reimbursement of business expenses).
  • By attachment to the three children : the tax household represents 4 shares of the family quotient (2 for the parents and 2 for the children). This gives a maximum tax benefit of 6,368 euros (3,184 x 2). The income tax due is € 5,476after application of tax benefit of 6,368 euros.
  • In case of posting of the eldest child: the couple chooses to pay him alimony of 6,042 euros. This reduces the tax base to 73,958 euros (80,000 – 6,042). From then on, the tax household has only 3 shares of family quotient. This gives a maximum tax benefit of 3,184 euros (1,592 x 2) thanks to the last two children still attached. The income tax due is € 6,847after application of tax benefit of 3,184 euros.
  • The difference between the two situations (6,847-5,476) emphasizes that the family can save 1,371 euros in income tax by attaching his adult child to the tax household.

Example # 4

SwissLife Private Bank / Capital
  • In this fourth example, a family with three children has 200,000 euros in taxable net income (after applying 10% reimbursement of business expenses).
  • By attachment to the three children : the tax household represents 4 shares of the family quotient (2 for the parents and 2 for the children). This gives a maximum tax benefit of 6,368 euros (3,184 x 2). The income tax due is € 47,076after application of tax benefit of 6,368 euros.
  • In case of posting of the eldest child: the couple chooses to pay him alimony of 6,042 euros. This reduces the tax base to 193,958 euros (200,000 – 6,042). The household now has only 3 shares of family quotient. This gives a maximum tax benefit of 3,184 euros (1,592 x 2). The income tax due is € 47,783after application of tax benefit of 50,967 euros.
  • The difference between the two situations (47,783 – 47,076) highlights that the family can save 707 euros income tax by attaching his adult child to the tax household.

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