There are many forms of child benefits in Hungary. The two most important child benefits for employees will be the family tax benefit and the family allowance, as these directly influence how much money they can use each month to provide for their families.
Family allowance is the most well-known child benefit in Hungary. It is a general financial support paid directly by the state to everyone who is taking care of a child in Hungary. You can learn more about the family allowance in detail here.
It is relevant for employers and employees because it is the basis of the family tax benefit.
The family tax benefit affects the net salary of employees, since it reduces the amount of taxes to be paid from the employee’s gross salary, and it has to be considered when doing the employee’s payroll (see our salary calculator for more info). It is based on the number of children eligible for the family allowance, but it is also influenced by the number of dependent children. You can read about the family tax benefit in detail here.
The aim of both child benefits is to improve the situation of the children, so we usually talk about children being eligible for or receiving them. However, both the family allowance and the family tax benefit are given to the parent as the caregiver of the children. Parents should decide how they divide these benefits among themselves. Either one of them can receive all, or they can agree on the ratio between all caregivers, including the new spouses of divorced parents.
Children are considered dependent as long as they attend education (including higher education), have not yet received a college or university degree, live with their parents’ household, and have no stable income. However, not all dependent children are actually eligible for the child benefits: only those under 20 years, living in their parents’ household, not having stable income and still attending high school can receive these benefits.
Since eligibility for the family allowance and the family tax benefit is strictly defined, parents should keep in mind when they (and their children) become eligible or when they will lose eligibility. They have to report both these events to the accountant or payroll specialist of their employer AND the authorities. Read more about a responsible parent’s reporting obligations here.
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