Tax refund Jobcenter income: when the offsetting is wrong

Q: I am self-employed and have received an input-tax credit from the tax office. Is that income?

No. Input-tax credits from a VAT advance return are pass-through items. You had collected the VAT from your customers and paid it on to the tax office — the refund just offsets your earlier outlay. The annual income-tax adjustment is different: that is income and is treated under § 11 Abs. 3 SGB II. If your Jobcenter offsets input tax as income, that is unlawful.

You have finally received your tax refund (Steuererstattung) — and the Jobcenter deducts it from your Bürgergeld in a single month? In many cases this is exactly what is unlawful. A tax refund counts as one-off income and, under § 11 Abs. 3 SGB II, must as a rule be spread over up to six months. This guide shows when the offsetting is correct, when it is not, and how to get your money back.

The essentials in 30 seconds

A tax refund (Steuererstattung) (annual income-tax adjustment) is income in the inflow month under § 11 Abs. 3 SGB II.
It is in principle spread over up to six months — not offset entirely in one month.
Allowances and deductible amounts for employed persons do not apply, since it is not earned income.
Input-tax credit from a VAT advance return for self-employed persons is not income — it is purely a pass-through item.
Common mistake: the refund is fully offset in the inflow month — you receive nothing that month and too much in the months that follow.
Objection deadline: one month from receipt of the decision.

We review your decision within 24 hours. Free and non-binding.

Why does this happen?

Many Aufstocker — people who, despite working, have to rely on Bürgergeld — receive a tax refund from the tax office once a year. For the family it is often a small ray of light: finally a buffer for the broken washing machine, the daughter's school trip or dental treatment. And then the shock: the Jobcenter learns of the transfer and wipes out the entire Bürgergeld for one month.

The background: § 11 Abs. 3 SGB II (the central provision on the treatment of one-off income) provides for two rules. First: one-off income basically counts in the month of inflow. Second: if full offsetting in the inflow month would mean that the entitlement to benefits drops to zero, the income must be spread over a period of six months. It is precisely this second sentence that case workers regularly overlook or apply incorrectly.

Example: Herr Nowak, 42, a top-up recipient working in retail. His Bürgergeld claim is 380 € per month as a top-up. In March he receives a tax refund of 2,100 € from the tax office. In April, the Jobcenter deducts the full 2,100 € from his need. Result: Herr Nowak receives 0 € Bürgergeld in April — even though his rent still has to be paid. Under § 11 Abs. 3 SGB II this blanket treatment is wrong. Correct would be a split over six months: 2,100 € ÷ 6 = 350 € per month offset. That way Herr Nowak keeps at least part of his Bürgergeld every month, plus his housing costs (Kosten der Unterkunft, KdU).

Why does the Jobcenter still do this? The software often defaults automatically to "one-off income in the inflow month" — and the case worker does not correct the preset. Sometimes there is simply no check whether the benefit entitlement falls away entirely as a result of the one-off offsetting. For you that means: do the math carefully, file a precise objection.

Your rights in concrete terms

A tax refund is income in the inflow month (§ 11 Abs. 3 S. 1 SGB II). What counts is the day the credit lands in your account, not the date of the tax office's decision.
Spreading over six months if the benefit entitlement falls away (§ 11 Abs. 3 S. 3 and S. 4 SGB II). If the full offsetting in the inflow month would lead to your Bürgergeld claim falling away in that month, the income must be spread evenly over six months from the following month.
No earned-income allowances. The basic allowance of 100 € and the graduated deductions under § 11b SGB II apply only to earned income from active work. A tax refund is not earned income — therefore no 100 € allowance, no 20 % deduction.
Input-tax credit for self-employed persons is not income. For self-employed persons, the input-tax credit from a VAT advance return is a pass-through item, not income within the meaning of § 11 SGB II. It was previously collected from customers and is only being refunded by the tax office. Offsetting it would be double-counting and unlawful.
Net out solidarity surcharge and church tax. If your refund contains shares of solidarity surcharge or church tax, these must be netted against contributions paid at the same time. Only the net amount is income.
Right of objection within one month. The amending decision only becomes legally binding once this deadline has passed (§ 84 SGG).
Application for review under § 44 SGB X. If the deadline has passed and you only later realise that the offsetting was wrong: the money can be paid retroactively for up to one year.

Current case law

The Federal Social Court (BSG) has repeatedly clarified that a tax refund (Steuererstattung) as an annual income-tax adjustment is income within the meaning of § 11 SGB II. At the same time, it has clarified the system of spreading over six months: what matters is whether the inflow would cause the benefit entitlement in the inflow month to fall away entirely. If that is the case, the Jobcenter must spread it — it is not a discretionary decision. [URTEIL-REFERENZ]

For self-employed persons the case law is equally clear: input-tax credits are not need-reducing income, because economically they merely represent a pass-through item. You had previously collected the VAT from your customers and paid it on to the tax office — the refund only offsets your earlier outlay. [URTEIL-REFERENZ]

In practice, the social courts follow these lines consistently. Anyone who relies on § 11 Abs. 3 S. 3 SGB II and concretely demonstrates that the benefit entitlement would fall away without spreading has very good chances. According to the experience of many social counselling centres, objections in cases of incorrect tax-refund offsetting succeed at an above-average rate.

How to proceed now

Look at the decision in detail. In the amending decision, find the line with the tax refund. Does the full amount appear in the inflow month? Or has it already been spread over six months (in which case roughly 350 € per month would appear instead of 2,100 € in one month)?
Document the payment date. Pull out the bank statement showing the inflow of the refund from the tax office. The inflow month is the month of the credit.
Set up a comparison calculation. What would your Bürgergeld claim be without the refund? Does it disappear entirely because of the full offsetting in the inflow month? If so, spreading under § 11 Abs. 3 S. 3 SGB II is mandatory.
File an objection — in writing, in time. Within one month of receiving the decision. An informal letter or fax is enough. Core sentence: "I hereby object to the amending decision of [date]. Reasons: the tax refund was not spread over six months in breach of § 11 Abs. 3 S. 3 SGB II. Reasons to follow."
Submit reasons later. Lay out the chain of calculation: amount of the refund, inflow month, fall-away of the benefit entitlement in the inflow month, and resulting spread over six months. Attach the bank statement and the tax-office decision.
Have the decision reviewed. Anyone who is unsure — especially self-employed persons with input-tax credits or couples with joint assessment — should have the decision examined by a specialist before the objection deadline expires.

Avoid typical mistakes

Mistake 1: Full offsetting in the inflow month instead of spreading. The most common mistake. The Jobcenter books the entire amount in one month as income and you receive no Bürgergeld at all. If your claim drops to zero as a result, this is unlawful under § 11 Abs. 3 S. 3 SGB II — spreading is mandatory.
Mistake 2: Solidarity surcharge counted separately as income. If your refund contains solidarity-surcharge shares and you are at the same time still paying solidarity surcharge on current wage tax, these must be netted. If the Jobcenter offsets the gross amount instead of the net amount, it pays you too little.
Mistake 3: Double offsetting in couples. With joint assessment, the refund is often transferred to one spouse's account. Some Jobcenters then offset it both against the receiving partner and again proportionally against the other. The refund is income of the household community (Bedarfsgemeinschaft, BG) (all persons in the household whose income is offset jointly) once — not twice.
Mistake 4: Input-tax credit counted as income. For self-employed persons: the input-tax credit from the VAT advance return is not income. If it is offset anyway, that is a clear ground for objection.

Frequently asked questions

I am a top-up recipient and get a 2,100 € tax refund. Does the Jobcenter have to spread it over six months?

As a rule yes. The test under § 11 Abs. 3 S. 3 SGB II: would full offsetting in the inflow month wipe out your benefit entitlement entirely? With 2,100 € against a typical top-up claim of 300 to 500 €, the answer is almost always yes. Then the Jobcenter must spread it — 350 € per month for six months. That is not a discretionary decision.

Does the 100 € basic allowance also apply to the tax refund?

No. The 100 € basic allowance and the deductions under § 11b SGB II apply exclusively to earned income from current activity — that is, your wages. A tax refund is, economically, the result of your work, but legally it is its own category. That is why there is no allowance. This is often misunderstood, but that is how it is regulated.

I am self-employed and have received an input-tax credit from the tax office. Is that income?

No. Input-tax credits from a VAT advance return are pass-through items. You had collected the VAT from your customers and paid it on to the tax office — the refund just offsets your earlier outlay. The annual income-tax adjustment is different: that is income and is treated under § 11 Abs. 3 SGB II. If your Jobcenter offsets input tax as income, that is unlawful.

We are a couple with joint assessment. How is the refund split?

The refund belongs to the household community and is taken into account once as income — not twice for each partner. In the BG calculation it is allocated horizontally to all members like any other income. Important: the six-month spread also applies here if the benefit entitlement would fall away in the inflow month. Check carefully in the decision that the amount only appears once.

Can I file an objection if the deadline has passed?

In principle, no — the decision becomes legally binding after one month. But: in cases of clear calculation errors, the application for review under § 44 SGB X applies. It is possible up to one year retroactively, in certain serious cases up to four years. Especially with tax-refund offsetting it is often worthwhile, because the amounts are noticeable.

Now have your decision reviewed

If you suspect that your tax refund has been wrongly offset, every day counts — the one-month objection deadline runs from receipt of the decision. You do not have to fight your way through § 11 Abs. 3 SGB II yourself.

We review your decision within 24 hours. Free and non-binding.

Upload the amending decision, your tax-office decision and the bank statement showing the refund. Within one working day we will tell you whether the offsetting is correct or whether an objection is worthwhile.