second job. A mini-job in addition to a regular job can be financially rewarding.
If you have a second job, you often pay taxes and social security contributions. Stiftung Warentest explains the rules and shows how you can get the most out of your net income.
Millions of professionals with a second job
More and more professionals do not have just one job: In the spring of 2019, the Federal Employment Agency counted about 3.4 million employees with two or even more jobs.
The number has been steadily increasing over the past few years. There are usually financial reasons behind the additional job – for example, if the earnings in the main job are low or if part-time employees would like to work more, but this is currently not possible.
There are a few ways to earn money on the side, for example a
- 450-euro mini-job,
- Second job with gross earnings of more than 450 euros per month,
- seasonal or temporary job or
- a self-employed side job.
The taxes and social security contributions that are due for the extra income vary depending on the job. Job seekers should therefore not be guided solely by an attractive gross salary, but should clarify in advance what is left over in net terms.
Tip: In the sub-article One extra job – four options, an example shows what deductions you can expect depending on the type of extra job you have.
Avoid deductions as a mini-jobber
A mini-job alongside your main job is particularly popular: around 2.9 million employees have opted for this combination. You can earn up to 450 euros per month on average, up to a total of 5,400 euros per year. Higher earnings are permitted in exceptional cases, for example, in the event of a short-term sickness replacement.
Mini-jobbers can collect their wages without deductions. As a rule, the employer not only pays the contributions from health insurance to pension insurance, but also pays a flat rate of 2 percent wage tax to the mini-job center. Employees then do not have to declare the earnings in the tax return.
The employer may not want to calculate the earnings as a lump sum, but according to the tax bracket. For side jobbers, this is usually the worse solution, since wage tax is due. The earnings must also be declared in the tax return.
Tip: In the mini-job you have to pay a part of the contributions to the pension insurance yourself. This can be worthwhile in order to draw a little more pension in old age. You can, however, be exempted from this obligation. You can read about the advantages of pension insurance in our special Why mini-jobbers should pay into pension insurance.
Earn more in the long run
A regular additional income of more than 450 euros gross may initially seem more attractive than a mini-job. The view on the monthly net shows however that the additional expenditure is hardly or perhaps not at all worthwhile itself. In the example of Carina Berger (see One additional job – four options), 483 euros net remain from 700 euros gross additional earnings – only a good 30 euros more than in a mini-job. This is due to the taxes and social security contributions.
Social security contributions. How high the deductions are depends, among other things, on what income the jobber still has. For example, pensioners and students with earnings in the "transitional range" – more than 450 euros, but no more than 1,300 euros per month – only have to pay reduced social security contributions.
The deductions are higher for employees like Carina Berger: Since she already earns 2,200 euros gross in her main job, she must pay half of the contributions to pension, health, nursing care and unemployment insurance for 700 euros in additional earnings, just like her employer. "If several jobs subject to social insurance contributions are combined, the total earnings are usually over 1,300 euros, so that the rules of the transitional area do not apply," explains Madeline Scholz from the Minijob-Zentrale.
Taxes. Flat-rate taxation is not possible. The employer calculates the wage tax according to the tax class. If you have a main job that is calculated according to tax class I, as is the case with Berger, for example, you will have to accept the unfavorable class VI for the additional job, in which the deductions are particularly high. But that’s not all: After the tax return, which is mandatory for salvors, the tax office will demand additional taxes.
Tip: Have the personnel department of the new company calculate in advance how much your net earnings will be. You can find out what you have to expect in your tax return from a wage tax help center or tax advisor. If you are already a pensioner, please note that pension reductions are possible depending on your earnings. (side job to the pension). You can find all tips on tax returns in our Finanztest Spezial Steuern 2020 booklet.
Additional job for a maximum of three months
A temporary seasonal or temporary job can be attractive on the side: Jobbers do not pay social security contributions for the additional earnings – no matter how high they are – if the employment is limited to three months or 70 working days in a calendar year. The employer usually calculates the income tax according to tax class VI. Seasonal jobbers can reclaim overpaid taxes by filing a tax return.
Possibly also a lump sum tax comes into question. However, the tax rate is not only 2 percent, as in the case of a mini-job, but 25 percent. This is usually only worthwhile for the jobber if the employer pays the tax and does not pass it on to the employee.
Tip: The additional earnings from only three months are not enough for you? You can still combine your main job and seasonal job with a mini-job. Even then, you do not have to pay social security contributions for the seasonal job. But more is not possible, says Madeline Scholz: "If another mini-job is added, this would be added to the main job and would have to be reported to the health insurance as a socially-insurable employment."
Independent. Objective. Incorruptible.
Self-employed on the side
If employees become self-employed on the side, they usually also avoid social security contributions: If the activity remains part-time, no health insurance contributions are due. However, pension contributions may be due depending on the profession, e.g. for teachers or manual workers.
If freelancers and tradespeople make an annual profit of more than 410 euros, they must declare it in their income tax return. Here’s how taxable income increases, and with it the tax you have to pay.
Possibly for the sideline entrepreneurs additionally the sales tax becomes the topic. This depends on whether the tax office classifies the self-employed person as a small entrepreneur or not. Small business owners do not have to collect sales tax and pass it on to the tax office. The prerequisite is that the turnover in the current fiscal year is at most 22,000 euros and is not expected to exceed 50,000 euros in the following year.
Tip: If you want to be self-employed on the side, you must register with the tax office. Especially at the beginning of your self-employment, for example, if you have questions about sales tax or still want to purchase equipment, it can be worthwhile to get help from a tax consultant.